T h e Ox f o r d H a n d b o o k o f

C ON T E X T UA L
A PPROAC H E S TO
HUMAN
R E SOU RC E
M A NAGE M E N T
The Oxford Handbook of

CONTEXTUAL
APPROACHES
TO HUMAN
RESOURCE
MANAGEMENT
Edited by
EMMA PARRY, MICHAEL J. MORLEY,
and
CHRIS BREWSTER

1
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 Contents

About the Editorsix

List of Contributorsxi

1. Contextual Approaches to Human Resource Management: An

Introduction1
Emma Parry, Michael J. Morley, and Chris Brewster

SE C T ION 1 :   T H E OR E T IC A L A N D
C ON C E P T UA L   L E N SE S
2. The Cultural Lens 25
Hilla Peretz and Lena Knappert
3. Institutional Approaches to Examining the Influence of
Context on Human Resource Management 53
Matthew M. C. Allen and Geoffrey Wood
4. Critical Contextualized Studies of Human Resource Management 71
Frans Bévort, Lotte Holck, and Mette Mogensen
5. The Performance Lens: The Public-Sector Case 97
Paul Boselie and Carina Schott
6. Human Resource Management in Emerging Markets: Theoretical
Perspectives for Understanding Contexts 115
Frank M. Horwitz, Fang Lee Cooke, and Ken N. Kamoche
7. The Context of Terrorism for Managing People in Multinational
Enterprises: Toward a Human Resource Management
Terrorism-­Response Theory 135
Benjamin Bader and Carol Reade
vi   contents

SE C T ION 2 :   R E G IONA L A N D C U LT U R A L
C LU S T E R S
8. Human Resource Management in the Anglo-­Saxon Countries 159
Geoffrey Wood and Chris Brewster
9. Human Resource Management in the Germanic Context 177
Benjamin P. Krebs, Bernhard A. Wach, Marius C. Wehner,
Astrid Reichel, Wolfgang Mayrhofer, Anna Sender,
Bruno Staffelbach, and Paul Ligthart
10. Human Resource Management in the Nordic Context 209
Frans Bévort and Arney Einarsdottir
11. Human Resource Management in the Postsocialist Region
of Central and Eastern Europe 239
Michael J. Morley, Andrej Kohont, József Poór,
Rūta Kazlauskaitė, Veronika Kabalina, and
Jana Blštáková
12. Human Resource Management in the Latin European Context 265
Jordi Trullen and Carlos Obeso
13. Human Resource Management and Industrial Relations in the
Latin American Context 287
Wilson Aparecido Costa de Amorim and
Antonio Carvalho Neto
14. Human Resource Management in the African Context 307
Frank M. Horwitz and Linda Ronnie
15. Human Resource Management in the Middle East 327
Washika Haak-Saheem and Tamer K. Darwish
16. Human Resource Management in Asia 345
Fang Lee Cooke, Vivien T. Supangco, and Neil Rupidara
17. Convergence in Human Resource Management 367
Wolfgang Mayrhofer, Chris Brewster, and
Katharina Pernkopf
 contents   vii

SE C T ION 3 :   SE C TOR A N D ORG A N I Z AT IONA L

I N F LU E N C E S
18. Human Resource Management in the Multinational Context 397
Neil Rupidara
19. Human Resource Management in a Public-­Sector Context 415
Peter Leisink, Rick T. Borst, Eva Knies, and
Valentina Battista
20. Human Resource Management in the Not-­for-­Profit Sector 437
Emma Parry and Clare Kelliher
21. Human Resource Management in the Family Business Context 459
Eleni Stavrou
22. Human Resource Management within a Trade Union Context 479
Lorraine Ryan and Jonathan Lavelle

SE C T ION 4 :   T H E F U N C T IONA L C ON T E X T
A N D   AC T I V I T I E S
23. Individual-­Level Rewards and Appraisal: The Influence
of Context 503
Paul Gooderham and Wolfgang Mayrhofer
24. Human Resource Development 521
Noreen Heraty
25. Well-­Being in Industrialized Economies and the Case for Firms’
Investment in Employee Learning 545
Olga Tregaskis
26. The Diversity Context of Human Resource Management 563
Robin Kramar and Denise Mary Jepsen
27. Human Resource Management Outsourcing 583
Mila Lazarova and Astrid Reichel
viii   contents

28. The Profile of the Human Resource Management Director:

One Size Fits All? 605
Anna Sender, Bruno Staffelbach, and
Wolfgang Mayrhofer
29. Is the Human Resource Management Department Becoming
More Strategic? Exploring the Latest Global Evidence 631
Elaine Farndale and Maja Vidovic

Index651
 About the Editors

Emma Parry is a professor of human resource management and head of the

Changing World of Work Group at Cranfield School of Management. Her research
interests focus on the impact of context on people management, particularly national
context, changing demographics, and technological advancement.
Michael  J.  Morley is a professor of management at the Kemmy Business School,
University of Limerick, Ireland. His research interests encompass international,
comparative, and cross-­cultural human resource management, which he investigates at
different levels.
Chris Brewster is a professor of international human resource management at
Henley Business School, University of Reading, United Kingdom. He researches and
publishes in the field of international and comparative HRM. Chris has consulted
with major international companies and international public-­sector organizations
and taught on management programs throughout the world.
 List of Contributors

Matthew M. C. Allen is a professor of international business and strategy and head of

the Management Science and Entrepreneurship Group, Essex Business School. He has
published in leading business journals. He is on the editorial board of the International
Journal of Human Resource Management.
Wilson Aparecido Costa de Amorim  is an associate professor (human resources
management [HRM]) of FEA USP, Sao Paulo, Brazil, and an advisory group member of
the Cranet International Research Network and coordinator of this research in Brazil.
He is also an invited researcher at the Fudan Development Institute, Fudan University
Shanghai, China, and a member of the HRM and Labour Relations Division at ANPAD,
Brazil.
Benjamin Bader is the deputy head of the Leadership, Work and Organisation Subject
Group at Newcastle University Business School and a senior lecturer in international
human resource management. His research interests include expatriate management
and international leadership, with a special emphasis on people management in hostile
environments as well as the future of work.
Valentina Battista is a lecturer in human resource management and the director of the
master of science program in management and human resource management at
Cranfield University. Her interests focus on the impact of technological advancement
on work, the work force, and the workplace.
Frans Bévort,  PhD, is an associate professor at the Department of Organization,
Copenhagen Business School. His research focuses on human resource management
(HRM), professions, and management. A special research interest is the tension
between management as a professional discipline and other disciplines. Other research
interests are comparative HRM (Cranet), critical HRM studies, HRM and artificial
intelligence, and HRM as a professional discipline.
Jana Blštáková is an associate professor of human resources management (HRM) at
the University of Economics in Bratislava, Slovakia. She teaches HRM, organizational
behavior, and development of management skills. Her research focuses on HRM in the
4.0 Industry era.
Rick T. Borst,  PhD, is an assistant professor at the Utrecht University School of
Governance, the Netherlands. His research focuses on the behavior, attitudes, and
psychological characteristics of public-­sector and semi-public sector employees, taking
xii   list of contributors

into account the role of management and institutional contexts. For an overview of his
publications, see https://www.uu.nl/staff/RTBorst.
Paul Boselie is a professor and head of department at the Utrecht School of Governance
at Utrecht University in the Netherlands. His research traverses human resource
management, institutionalism, and strategic management. His research is published in
journals such as the Journal of Management Studies and Human Resource Management
Journal.
Antonio Carvalho Neto, PhD, is a professor of labor relations and human resources
management at the Postgraduate Programme in Management of the Pontifical, Catholic
University of Minas Gerais, Brazil, since 2000. He has published thirteen books, forty-
two book chapters, and eighty-­one papers in Brazil, Argentina, the United States,
Canada, Germany, France, and Italy.
Fang Lee Cooke  is a professor at Monash Business School, Monash University,
Australia. Her research interests are in the area of strategic human resource management
(HRM), knowledge management and innovation, outsourcing, international HRM,
diversity and inclusion management, employment relations, migrant studies, HRM in
the care sector, digitalization and implications for employment and HRM.
Tamer K. Darwish, PhD, is a reader in human resource management (HRM) and the
head of the HRM Research Centre in the Business School, University of Gloucestershire.
His research interests lie in the areas of strategic HRM, international and comparative
HRM, and organizational performance. His research has appeared in leading
management and human resource journals, including Human Resource Management
and British Journal of Management.
Arney Einarsdottir, PhD, is an associate professor at the School of Business at Bifröst
University in Iceland. Her research focuses on strategic human resource management
(HRM) and its impact on employee attitudes, perceptions, and behavior. She also has
interests in HRM and gender equality, downsizing, comparative HRM research between
the public and private sectors, and the HRM Nordic context.
Elaine Farndale is a professor in human resource management (HRM) and associate
director of the School of Labor and Employment Relations at the Pennsylvania State
University, where she is also founder and director of the Center for International
Human Resource Studies. Her widely published research encompasses the broad field
of international and strategic HRM.
Paul Gooderham  is a professor of international management in the Department of
Strategy & Management at NHH: Norwegian School of Economics, Bergen. He is also
an adjunct professor at Middlesex University, London. His most recent book is the
coauthored Global Strategy and Management (Edward Elgar).
 list of contributors   xiii

Washika Haak-­Saheem, PhD, is an associate professor in human resource management

at Henley Business School, University of Reading. Her research focuses on the
intersection between global migration and international business management, refugee
workforce integration, and knowledge management. Her research has appeared in
journals such as Human Resource Management Journal, European Management Review,
and International Journal of Human Resource Management.
Noreen Heraty is a senior lecturer in human resource management and development
at the Kemmy Business School, University of Limerick, Ireland, where she teaches
across a range of postgraduate, undergraduate, and professional programs. She has
coauthored a number of leading textbooks on human resource management,
organizational behavior, and training and development.
Lotte Holck is an associate professor at the Department of Organization, Copenhagen
Business School. Lotte’s research explores the organization of work and collaboration in
different organizational settings and cultural contexts. With this as a general framework,
her research pursues a critical approach to human resource management, exploring the
impact of demographic, professional, and hierarchical differences.
Frank M. Horwitz is professor emeritus of international human resource management
(IHRM) at Cranfield University, United Kingdom. He is a former director/dean of the
Cranfield School of Management and Graduate School of Business University, Cape
Town. His research interests focus on IHRM in emerging markets, IHRM in emerging
market multinational corporations, the BRICS countries, and the African–Asian nexus
in IHRM.
Denise Mary Jepsen  is an organizational psychologist and academic at Macquarie
Business School, Sydney, Australia. Beyond teaching organizational behavior, human
resource management, and research methods, Denise researches and advises on careers
and strategic people issues, especially in the aged care sector, where she has a particular
focus on attraction and retention.
Veronika Kabalina  is a professor of human resource management and academic
director of the master’s program in HR Analytics at the National Research University
Higher School of Economics, Moscow, Russia. Her numerous publications in Russian
and English deal with enterprise and management restructuring, employment relations,
employee engagement, human resource management, talent management, and
corporate social responsibility in Russia.
Ken  N.  Kamoche  is a professor of human resource management (HRM) and
organization studies at Nottingham University. He earned his DPhil at Oxford
University, where he was a Rhodes scholar. He previously worked at Nottingham Trent,
City University of Hong Kong, and Birmingham University. Ken’s research interests
include HRM, knowledge management, and Africa–China relations.
xiv   list of contributors

Rūta Kazlauskaitė  is a professor of human resource management (HRM) at ISM

University of Management and Economics, Lithuania. Her research focuses on
employee well-­being and work–life balance, work environment, HRM implementation,
responsible HRM, and comparative HRM.
Clare Kelliher  is a professor of work and organization at Cranfield School of
Management, United Kingdom. Her research focuses on the organization of work and
the management of the employment relationship. She has published widely in this field,
including recently in Human Resource Management Journal, Human Relations, and
Human Resource Management. Her recent books include Work, Working and Work
Relationships in a Changing World and Flexible Working in Organisations: A Research
Overview.
Lena Knappert  is an assistant professor at the Department of Management and
Organisation at VU Amsterdam, the Netherlands. Her research interests include
international human resource management and workforce diversity and inclusion.
Dr. Knappert’s work appears in journals such as Human Resource Management, Journal
of Vocational Behavior, and Career Development International.
Eva Knies  is a professor of strategic human resource management at the Utrecht
University School of Governance, the Netherlands. Her research interests are in the
areas of strategic human resource management, public service performance, public
leadership, and sustainable employability. Her website lists her international journal
articles and other publications (https://www.evaknies.com).
Andrej Kohont  is an assistant professor in the faculty of social sciences at the
University of Ljubljana, Slovenia. He lectures in human resources management
(HRM), organizational behavior, leadership, and strategic HRM. His research focuses
on international HRM, talent management, sustainability, competency management,
and career guidance.
Robin Kramar is an adjunct professor at the University of Notre Dame. She also has a
number of roles at the Sydney Metropolitan Institute of Technology, the Leadership
Institute, and the Sydney Institute of Commerce and Science. She also serves on the
Advisory Research Panel of the Australian Institute of Human Resource Management.
Robin has held visiting professor roles at the IGR University of Rennes, the University
of Ghent, and Cranfield School of Management, United Kingdom.
Benjamin  P.  Krebs  is a research assistant at Paderborn University, Germany. His
research interests include international human resource management, talent
management, and (corporate) entrepreneurship with a focus on status in organizations,
social comparison processes, and goal setting.
Jonathan Lavelle  is a senior lecturer in employment relations at the University of
Limerick. He is a former IRCHSS Government of Ireland scholar, a IRCHSS postdoctoral
fellow, and Marie Curie scholar. His research interests include international and
 list of contributors   xv

comparative employment relations, with a particular interest in trade unions and

employee voice.
Mila Lazarova  (Simon Fraser University, Canada) is the Canada research chair in
global workforce management. Mila has published on various international human
resource management topics in journals such as the Academy of Management Review,
Journal of International Business Studies, Journal of World Business, Organizational
Science, Journal of Organizational Behavior, and Human Resource Management.
Peter Leisink is professor emeritus of public administration and organization science
at the Utrecht University School of Governance, the Netherlands. His research covers
the areas of management and organization of public service organizations, strategic
human resource management, employment relations, leadership, and public service
motivation. For his publications, see https://www.uu.nl/staff/PLMLeisink.
Paul Ligthart, PhD, is an assistant professor of strategic management in the Department
of Business Administration of Nijmegen School of Management, Radboud University
of Nijmegen, the Netherlands. His research interest is the nature and impact of
technological and organizational innovation configurations in the manufacturing
industry (e.g., digitalization) and participatory human resource management policies
and practices (e.g., financial participation).
Wolfgang Mayrhofer is a full professor at WU Vienna, Austria. He previously has held
full-­time positions at the University of Paderborn, Germany, and Dresden University
of Technology, Germany, and conducts research in comparative international human
resource management and work careers, as well as systems theory and management.
Mette Mogensen, PhD, is a research fellow and external lecturer at the Department of
Organization at Copenhagen Business School. Her research revolves around critical
human resource management studies, the organization and management of the
psychosocial work environment, paradox theory, and leadership. She has recently been
involved in projects on leadership development and has coauthored a book on
paradoxes and paradox management.
Carlos Obeso was the head of the Institute of Labor Studies at ESADE Business School
until 2018, with the aim of analyzing the labor market and the relations between those
taking part in it. He currently serves as ESADE Business School ombudsman.
Hilla Peretz is a senior faculty member in the Department of Industrial Engineering
and Management, ORT Braude College, Israel. Her research interests concern
international human resource management. Dr. Peretz’s work appears in journals such
as Journal of Applied Psychology, Journal of Cross-­ Cultural Psychology, and the
International Journal of Human Resource Management.
Katharina Pernkopf  conducts research in the wider field of organizational
institutionalism, convention theory, and (comparative) human resource management.
She is interested in how organizations and individuals manage tensions at work, for
xvi   list of contributors

example, institutional demands versus organizational rules. She does research on work
time regulations, online recruiting, and other future of work issues.
József Poór is a professor of management at J. Selye University Komarno, Slovakia, and
Szent István University, Hungary, where he teaches a variety of management courses.
Previously he was a senior manager at different internationally recognized professional
service firms (Mercer, HayGroup, Diebold) and at a private business school for almost
two decades.
Carol Reade  is a professor at San Jose State University. She researches the effects of
societal conflict on OB/human resource management in multinational enterprises and
business’s role in fostering sustainable and peaceful societies. Publication outlets
include the Journal of International Management, International Journal of Human
Resource Management, and Journal of International Business Policy. 
Astrid Reichel  is a full professor of human resource management (HRM) at the
University of Salzburg. She previously was an associate professor at WU Vienna. She
has published on contextual HRM, gender and HRM, and digital HRM in journals
such as Human Resource Management, Human Resource Management Journal, and
Journal of Organizational Behavior.
Linda Ronnie  is an associate professor in organizational behavior and people
management at the School of Management Studies, University of Cape Town, where
she is dean of the faculty of commerce. She has master’s degrees in psychology
(Liverpool) and education, training, and development (Sheffield) and a PhD in
education (Cape Town). Linda has been a management educator for over twenty years
and consults to private- and public-­sector organizations.
Neil Rupidara is an associate professor of human resource management (HRM) and
rector at Universitas Kristen Satya Wacana in Salatiga, Indonesia. His research interests
are in general and international HRM, leadership, and organizational institutionalism.
Neil has published journal articles and book chapters and presented papers at
conferences. Neil is the Cranet partner in Indonesia.
Lorraine Ryan is a lecturer in employment relations and human resource management
at the University of Limerick and a former Government of Ireland scholar. Her research
interests include precarious work, collaborative bargaining, trade unions and
democracy, and the impact of technology on the future of work.
Carina Schott is an assistant professor at the Utrecht University School of Governance.
She conducts research in the field of public management at the individual level.
Specifically, her research concerns motivational and decision-­making processes of
bureaucrats. Her research appears, among other places, in Public Administration and
Public Management Review.
 list of contributors   xvii

Anna Sender, PhD, is a senior researcher, lecturer, and associate director of the Center
for Human Resource Management at the University of Lucerne. She is also a lecturer at
the Lucerne University of Applied Sciences and Arts. Her research focus includes
international human resource management, talent retention, compensation, and
nonstandard work.
Bruno Staffelbach, Prof Dr, is a full professor for business administration, director of
the Center for Human Resource Management, and president of the University of
Lucerne. He is a member of the board of the International Committee of the Red Cross,
Geneva, 1992–2016, and director of the executive master’s of business administration at
the University of Zurich.
Eleni Stavrou  is a professor at the University of Cyprus. She received her PhD at
George Washington University, where she was director of programs and operations
of the Center for Family Enterprise. Her research interests include work-life issues,
strategic and comparative human resource management, and intergenerational
transitions in family firms.
Vivien T. Supangco is a retired professor at the Virata School of Business, University of
the Philippines. Her research interests are in the areas of career development and
management, comparative human resource management, organization diagnosis,
corporate culture, and expatriation.
Olga Tregaskis  is a professor of international human resource management at the
University of East Anglia and a senior scientist of the United Kingdom’s What Works
Wellbeing network and Centre for Climate Change and Social Transformation. Her
published works include issues on human resource management and development and
change.
Jordi Trullen is an associate professor in the Department of People Management and
Organisation at Universitat Ramon Llull, ESADE, where he teaches courses in
organizational behavior and human resource management (HRM). His research
focuses on the areas of HRM implementation and comparative HRM, with a focus on
Latin America.
Maja Vidovic is an assistant teaching professor of human resource management (HRM)
at the Center for International Human Resource Studies, Pennsylvania State University.
She earned her PhD from the faculty of economics and business, University of Zagreb,
Croatia. She researches HRM in general, with a focus on HRM in multinational
corporations and their subsidiaries.
Bernhard  A.  Wach  is an interim professor at the University of Applied Sciences
Bielefeld, Germany. His research and teaching are in the field of strategic human
resource management, international management, and (corporate) entrepreneurship.
xviii   list of contributors

Marius  C.  Wehner  is an assistant professor at the Heinrich-­Heine-­University in

Dusseldorf, Germany. His research interests include international and strategic
management, (international) human resource management (HRM), and (corporate)
entrepreneurship. Currently, he is working on projects concerning artificial intelligence
and fairness perceptions in the context of HRM.
Geoffrey Wood  is Dancap Chair of Innovation, professor of sociology, and head of
DAN Management at Western University, Canada, and visiting professor at Trinity
College, Dublin. Previously, he served as dean and professor of international business,
Essex Business School, and professor of international business, Warwick Business
School. He has authored/coauthored over 180 peer-­reviewed journal articles.
 chapter 1

Con textua l
A pproaches to H um a n
R esou rce M a nagem en t
An Introduction

Emma Parry, Michael J. Morley,

and Chris Brewster

The Origins of This Handbook

This handbook is the culmination of a sustained collaboration, the foundations of

which were laid over thirty years ago with the establishment of the Cranfield Network
on International Human Resource Management (Cranet) in 1989 (for more details, see,
for example, Brewster, Mayrhofer, & Morley, 2004; Lazarova, Morley, & Tyson, 2008;
Mayrhofer, Gooderham, & Brewster,  2019; Morley & Heraty,  2019; Parry, Farndale,
Brewster, & Morley, 2020; Parry, Stavrou-­Costea, & Morley, 2011). Launched with five
founding member countries (France, Germany, Spain, Sweden, and the United
Kingdom), Cranet is now the largest and longest running human resource management
(HRM) network in the world, and in the early twenty-­first century, it involves research
partners in some forty-­two countries1 collaborating in the ongoing collection of data on
HRM policies and practices in their respective countries. The data collection effort and
the academic collaboration more broadly afforded by participation in the network are
squarely focused on charting key aspects of the landscape of HRM in a diverse range of

1  Australia, Austria, Belgium, Brazil, Canada, Chile, China, Croatia, Cyprus, Czech Republic,
Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Indonesia, Ireland, Israel,
Italy, Japan, Latvia, Lithuania, Nepal, the Netherlands, New Zealand, Norway, the Philippines,
Romania, Russia, Serbia, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, Turkey, the
United Kingdom, and the United States.
2   Parry, Morley, and Brewster

sociocultural contexts and geographic territories. Many of the territories now covered
by the network have been historically underrepresented in the academic literature.
The motivation for the founding of the network lay from the very beginning in the
acceptance of the basic reality that obvious differences exist in the way HRM is concep-
tualized, institutionalized, and practiced in different contexts and in the understanding
that a blanket approach to the transposition of elements from one system onto another
was likely to be limited. In developing a collaborative architecture to give concrete
expression to this pluralistic reality and engage in the coproduction of knowledge on the
nature of HRM in a diverse range of territories, the network was joining a conversation
that was emerging among a growing cohort of researchers who argued that scholarship
had paid insufficient attention to the influence of context on the nature, direction, and
impact of HRM. Through their ongoing collaboration, Cranet scholars were increas-
ingly understanding that context plays a critical role in the preferred approaches to
HRM pursued by organizations operating in different locations and facing different sit-
uations. These scholars, and others, were gradually and incrementally teasing out distal
and proximal factors that accounted for commonalities and differences across contexts.
They were also increasingly aware that acknowledging and giving expression to this sit-
uational heterogeneity, and its consequences for both our theorizing and our empirics,
could make an important contribution to advancing the conversation on the value of a
more contextual approach to HRM.
As network membership grew, the conversations deepened about universalism ver-
sus contextualism. In many instances, those conversations pointed to gaps in the extant
literature about what constituted the elemental building blocks of HRM in many territo-
ries. This exchange fed a growing collective awareness among an expanding group of
collaborating scholars in the network and, beyond that, the very thing that we were
increasingly focused on explicating, namely, a contextual paradigm for understanding
HRM, had a broad range of meanings in the lexicon of the field internationally, and
these demanded fuller treatment.
Because of the scale of the task in landscaping those elements and the breadth of terri-
tory that needed treatment, a handbook that would give coverage to the multiple dimen-
sions of context seemed like an appropriate way to contribute to this evolving
conversation. As editors, our mutually agreed objective therefore became one of con-
ceptualizing and assembling the bricolage of key aspects of context as a phenomenon in
HRM scholarship and curating it in a single source reference. We knew this would
require compiling a range of conceptual and empirical analyses of diverse elements of
context, ones that would give expression to different theoretical platforms or lenses,
along with the incorporation of multilevel influences. Its added value, we felt, would lie
in enriching the debate on the multiple dimensions of context in HRM and in further
expounding the explanatory power of the contextual paradigm as a point of departure
for research on the subject. The twenty-­eight chapters that follow are the culmination of
our efforts in this regard.
 Contextual Approaches to Human Resource Management   3

Context and Human Resource

Management Research

The fundamental question of the most appropriate paradigm for inquiry in the field of
HRM, and indeed in the social sciences more broadly, has occupied a central place in
academic discourse for a protracted period. The contrasts and contestations between
universalism and contextualism lie at the very heart of this debate. The universalist
approach, which seeks to build generalizable knowledge, stands in contrast to the con-
textual approach, which searches for a fuller understanding of what is contextually
unique and why (Brewster, Mayrhofer, & Morley, 2000). The increasing calls for deeper
contextualization serve as the fundamental point of departure for us in the preparation
of this handbook. These calls are rooted in a belief in the value of different research tra-
ditions and the particular explanatory power and utility of the knowledge generated
through following those traditions. Scholars working to advance a contextual approach
have called attention to its conceptual and analytical benefits, along with the many
inherent challenges that accompany its pursuit and execution. From a basic paradig-
matic perspective, Rousseau and Fried (2001, p. 1), for example, highlight that contextu-
alization serves to more fully acknowledge that significant contestations and limitations
arise when trying to transport “social science models from one society to another” and
this accentuates why it is critically important to pay “special attention when exporting
scientific constructs and research methodologies across national borders.” From the
perspective of theoretical positioning and scaffolding, Minbaeva (2016, p. 95) notes that
when properly executed, contextualization can serve as “a novel source of theorizing” in
the fundamental framing of the research problem under investigation from the outset.
This, she rightly maintains, is a qualitatively different stance from the one merely involv-
ing post hoc contextualization. Analytically, Johns (2018, p. 21) emphasizes that contex-
tualization as a tradition “permits integration across research areas and levels of
analysis,” while from a knowledge utility perspective, Teagarden, Von Glinow, and
Mellahi (2018) underscore that contextualization brings to center stage the important
issue of boundary conditions or particular limitations that may apply to the generaliz-
ability of the research findings being advanced. The overall complexity of the research
challenge involved in generating contextual insights in order to strengthen theory and
deepen our appreciation of embedded management practices in more diverse settings is
perhaps best captured by Shapiro, Von Glinow, and Xiao (2007, p. 129), when they high-
light the importance of adopting stances and employing approaches capable of unearth-
ing “multiple and qualitatively different contexts embedded within one another.”
Cappelli and Sherer (1991, p. 56) cogently characterize context as “the surroundings
associated with phenomena which help to illuminate that phenomena.” In the HRM
domain of interest to us in this handbook, such surroundings, of necessity, comprise a
diverse range of macro-, meso-, and micro-­interrelated influences that, in combination,
shape practices and outcomes and account for commonalities or differences in the way
4   Parry, Morley, and Brewster

these are developed and deployed within regions, nations, sectors, organizations,
­functions, and/or units. While here we classify and unpack these macro, meso, and micro
surrounding influences as they apply to HRM one at a time, we stress that it is only by
appreciating the interrelated nature of these contingencies that an organization’s pre-
ferred HRM practices and postures may be more fully understood and accounted for.
Over the past thirty or more years, there has been a growing recognition that context
is crucial in understanding the effectiveness of HRM policies and practices, in particular
in relation to their impact on organizational performance. Indeed, as far back as
the 1980s, the Harvard (Beer, Spector, Lawrence, Quinn Mills, & Walton, 1984) and
Michigan (Fombrun, Tichy, & Devanna, 1984) models of HRM, often seen as the found-
ing texts in HRM scholarship, included reference to contextual determinants. Beer et al.
refer specifically to stakeholder interests and situational factors, while Fombrun et al.
broadly identified economic, cultural, and political forces. Despite the inclusion of con-
text in these two seminal texts, the notion of context in HRM was broadly ignored as the
scholarship in HRM developed.
Much of this scholarship came from the United States, the home of HRM, where
notions of self-­help, independence from external influences, and the primacy of the
rights of owners have a long cultural history. In HRM as a field of study, adopting these
criteria plays well to a neoliberal audience and is well received by many HRM practitio-
ners who want to feel that they have scope and choice and that their actions will make a
difference. Combined with the ever-­increasing pressure in the top journals for “general-
izability” of results as a touchstone of management “science,” this led the extensive liter-
ature on HRM to take a primarily “universalist” perspective (Brewster 1999), implying
that the relationship between HRM practice and organizational outcomes was largely
consistent regardless of context and, thus, that adopting particular “best practice” HRM
will always result in superior performance (Delery & Doty, 1996). Thus, much of the lit-
erature, specifically that which falls under the rubric of strategic HRM, assumes that
managers have agency and, in fully exercising this agency, can choose and implement
any strategy that they deem appropriate (Wangrow, Schpeker, & Barker, 2015) and that
these strategies will have direct and intended consequences.
For many years, the largest single topic in the HRM literature (and its often poorly
distinguished subcategory of “strategic” HRM) consisted of attempts to show that it was
directly related to organizational performance (see, for example, Huselid,  1995;
Pfeffer,  1994,  1998) and that specific sets of HRM practices—dubbed best practice—
could be identified and would invariably be linked to improved corporate performance
outcomes. The fact that such practices tended to look a lot like the espoused practices of
large, successful businesses in the United States did not stop proponents claiming that
they could be applied in any circumstances—they were generalizable.
Despite the widespread focus on universalism in HRM, the understanding that orga-
nizations operate in specific contexts and that different contexts will mean the develop-
ment of different approaches to HRM has persisted in some quarters. For example,
Schuler and Jackson (2014, p. 35) highlighted the importance of a “deep understanding
of a firm’s external environment” for HRM, while Farndale and Paauwe (2018, p. 203)
 Contextual Approaches to Human Resource Management   5

noted that “firms do not operate in a vacuum.” Most scholars will recognize that context
will affect what an organization can do in relation to its HRM; however, these authors,
and the editors of and contributors to this handbook, believe that the different practices
that need to be applied as a result of the different contexts will be more situationally
appropriate, more legitimate, and, indeed, in many cases “better” than any one-size-fits-
all “best practice” approachThis is the reason that commentators may sometimes see
context in HRM as being part of a more critical tradition.
In this handbook, therefore, we subscribe to this contextual approach to HRM,
believing that the same approach to managing human resources will be likely to have
differential effects in different contexts (Stavrou, Brewster, & Charalambous,  2010).
What will work well in the giant multinational headquarters of a major consumer goods
company in Chicago may be quite different from what will work well in a small family
firm offering consultancy services in Slovakia. These contexts operate at or in multiple
levels, sizes, sectors, countries, and regions and are characterized by a range of stake-
holders such as economic actors, governments, local authorities, trade unions, and
communities (Beer, Boselie, & Brewster, 2015). Background factors are also important
elements of the context: ranging from distal factors such as the size, geographical loca-
tion, and weather of a country, through intermediate factors such as economics and pol-
itics, history, and the local education system and national religions and cultures, to
proximal factors including local and international competition, labor laws, and trade
union representation.
Alongside the stream of universalistic strategic HRM literature (which, to be clear, is
because of the hegemony of the US system, now found around the world), there is a
smaller but increasing focus on context, particularly at the national level. Indeed, the
late twentieth and twenty-­first centuries saw a growing appreciation of the importance
of context and a growth in the amount of academic research in this area. In Europe in
particular, efforts were made to develop a more nuanced understanding of how the
European context might affect the nature of HRM. For example, Brewster (1995) devel-
oped a model of HRM in Europe based on the assumption that the autonomy of firms
operating within certain European nations was restricted by those country’s institutions
and that the nature of HRM was influenced by factors related to the national con-
text  (e.g., culture, legislation, economic trends, ownership patterns), international context
(e.g., European Union), and what he termed the national HRM context (e.g., education/
training, labor markets, and trade unions). This paper supported a line of thinking that
moved away not only from universalistic approaches to HRM, but also from contin-
gency theories that focused on internal contingencies such as the organizational strat-
egy (Delery & Doty,  1996). Taking a similar approach, Paauwe (2004) presented his
“contextually-­based human resource theory,” arguing that HRM needed to be under-
stood as an element of the firm, which was also part of a broader society or operating
context. More recently, Paauwe and Farndale (2017) developed the “contextual strategic
HRM framework” that divides context into the competitive mechanisms with regard to
how an organization positions itself in the marketplace (e.g., technology, products, or
services); the institutional context (e.g., regulatory, social, political, and legal context);
6   Parry, Morley, and Brewster

and a heritage mechanism, which is based on path dependency created by how the firm
has operated in the past (Farndale & Paauwe, 2018). These are examples of approaches
that emphasize the importance of the macro- and meso-­level context in influencing
both strategic choices in relation to HRM and the effectiveness of these HRM practices
in delivering positive outcomes.
The development of these models has been accompanied by a plethora of empirical
research that examines the impact of macro-­level context on HRM decision-­making.
Generally, this research has fallen into two areas. The first is that of comparative HRM,
which compares the use of HRM policies and practices across countries or regions and
the reasons (usually seen as aspects of national culture or national institutions) behind
any differences (Brewster, Mayrhofer, & Farndale, 2018). The second is the examination
of HRM in multinational enterprises and their subsidiaries that must work across these
national differences (Stahl, Björkman, & Morris, 2012), with a small stream of research
examining the relationship between the two (Brewster, Mayrhofer, & Smale, 2016). This
research has demonstrated the complexity in relation to the macro-­level factors driving
HRM and supported the idea that HRM is indeed not universal. In fact, it varies in con-
cept, definition, coverage, formalization, attitudes to stakeholders, and what is seen as
“good” HRM.
Macro or distal contextual HRM research has followed a number of theoretical per-
spectives, focusing on different aspects of the national context, mainly associated with
national culture (Hofstede & Minkov,  2010; House, Hanges, Javidan, Dorfman, &
Gupta, 2004) and the institutional environment (Amable, 2003; Hall & Soskice, 2001;
Whitley, 1999). The development of these two strands of research on national context
and HRM has led to the development of multiple theoretical approaches addressing the
impact of institutions (e.g., comparative capitalisms; institutional theory and neo-
institutionalism) and a variety of methods of measuring both institutional characteris-
tics and national culture. The result is that research addressing the impact of national
context on HRM has become somewhat fragmented, with most authors focusing on
either institutions or culture. We therefore need more research combining these per-
spectives as well as comparing and contrasting their assumptions and the outcomes of
different aspects of theorizing. So, this handbook considers multiple theoretical lenses
on context to allow us to understand what each one offers in relation to developing this
contextual approach to HRM.
Much of the contextualization literature to date focuses on macro context and on
(usually cultural or institutional) factors at the regional or national level that might
affect the choice or effectiveness of HRM activities. However, casting further light on
meso and micro or more proximal contextual influences is also an important part of
coming to a fuller understanding of multilevel contextual determinism. Here, for exam-
ple, a fuller representation and more detailed treatment of industrial sector, organiza-
tional size, or ownership, often relegated to controls, is important in accounting for
commonalities and differences in HRM recipes. We know much about large, private-
sector organizations operating in certain sectors, but much less about other sectors and
types. We therefore consider multiple aspects and levels of context to communicate a
 Contextual Approaches to Human Resource Management   7

more holistic and multidimensional view of the paradigm and its value and explanatory
power in a broader range of settings. For our purposes, context represents an intersec-
tion and interaction between the macro level (geographic, regional, and national), the
meso level (sector, industry, ownership, unionization), and the micro level (the HRM
function, activities, status). Note that, as we are concerned with context, we limit our
analysis of the micro level to the organization: We do not examine individual-­level
interactions. Our aim in this book is to widen the perspective and understanding of
context as a multilevel phenomenon and underscore how these levels and characteris-
tics might intersect to drive HRM policy and practice.

The Shape of the Handbook

To address our objectives and explicate the multilevel nature of context, we have divided
the book into four sections: theoretical and conceptual lenses, regional and cultural
clusters, sector and organizational influences, and the functional context and activities.

Theoretical and Conceptual Lenses

The first section offers an in-­depth examination of key established theoretical lenses,
along with emerging ones that have served as conceptual platforms examining the influ-
ence of different elements of context on HRM. Our decision on what was to be included
here was guided by the importance of achieving a balance between dominant estab-
lished lenses, with their explanatory power in accounting for contextual influences, and
newer, emerging perspectives that hold the prospect of opening up new lines of research.
To this end, we settled on six such theoretical perspectives, as follows: the cultural lens,
the institutional lens, the critical lens, the performance lens, the emerging markets lens,
and the terrorism lens. In bringing together these theoretical platforms, this first section
of the handbook assembles key elements of the ways in which context has been concep-
tualized and serves to call attention to the intellectual utility of these platforms as con-
ceptual points of departure chosen by scholars seeking to advance a contextual
perspective on HRM.
National culture represents an enduring and important part of the context in which
organizations operate and in which HRM is practiced. In Chapter  2, Peretz and
Knappert examine the provenance and the prominence of the cultural lens as a theoreti-
cal platform for explicating contextual HRM. The authors review the literature dealing
with the intersection of culture and HRM, focusing on why and how culture accounts
for variance in HRM practices and the differing outcomes between organizations oper-
ating in diverse cultural settings. It examines how culture is defined and measured and
reviews several established frameworks of culture. This is followed by a review of related
studies conducted by Cranet members and other established scholars examining
8   Parry, Morley, and Brewster

c­ ultural influences on particular HRM practices (i.e., recruitment and selection,

­performance management and performance appraisal, training and development,
compensation and benefits, flexible work arrangement, diversity management, and
high-­performance work systems) and their outcomes. The chapter concludes with prac-
tical implications and suggested avenues for future research.
In parallel with the cultural lens, HRM scholars have embraced institutional ideas to
understand variations in HRM systems and practices in different settings. Along with
the cultural perspective, the institutional lens has allowed researchers to build more plu-
ralist insights and has served as an important theoretical lynchpin in enhancing the con-
textual relevance of much HRM research. In Chapter 3, Allen and Wood review three
related, but distinctive, institutional approaches to HRM policies within organizations.
They view institutions, organizations, and their HRM policies as conceptually separate,
but ontologically connected. In other words, they view context and HRM as inter-
twined, meaning that institutions play a key role in constituting what firms are and what
HRM is in different contexts. They review work on HRM within different institutional
frameworks and call attention to the similarities among, and the differences between,
them. They argue that these institutional approaches add value to HRM analyses by
explaining key variation among the nature of firms and how that variation influences
important HRM outcomes.
Chapter 4 focuses on the value of a critical management lens for studying HRM. In
this contribution, Bévort, Holck, and Mogensen argue that while mainstream HRM
studies accept, without much reflection, that best practice HRM is what is best for man-
agement and owners, critical management studies start from the perspective that HRM
is always about the exploitation of the weaker stakeholders in organizations. The chapter
presents three critical analyses of HRM practices. The first addresses how institutional
logics affect the practice of HRM professionals; the second presents alternatives to best
practice diversity management; and the third examines a case of meditation practices as
expressions of managerial control. The chapter culminates with suggestions on how to
advance critical contextualized HRM scholarship.
Chapter 5 turns to the performance lens and the intellectual utility it provides in the
HRM field. Boselie and Schott take the slightly less traveled road and concentrate spe-
cifically on the relationship between HRM and public-­sector performance. The authors
adapt the original Harvard model through blending contemporary general HRM
insights with public administration and public management literature. The specific
adaption centers on highlighting multiple stakeholder interests, situational factors,
mediating factors referring to HRM policy choices, and HRM outcomes, as well as long-
term consequences from a public-­sector context perspective. They then present an
overview of studies on HRM and public-­sector performance. Arising from this review,
they identify important gaps in the literature and highlight potential avenues for future
research.
The emerging markets lens as a particular platform on which to build insights on
HRM is of a more recent vintage than either the purely cultural or the institutional back-
drops discussed here thus far. Though described as a portmanteau term (Horwitz,
 Contextual Approaches to Human Resource Management   9

Budhwar, & Morley, 2015), there is no doubt that interest in, as well as research on, the
emerging markets is on a significant upward trajectory. In Chapter 6, Horwitz, Cooke,
and Kamoche highlight that the emerging markets reflect an evolving and diverse litera-
ture with a series of opportunities, encompassing the purely theoretical through to the
methodological and the analytical. They provide an overview examination of
approaches useful for unearthing the complexity and diversity of HRM in these con-
texts, including institutional, cross-­cultural, internationalization, postcolonial, and
hybrid perspectives.
Another focus of more recent vintage relates to security, conflict, and geopolitical
risk, which is a threat to business through a range of “direct and indirect effects”
(Czinkota, Knight, Liesch, & Steen, et al. 2010, p. 826). In Chapter 7, Bader and Reade
focus on the development of an HRM terrorism response theory. They note that while a
number of research studies have been published in recent years dealing with the impli-
cations of terrorism for HRM-­related issues, most are focused at the individual level,
with the result that a comprehensive theoretical approach at the organizational level rel-
evant to HRM in the context of terrorism is lacking. To address this shortcoming, they
examine extant literature on the influence of terrorism on HRM-­related issues, integrate
several theoretical approaches that emerge from this literature, and introduce an HRM
terrorism-­response theory relevant for organizations operating in countries afflicted
with terrorism.

Regional and Cultural Clusters

Theoretical perspectives in the treatment of HRM that serve as the lens through which
the particular phenomenon of interest is viewed constitute perhaps the most significant
difference between HRM scholars. But macro differences vested in aspects of the geo-
graphic, the regional, and the national are important too and occasionally mirror theo-
retical differences. It is not just that HRM policies and practices vary from country to
country; so do definitions of the topic, of what is included or excluded, and of what is
deemed to be “good” HRM (Brewster, Mayrhofer, & Farndale, 2018). Geography clearly
matters in HRM. Paradigmatically, studies of management in general, and HRM in par-
ticular, are by an enormous majority dominated by a “proper science,” universalistic
approach (Brewster, 1999; Delery & Doty, 1996; Gardey, Alcazar, & Fernandez, 2004).
This argues that the task of science is to discover universalist, generalizable rules (laws)
that can be applied in all circumstances. Contributions in this tradition occupy most
pages in the top business and management outlets. Paradoxically, however, the scientific
rules applied to management and HRM studies differ from the rules applied in the natu-
ral sciences—as an example, replication studies (the backbone of much research in
physics, chemistry, and medicine) are rarely entertained by the top journals in business
and management—with the emphasis being on each paper making a “new” contribu-
tion. We make no comment on the “meta-­analyses” that then add up all the inevitably
“different” contributions to establish general laws. Practically, the limited resources
10   Parry, Morley, and Brewster

applied to most academic studies mean that most research is carried out in a single
country rather than comparatively, so international differences feature much less
prominently.
When a comparative HRM agenda is pursued, as evidenced in this section of this
book, it focuses on describing and explaining differences and similarities in patterns of
HRM across countries or regions of the world (Brewster, Mayrhofer, & Smale, 2016;
Kaufman, 2016). The field has typically been driven by empirical observation of differ-
ence rather than by theory (Mayrhofer & Reichel, 2009). Early work, often carried out
by researchers from the industrial relations tradition where country differences were
part of the discourse, focused on description—pointing out differences between coun-
tries in their HRM practices (e.g., Begin, 1992; Boxall, 1995; Brewster & Tyson, 1991;
Hegewisch & Brewster, 1993). As our knowledge has developed, more attention has been
paid to understanding the reasons for and outcomes of the differences, and greater
attention is being paid to explaining rather than simply recording differences. Major
explanators, both of which contain some truth, are, as noted in the first section of the
book, institutional theories (e.g., Wood, Brewster, & Brookes, 2014) and cultural theo-
ries (Reiche, Lee, & Quintanilla, 2018). It has been argued that while both may be impor-
tant, institutional theories may explain more than cultural theories (Vaiman &
Brewster, 2015).
An unfortunate side effect of the universalistic paradigm, and a reflection of the
“dominance” of the United States in our management thinking (Pudelko &
Harzing, 2007; Smith & Meiksins, 1995) are the numerous studies attempting to apply
etic concepts in clearly inappropriate settings. This is a constant challenge: Journals are
always readier to publish research where established constructs are employed, even
when the results may simply be immaterial in the setting in which they have been gener-
ated. It should be obvious that research into selection criteria in Pakistan, using preex-
isting scales, will underestimate the effect of Vartan Bhanji; traditional studies of
decisions to accept expatriation in Indonesia will miss the influence of parents and
parents-­in-­law; high-­performance work systems may not be all that common in Laos,
even if people will politely answer questions about them. What we need is more research,
emic research, written by people from different countries around the world and apply-
ing relevant, legitimate concepts and practices to deepen our understanding of HRM in
those countries.
This gives the editors of a text like this some serious concerns. Unless this book is
going to grow into an enormous encyclopedia, we cannot have a chapter on each of the
two hundred or so countries that there are in the world. And even that would be prob-
lematic: Is it reasonable to try to encompass HRM in Vanatu with HRM in India, given
the very small population of Vanatu and India’s huge population, split between many
different states with different languages, institutions, religions, and cultures? But if we
cannot have chapters on each country, how are we to address the issue of different geo-
graphical contexts in HRM? We decided to go for regional categories. It must be
acknowledged that adopting this approach involves trading “within-­systems” depth for
“across-­systems” scope and coverage (Garavan, McCarthy, & Morley,  2016). But the
 Contextual Approaches to Human Resource Management   11

issues did not stop there. How big were these regions to be? Were they to be based on
natural proximity (Africa) or cultural or institutional similarity (the Anglo-­Saxon coun-
tries)? In the end, we chose a somewhat inconsistent mix of the two—arguing to our-
selves that, apart from the Anglo-­Saxon grouping, there is sufficient similarity within
and sufficient distinction between the “proximity” groupings to maintain that as a con-
sistent criterion.
In the end, perhaps because the editors are European and more conscious of the differ-
ences here than we are of the differences between anglophone, francophone, and luso-
phone Africa or within India, for example, the groupings we have chosen are the
Anglo-­Saxon countries, the Germanic, the Nordic, the postsocialist European states, and
the “Latin” European countries, and then Latin America, Africa (concentrating on sub-
Saharan Africa), the Middle East, and Asia. Even this idiosyncratic analysis—and the
inevitable lumping together of very different national contexts in the “continental” chap-
ters—illustrates the very different ways that HRM is understood, conducted, and assessed
in different geographical contexts. Despite the caveats, an approach of this nature can be
valuable in providing contextual insights that can feed into the process of developing the-
ory in HRM and expanding the range of systems examined in the literature.
Chapter 8 focuses on HRM in the Anglo-­Saxon countries. Wood and Brewster note
that these countries, also termed the liberal market economies, are just about the only
example of a country cluster that both the cultural theories and the comparative institu-
tional theorists agree on. They note that culturally, these countries are characterized by
low power distance, high individualism, and low uncertainty avoidance, while institu-
tionally, they have shared legal origins (common law) and are characterized by powerful
private property rights, lesser rights for other stakeholders, and government being less
interested in supporting stakeholder rights, with commensurate suspicion of govern-
ment involvement and taxation. They debate how cohesive and consistent the Anglo-
Saxon category really is and precisely how the implications for HRM are manifested in
each country.
Chapter 9 focuses on HRM in the Germanic context. Krebs, Wach, Wehner, Reichel,
Mayrhofer, Sender, Staffelbach, and Ligthart examine how cultural and institutional dif-
ferences within Germanic Europe shape cross-­national variation in the approaches of
organizations to strategic integration of HRM and developmental HRM practices.
Despite similarities, their comparison of societal cultural practices and institutional
approaches reveals dissimilarities within the cluster. Using Cranet data, they show that
the institutional and, to a lesser extent, cultural differences within the Germanic Europe
cluster mirror the degree to which HRM is strategically integrated. In contrast, they find
more similarities among the Germanic cluster countries in relation to a high level of
professionalization concerning developmental HRM practices. The findings indicate
that cross-­national differences in the strategic integration of HRM and developmental
HRM practices are partially time-­invariant as a result of persistent differences in the
institutional environment.
Chapter 10 focuses on HRM in the Nordic context. Bévort and Einarsdottir discuss
how the specific institutional context has impacted the evolution of HRM practices in
12   Parry, Morley, and Brewster

the cluster. First, the Nordic social model and HRM ideology are reviewed. Then the
limits of the claim that the Nordic countries form a cluster with very similar attributes in
relation to HRM are discussed by examining some of the characteristics and differences
for each country. Cranet data are used to compare and highlight commonalities and dif-
ferences characterizing HRM practices in the Nordic countries. The authors highlight
that Nordic HRM operates on the back of an existing collaborative labor market and a
social model where, compared to most other regions, egalitarian values are to the fore, a
context that affects the status of HRM and HRM practices pursued in the five Nordic
countries.
In Chapter 11, Morley, Kohont, Poór, Kazlauskaitė, Kabalina and Blštáková examine
HRM in the postsocialist region of central and eastern Europe. They commence with a
background discussion of the evolution of HRM in the region under three key periods,
namely, the socialist period, the transition period, and the contemporary period. They
then turn to providing a discussion of a selected number of particular historical and
contextual factors that account for some of the commonalities and differences exhibited
in contemporary HRM in the region. Finally, drawing on Cranet data, they provide a
summative account of selected aspects of organizational-­level HRM policy and practice
in the region.
Chapter 12, by Trullen and Obeso, provides an overview of the HRM landscape in
Latin Europe in the early twenty-­first century. Latin European countries are commonly
associated with lower levels of active population, weaker systems of social protection,
higher rates of self-­employment, and a dualistic labor market. Drawing again on Cranet
data, the authors observe significant variance in HRM among the Latin European coun-
tries under examination, along with some shared traits. They find that the HRM depart-
ment typically has a low degree of influence on strategic decision-­making; there is lower
investment in training and development and less involvement by line management in
the management of employees. The Latin model also reveals a greater level of labor
unrest relative to its European counterparts.
Aparecido Costa de Amorim and Carvalho Neto focus on the Latin American con-
text with a particular focus on the Mercosur bloc in Chapter 13. They examine key fea-
tures of both the HRM and the industrial relations systems in operation in the region. In
particular, they examine whether the dissemination of HRM practices in an institu-
tional setting that emphasizes hierarchy and market characteristics will also produce
some kind of convergence in these practices. They explore the extent to which the rather
different national institutional environments generate similar or different HRM prac-
tices. They suggest that the framework explored in the chapter could serve as a useful
theoretical point of departure for identifying both national and regional contextual
influences on HRM and industrial relations in the Latin American context and could
open up new lines of inquiry, in particular, on the likelihood of convergence or diver-
gence in HRM in the region.
Chapter 14 turns to HRM in the (sub-­Saharan) African context. Horwitz and Ronnie
provide a critical overview of the evolving body of research on HRM, labor market
developments, insights regarding cross-­cultural diversity, specific HR practices, issues
 Contextual Approaches to Human Resource Management   13

pertaining to the efficacy of the adoption of Western and East Asian international HRM,
and employment relations in selected African countries. Among other things, they find
evidence of increasing research on HRM issues and mergers and acquisitions, on the
impacts of privatization on HRM, on knowledge appropriation, on HIV/AIDS policy
implementation issues, and on sustainable development. Despite a burgeoning research
agenda, they highlight that there are still unexplored issues relating to African manage-
ment and HRM and that new findings could reshape the research agenda, along with
HRM policy and practice.
In Chapter 15 on HRM in the Middle East, Haak-­Saheem and Darwish provide a
review on the myriad of terms and geographies that have been used to describe the
Middle East and highlight the dearth of relevant literature on HRM in the region. They
then explore the importance of the Middle East’s unique institutional and cultural con-
text for HRM and the implications of this for theory and practice. In particular, they
examine the relative impact of context on HRM in general before looking at a number of
specific examples of some of the Middle Eastern countries. This chapter concludes with
setting down several important areas for future research.
Chapter 16, by Cooke, Supangco, and Rupidara, reviews key characteristics and devel-
opments of HRM in Asian countries against the backdrop of their rich historical fea-
tures and the rapidly changing landscape on many fronts. It takes stock of what has been
researched in the HRM field and the theoretical perspectives underpinning it. They
highlight the growing trend toward positivist HRM studies of hypothesized organiza-
tional conditions and individual behaviors, at the expense of in-­depth qualitative stud-
ies of the motivations, actions, and interactions of social groups, and outcomes in
specific organizational settings. Set against this development, they argue that the under-
standing of people management in workplaces in Asia must take into account a range of
institutional, cultural, organizational, and individual factors. They suggest that, in order
to add social value and extend intellectual horizons, HRM research in Asia needs to
more fully engage with real and live issues that are confronting employing organizations
and individuals.
Finally, in this section on regional and cultural clusters, we address the fundamental
issue of convergence. The question of whether HRM systems and approaches are subject
to convergence, in particular as a result of a protracted period of globalization and the
spread of practices by multinational enterprises (MNEs), is important because MNEs
are powerful players in the landscape of international business and serve as purveyors of
specific HRM practices. As they spread their influence around the world, as markets
become more international, and as money moves around the world at an ever more
frantic pace, might we expect there to be pressures on the most expensive element of
operating costs for most organizations—the cost of their people—to become more com-
petitive? And might that lead to the most cost-­effective ways of managing people to
become more common across the globe? Many years ago, Rosenzweig and Nohria
(1994) noted that HRM was the most national of management activities: It is relatively
easy to have similar information technology systems or similar marketing campaigns in
different countries, but institutional and cultural differences between countries seem to
14   Parry, Morley, and Brewster

be keeping their recipes for managing people distinct (Farndale, Brewster, Ligthart, &
Poutsma, 2017; Mayrhofer, Brewster, Morley, & Ledolter, 2011; Mayrhofer, Morley, &
Brewster, 2004). This is a nuanced picture and depends to a considerable extent on how
we define the construct of convergence: It seems that aspects of HRM that are institu-
tionally constrained remain nationally distinctive, for aspects that are less institution-
ally constrained the rhetoric, at least, and perhaps the practice may be converging. In
Chapter  17, Mayrhofer, Brewster, and Pernkopf tackle the debate on convergence in
HRM and cast particular light on the role of time and whether it changes the relation-
ship between countries in the way that they manage HRM. The chapter addresses the
notion of convergence in three steps. First, it examines a range of conceptual views
about what convergence means in different theoretical traditions and discourses.
Second, based on that examination, it offers a balanced overview of the conceptual and
empirical evidence about how HRM has been developing in different contextual set-
tings over time, teasing out what we know for sure and what is still open for speculation.
Third, the chapter outlines some promising options for future research at the concep-
tual, empirical, and practical levels.

Sector and Organizational Influences

One of the key factors that will make a difference to HRM, even within countries, is
organizational ownership. Most of what we know about HRM comes from the private
sector: THe bulk of the research and publications that form the bedrock of our knowledge
about, and understanding of HRM, concern the private sector. There are some studies of
the effects on HRM of ownership in the privately owned sector—looking at the effects of
different forms of equity investment (Bacon, Wright, Meuleman, & Scholes, 2014) and
differences between equity investment from different countries (Guery, Stévenot,
Wood, & Brewster, 2017) and in different countries (Bacon, Wright, Demina, Bruining, &
Boselie,  2008). Generally, however, the private sector overall has been taken as the
­reference category. In an attempt to explicate sectoral and organizational meso-­level
influences on contextual determinism and examine some of the less studied sectors of
the economy, our contributors look in some detail at the public and not-­for-­profit sec-
tors (see also Brewster & Cerdin, 2018). We include a chapter on small and medium-
sized businesses, specifically family businesses—a category that probably constitutes
well over 90 percent of all the organizations that there are around the world and about
whose people management (despite some fascinating insights: Patel & Cardon, 2010;
Shulz, Bennett, & Ketchen, 1997; Stavrou-­Costea & Manson, 2006; Verreynne, Parker, &
Wilson, 2013) we know extraordinarily little. Other chapters in this section of the book
examine the issues of trade union contexts and the particularly relevant case of MNEs.
With respect to MNEs, Poór et al. (2014) note that the ratio of people employed by
MNEs is significantly higher in many transitional economies than in most Western
ones, making them powerful, if sometimes “ambiguous” (Cooke, Wood, Psychogios, &
Szamosi, 2011, p. 371), actors in these locations, with many MNEs playing a direct part in
 Contextual Approaches to Human Resource Management   15

the very construction of the environment of developing country contexts in which they
have chosen to locate. In Chapter 18, Rupidara examines HRM in MNEs in one such
developing country context, namely, Indonesia. Employing both process and institu-
tional perspectives to understand HRM in MNEs, the author casts light on how HRM
systems within subsidiaries of MNEs, particularly in developing country contexts in
Asia, are constructed and operate. Through a secondary analysis of published and
unpublished materials, he highlights several multilevel contextual factors that influence
the practices of HRM in MNE subsidiaries in the developing country context.
Chapter 19 explores aspects of HRM in a public-­sector context. Leisink, Borst, Knies,
and Battista reiterate the unique contextual features that pertain to the public sector despite
decades of reforms in some countries to reorient organizations to private-­sector man-
agement principles. They note the lack of evidence on public-­sector/private-­sector dif-
ferences in HRM practices. Using Cranet data, they examine whether public-­sector
institutional characteristics affect the application of HRM practices as theoretically
expected. Their results show that, compared to twenty years ago, HRM in public organi-
zations continues to differ in some respects from HRM in private-­sector organiza-
tions—but not in others. The traditional belief that public-­sector HRM is not as squarely
focused on efficiency and effectiveness still holds, with the prevailing public service
ethic and the resilience of collectivized industrial relations being suggested as contribu-
tory factors. Conversely, they note that the traditional public-­sector HRM orientation
on employee well-­being is less distinctive, a development they suggest may likely affect
the position of public organizations in the labor market.
Chapter 20 explores HRM in the not-­for profit sector. Here, drawing on Cranet data,
Parry and Kelliher examine the use of HRM practices such as recruitment, selection,
training, reward, performance management, communication, and diversity in not-­for-
profit organizations. In the light of ongoing debates about how the not-­for-­profit sector
differs from, or is similar to, the public and private sectors, they compare the findings
across sectors. They show that many of the HRM practices used in the not-­for-­profit
sector are similar to those used in the public and private sectors, making it difficult to
identify a unique not-­for-­profit approach to HRM. However, they also suggest that
some elements of the commonly cited “values-­based approach” to HRM in the not-­for-
profits remain.
Chapter 21 examines the specific case of HRM in the family business context. In this
contribution, Stavrou argues that family businesses seem to have unique characteristics
that make them different from nonfamily firms in the ways they handle HRM. The
author draws on the utility of three key theoretical perspectives, namely, the resource-
based view of the firm, institutional perspectives, and stakeholder analyses, to advance
understanding of HRM in family businesses. In exploring the direct relationships
between strategic HRM and distal competitive outcomes, Stavrou suggests that the fam-
ily business context seems to fall short compared to its non–family business counter-
parts. She notes that family businesses seem to pay special attention to certain
stakeholders when compared to nonfamily ones, creating the need to explicate the rea-
sons behind such emphasis. Finally, her analysis reveals that family businesses appear
16   Parry, Morley, and Brewster

affected by certain institutional constraints and enablers, necessitating their study in

greater depth and the reasons behind their effects. Her chapter culminates with the
development of a proposed future line of research devoted to the study of HRM in fam-
ily businesses.
The final chapter in our section on meso-­level context—sector- and organizational-
level influences—focuses on HRM in a trade union context. In Chapter 22, Ryan and
Lavelle profile trade unions and their activities across a range of countries. In particular,
the chapter focuses on providing contextual information on levels of trade union den-
sity (both at the national level and within organizations), levels of trade union engage-
ment (trade union recognition), levels of influence that trade unions have in the
workplace, and levels of collective bargaining. Drawing on different data sources, the
authors reveal a picture of diversity across countries in relation to trade union activity
and collective bargaining, although declining levels of trade union density and collec-
tive bargaining coverage are common to many countries.

The Functional Context and Activities

In the final section of the book, we focus on the micro-­level context, examining aspects
of the HRM function, its activities, and its status. In terms of activities, we examine
rewards and appraisals, human resource development, well-­being, and diversity. With
respect to the HRM function, we focus on outsourcing, the profile of the specialist lead-
ing the function, and whether the function is becoming more strategic.
Chapter 23 provides a treatise on individual-­level rewards and appraisal. In this
­analysis, Gooderham and Mayrhofer postulate that individual performance rewards
and individual performance appraisals are core tenets of “calculative HRM.” They then
review cross-­national studies of the adoption of calculative HRM and observe a sub-
stantial influence of national context on its adoption by firms. In terms of how to con-
ceive national context, they observe from research that formal institutional influences
are of more salience than informal influences. In addition, they note that recent research
on the uptake of calculative HRM perceives context as a constraint rather than as a
determinant. While managers have at least some latitude to implement calculative HRM
practices, regardless of context, they suggest that their efforts need to be adapted to, and
sensitive to, prevailing contextual constraints.
Adopting a multilevel and embedded stakeholder approach, Heraty considers expla-
nations of human resource development (HRD) from a variety of perspectives in
Chapter 24. Definitional aspects of learning and development at the organizational level
are first introduced, followed by a deeper consideration of who the different HRD stake-
holders might be at each level and what their priorities might include. Trends in the
macro context for HRD are then discussed, before a review of the organizational-­level
context. Employing Cranet data, an analysis of HRD investment across the countries
surveyed is presented and followed by an analysis of HRD needs identification, targeted
investment, and the common evaluation strategies employed.
 Contextual Approaches to Human Resource Management   17

In addition to the specific aspects of the work of HRM specialists, we also include a
chapter that examines well-­being. The well-­being of workers was one of the long-­term
consequences that Beer et al. (1984) said should be the aim of HRM. Although much of
the literature on employee well-­being argues that it is important because it leads to valu-
able outcomes for the employer, the idea that individuals may have a right to well-­being
has only been resurrected more recently (Boxall & Macky, 2014; Guest, 2002; Van de
Voorde, Paauwe, & Van Veldhoven, 2012). Tregaskis, in her contribution in Chapter 25,
argues that the well-­being of employees through employment practices and skills devel-
opment is gaining greater emphasis in economic growth strategies. She likens it to a new
performance lens that challenges the primacy given to financial metrics over social met-
rics such as health and happiness and brings multiple stakeholder interests into play.
This chapter examines the evidence base for employee learning as a pathway to well-
being, and the case is made for a renewed focus on such learning to enable transforma-
tive change that supports individuals, organizations, and society.
Chapter 26 is focused on the diversity context of HRM. Kramar and Jepsen highlight
that diversity management is composed of demographic, economic, and political con-
siderations as it focuses on managing individual differences. They present models of
diversity management and discuss diversity frameworks from strategic management
through stakeholder approach, social categorization, social identity theory, and social
capital theory. In addition, data on recruitment action programs are presented to dem-
onstrate the varied uptake of particular diversity practices in selected countries.
Opportunities for further research are identified.
The issue of outsourcing of HRM, or of perhaps the more administrative elements of
the  subject, while particularly popular some time ago (Adler,  2003; Gilley, Greer, &
Rasheed, 2004; Klaas, McClendon, & Gainey, 1999), perhaps as a result of consultancies try-
ing to build a market for their outsourcing products, remains a prevalent topic in some
quarters. The public sector is a particular case in point in this regard. In Chapter 27 on out-
sourcing, Lazarova and Reichel provide an overview of the current literature on HRM
­outsourcing. They note that there are few reliable sources on the actual extent to which
organizations implement HRM outsourcing or on its overall impact. Some studies suggest
small positive effects on company performance and mixed effects on outcomes related to
the functioning of HRM departments. The authors present empirical data from a compara-
tive HRM study on the prevalence of outsourcing, yielding insights on how widespread it is,
and suggest future directions for research in the area in order to open new lines of inquiry.
The profile and competencies of HRM directors are crucial in shaping the strategic
role of HRM in organizations. Chapter 28, by Sender, Staffelbach, and Mayrhofer, exam-
ines their profiles. They provide a comprehensive overview of the role of contextual fac-
tors related to both external environment (e.g., national culture, industry) and internal
environment (e.g., ownership, the role of the HRM function, performance, employee
turnover) for the profile of the HRM director. Then, using Cranet data, they explore dif-
ferences in the profile of the HRM director across contexts and suggest reasons for these
differences. Their analysis points to significant profile differences among HRM direc-
tors in relation to education, experience, and gender across contexts.
18   Parry, Morley, and Brewster

Our final chapter focuses on the perennial question of whether HRM functions are
becoming more strategic. Historically, the role of the HRM function in organizations
has been beset by debates about its contribution to and demonstrable impact on the bot-
tom line. In Chapter 29, Farndale and Vidovic unveil the historical development of the
strategic orientation of HRM departments in different regions of the world, providing
both a theoretical base and an overview of current practices and trends. Their answer to
the question, Is the HRM department becoming more strategic? is a qualified yes. In
their analysis, the trends over time and across contexts appear to suggest directional
convergence in the HRM department achieving a strategic role, though there are obvi-
ous differences in the pace at which this is being achieved. They find clear evidence of a
connection between how advanced an economy is and the extent to which the HRM
department can be more strategic.

Acknowledgments
As with all handbooks, the production of this volume has involved a sustained collective effort
from a cohort of scholars with whom we have had the pleasure of working. While hard choices
had to be made about various aspects of content, our guiding principle revolved around strik-
ing a balance between adequate coverage and appropriate depth. The extent to which that bal-
ance has been appropriately struck is best judged by you, our readers.
As editors, we want to thank some very important people. First, we thank the team at Oxford
University Press for their support—and indeed their patience—as we worked to develop this
handbook. Our contributors, a highly diverse group of scholars in their own right, have pro-
duced insightful summaries of the state of the art on their area and helped us to achieve our aim
of offering conceptual and empirical analyses of different elements of context through a range
of lenses. Behind our contributors stand an army of scholars and researchers who have pro-
vided much of the understanding that we and our contributors rely on. In front of our contrib-
utors, as it were, stand you, the readers of the handbook. We want to thank you for looking
through it and hope that it is helpful to you. We wish you the best of luck with your teaching
and your research, and above all, perhaps, we hope that you enjoy reading some of the contri-
butions in the handbook.

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 section 1

T H E OR ET IC A L
AND
C ONC E P T UA L
L E NSE S
 chapter 2

The Cu ltu r a l L ens

Hilla Peretz and Lena Knappert

Mahatma Gandhi said, “A nation’s culture resides in the hearts and in the soul of its
people.” But what is culture? And why is it important to understand culture as a contex-
tual variable? In this chapter, we will answer those questions and discuss why and how
culture is an important aspect of the human resource management (HRM) field, as well
as how it accounts for differences in HRM between organizations operating in diverse
cultural contexts.
We note that the study of the effect of culture on HRM policies and practices is not
limited to cultural differences at the national level, but also covers organizational (e.g.,
Aycan, Sinha, & Kanungo, 1999; Taylor, Levy, Boyacigiller, & Beechler, 2008) and indi-
vidual (e.g., Probst & Lawler, 2006; Stone, Stone-­Romero, & Lukaszewski, 2007) cul-
tural variances. However, this chapter will focus on the role of national cultural
differences. In the following sections, we first define culture, elaborate on the origin and
development of this concept, and review leading frameworks of culture. Subsequently,
drawing on prominent studies in the field, we discuss why and how culture is an impor-
tant variable for understanding HRM in context, specifically from a comparative per-
spective. Finally, we discuss the implications for practice, the limitations of cultural
perspectives to HRM, and conclude with some directions for future research.

Defining and Measuring Culture

The literature contains many definitions of culture. In fact, anthropologists Kroeber and
Kluckhohn (1952) once identified over 160 different definitions. They then offered an
inclusive definition of culture, namely, “Culture consists in patterned ways of thinking,
feeling and reacting, acquired and transmitted mainly by symbols, constituting the dis-
tinctive achievements of human groups, including their embodiments in artifacts; the
essential core of culture consists of traditional ideas and especially their attached values”
(Kroeber & Kluckhohn,  1952, p. 181). Similarly, Hofstede (1984, p. 21) offers his own
­definition, whereby “culture is the collective programming of the human mind that
26   Peretz and Knappert

­ istinguishes the members of one human group from those of another. Culture, in this
d
sense, is a system of collectively held values.”
The roots of the modern term culture can be traced to the ancient Roman Cicero
(106–43 bc), who, in his Tusculanae Disputationes, wrote of a cultivation of the soul (see
Peabody, 1886). The anthropologist Edward Burnett Tylor (1832–1917) defined culture as
“that complex whole which includes knowledge, belief, art, morals, law, custom and any
other capabilities and habits acquired by man as a member of society” (Tylor, 1871, p. 54).
Alternatively, in a modern variation, culture is defined as “an adaptive system that links
groups of people and their adapted behavioral patterns to the ecological systems in
which they live” (Hall, 1959), or “a set of parameters that differentiate collectivities from
each other in a meaningful way” (Chhokar, Brodbeck, & House, 2008).
It has been common to conceptualize and measure culture through various value
dimensions (Hofstede, 1980; Schwartz, 1994; Trompenaars & Hampden-­Turner, 1997).
Values at a national level are the means by which behaviors and beliefs of members of
the larger society can be coherently interpreted. Researchers have made several attempts
to define and classify national values (e.g., Aycan et al., 2000; Hofstede, 1991; Schwartz,
1999; Trompenaars, 1993). Common themes in most of these definitions and classifica-
tions are that cultural values are typically shared by members of society, are passed from
older to younger members, and shape a collective perception of the world (Adler, 2002).
Another important differentiation is the emic versus etic approach to defining and
measuring culture. In cross-­cultural studies, the emic approach is based on the assumption
that at least some cultural dimensions are culture specific and cannot be used to analyze
cultures of different societies. Unlike universal cultural dimensions that are used to
describe cultures relative to each other, emic studies are unique to specific cultures and are
used to describe each culture independently. On the contrary, the etic approach assumes
that there is a set of universal cultural dimensions that are equally relevant to all cultures.
The described frameworks in this chapter use the etic approach. Although the emic
approach (for example, cultural metaphors) was also used in ­several cross-­cultural studies
(e.g., Gannon, Locke, Gupta, Audio, & Kristof-­Brown, 2005–2006), the etic approach has
dominated the field of cross-­cultural studies. While reducing the concept of culture to a lim-
ited number of value dimensions is not without criticism, this approach allows for compa-
rability across cultural studies and provides valid measures for a highly abstract construct.

Models of Culture

In recent decades, six rigorous, inclusive frameworks of culture have been developed:
Kluckhohn and Strodtbeck (1961), Hall (1976), Hofstede (1980,  1991), Trompenaars
(1993), Schwartz (1994, 1999), and the Global Leadership and Organizational Behavior
Effectiveness (GLOBE 2004, 2006) frameworks. Recently, a seventh framework of cul-
ture has been advanced: Gelfand et al.’s (2011) framework of cultural tightness–looseness.
Each framework highlights different aspects of societal beliefs, norms, and values and
serves as the starting point for understanding different layers of culture, for testing
antecedents of national culture, and for assessing cultural effects on management in
general and HRM in particular. Table 2.1 provides a summary.
 The Cultural Lens   27

Table 2.1.  Summary of culture frameworks

Framework Based on Cultural dimension Core principles

Kluckhohn & Value ■  Human nature Each society creates a dominant

Strodtbeck orientations ■  Man–nature relationship value system in response to
(1961) ■  Human activity universal problems
■  Social relation with people
■  Time sense
Hall (1976) Dimensions of ■  High context vs. Culture can be characterized according
context low context to communication styles by referring
to the degree of nonverbal context used
in communication
Hofstede Value ■  Collectivism vs. The model is empirically driven
(1980) orientations individualism Based on the assumption that
■  Masculinity vs. femininity different cultures can be
■  Power distance distinguished based on differences
■  Uncertainty avoidance in what they value
■  Long-­term vs. short-­term
orientation
Trompenaars Dimensions of ■ Universalism–particularism Building on the work of Hofstede
(1993) values and ■ Individualism–collectivism Focused on variations in both
personal ■ Specific–diffuse values and personal relationships
relationship ■ Neutral–affective across cultures
■ Achievement–ascription
■  Time perspective
■  Relationship with
environment
Schwartz Value ■  Conservatism vs. autonomy Cultural adaptations to resolve
(1994) orientations (intellectual autonomy and basic needs of human beings
affective autonomy)
■  Hierarchy vs. egalitarianism
■  Mastery vs. harmony
GLOBE (House Value ■  Institutional collectivism Building on the framework of
et al., 2004) orientations ■  In-­group collectivism Hofstede
■  Power distance Focused on how cultural values relate
■  Uncertainty avoidance to organizational practices
■  Gender egalitarianism
■  Humane orientation
■  Performance orientation
■ Assertiveness
■  Future orientation
Gelfand et al. Social norms ■  Tight vs. loose Focus on the strength of social norms
(2011) orientation within societies
28   Peretz and Knappert

Kluckhohn and Strodtbeck’s Framework

Kluckhohn and Strodtbeck (1961) suggested one of the earliest models of culture that
has served as a principal foundation for several later models. They proposed a theory of
culture based on value orientations, arguing that there are a limited number of universal
problems that are common to all human groups, but for which various human groups
find different solutions based on their values and preferences. The universal problems
are the relationship with nature, attitudes to time, views of human nature, activity, rela-
tionships between people, and space. They suggested that in responding to these prob-
lems, any given society creates a dominant value system consisting of five basic value
orientations with several subdimensions. The major orientations are human nature
(evil, mixed, good), man–nature relationship (subjugation, harmony, dominant), human
activity (being, becoming, doing), social relation with people (hierarchical, collateral,
individual), and time sense (past, present, future). Although Kluckhohn and Strodtbeck’s
(1961) framework has been adopted by some researchers to explain variations in HRM
practices across countries (e.g., Aycan, al-­Hamadi, Davis, & Budhwar, 2007; Nyambegera,
Sparrow, & Daniels, 2000), this framework has been applied less frequently in HRM
research than later models (such as Hofstede’s model and GLOBE) because of its com-
plexity and the existence of overlaps between the orientations.

Hall’s Framework
Hall (1976) suggested that cultures are characterized according to communication styles
by referring to the degree of nonverbal context used in communication. Hall (2000,
p. 37) argued that “the level of context determines everything about the nature of the
communication and is the foundation on which all subsequent behaviour rests.”
Essential for the understanding of Hall’s concept and the construct of context is a clear
definition of the key terms high-­context culture and low-­context culture. According to
Hall (1976, p. 101), “high-­context transactions feature pre-­programmed information that
is in the receiver and in the setting, with only minimal information in the transmitted
message.” Conversely, in low-­context communication, most of the information is vested
in the explicit code. Because context use varies across cultures, any transaction transfer-
ring meaning can be characterized somewhere on a continuum from high context to
low context, with nearly all possible combinations of context and information, but
without both extremes (high context: only context; low context: only information)
themselves (Hall, 2000). In high-­context societies, the situation, the external environ-
ment, and nonverbal cues are crucial in the communication process. Examples of high-
context cultures include Japan, as well as Arab and southern European societies, where
the meaning of communication is mainly derived from body language, facial expres-
sions, setting, and timing (Boyacigiller & Adler, 1991). Low-­context cultures, in contrast,
appreciate a more clear, explicit, and written form of communication. Anglo-­Saxon and
northern European countries are examples of low-­context societies. The implications of
 The Cultural Lens   29

these different cultural contexts for management studies are evident. However, this
approach fits much better with a generic concept of culture, in the sense of broad cul-
tural communities (e.g., Arabs or Latinos) rather than within the constrained boundar-
ies of a nation-­state.

Hofstede’s Framework
Hofstede (1980,  1984,  1991) developed one of the most influential national culture
frameworks and the most widely used model of cultural differences in the organizational
literature. His model was driven from an empirical study of employees from fifty
countries working for a major multinational corporation (IBM) and was based on the
assumption that different cultures can be distinguished based on differences in what
they value. For example, some cultures have difficulty coping with unanticipated events
and value certainty in their life, while others have a greater tolerance for ambiguity and
seem to appreciate change. Hofstede argues that it is possible to gain extensive insight
into organized behavior across cultures based on value dimensions. Initially, Hofstede
(1980) offered four dimensions: collectivism–individualism (the importance of individual
vs. group interests); masculinity–femininity (assertiveness vs. passivity or material pos-
sessions vs. quality of life); power distance (the appropriate distribution of power in a
society); and uncertainty avoidance (the degree of uncertainty that can be tolerated in
a society). These dimensions are based on four fundamental challenges society faces:
(1) the relationship between the individual and the group, (2) social implications of gender,
(3) social inequality, and (4) handling of uncertainty inherent in economic and social
processes. Later, Hofstede added a fifth dimension based on his research with Bond
(Hofstede, 1991b, Hofstede & Bond, 1988), the dimension of long-­term versus short-­term
orientation (importance of tradition and social obligation vs. being able to adapt).
Although Hofstede’s framework is one of the most widely used models, the framework
is subject to several criticisms, especially in respect to the usefulness of operationalizing
culture through a series of numerically measured dimensions, some preferring to use
richer qualitative techniques (McSweeney, 2002). Country scores are based on matched
samples of IBM employees, which are not necessarily representative of their countries
(Javidan, House, Dorfman, Hanges, & Sully de Luque, 2006). Another major criticism
surrounding Hofstede’s work is that culture does not equate with nations. Hence, it
could not generalize to the culture of a wide range of countries and is reasonable only if
human societies are considered isolated from each other (Baskerville, 2003).

Trompenaars’s Framework
Trompenaars (1993), building on the work of Hofstede, presented a rather different
model of culture, which focused on variations in both values and personal relationships
across cultures. It consists of seven dimensions. The first five dimensions focus on how
30   Peretz and Knappert

people relate to other people: universalism–particularism (whether there is one best

way of doing things vs. changing as a result of unique circumstances), individualism–
collectivism (parallel to Hofstede’s definition), specific–diffuse (whether people are
viewed in their specific role or as a whole person), neutral–affective (whether people
refrain from showing emotional expressions or if this is acceptable and encouraged),
and achievement–ascription (whether people are being judged based on accomplish-
ments or status). The last two cultural dimensions by Trompenaars focus on time
management and society’s relationship with nature: time perspective (whether people
focus on the past or the future in their daily activities) and relationship with environ-
ment (the extent to which people believe they control the environment or it controls
them). The seven dimensions of this model correspond to major cultural values and
appear exhaustive and intelligible. Despite this comprehensiveness, the applicability
of the model is low. In fact, Smith, Peterson, and Schwartz (2002) note that the
­model’s dimensions still have not been reliably measured, and Yeganeh, Su, and
Sauers (2009) indicate that some of the framework dimensions (such as universalism–
particularism, individualism–collectivism, and diffuse–specific) are conceptually
overlapping. Further, the framework does not provide a practical approach to mea-
suring culture, and as a result, its applicability in cross-­cultural research is decreased,
especially in the case of causal design, which requires conceptually separated con-
structs (Yeganeh et al., 2009).

Schwartz’s Framework
Schwartz (1994, 1999) reasoned that since values are motivational goals, basic human
values might be derived by considering the most basic needs of human beings:
(1) biological needs as individuals, (2) the need to coordinate our actions with others,
and (3) the need for groups to survive and flourish. Hence, the cultural adaptations to
resolve each of these needs underscore Schwartz’s framework, which consists of three
bipolar dimensions, defining seven national–cultural domains. The first dimension con-
trasts conservatism versus autonomy (the person is embedded in the collectivity vs. the
person is viewed as an autonomous, bounded entity), whereby two types of autonomy
are distinguished: intellectual autonomy (the right of individuals to follow their own
intellectual directions) and affective autonomy (the right of individuals to pursue their
own affectively positive experiences). This dimension resembles Hofstede’s individualism–
collectivism dimension. However, while Schwartz’s dimension focuses on the extent to
which a society views the individual as either autonomous or embedded in the group,
Hofstede’s individualism–collectivism focuses on the contrast between individual goals
and group goals. The second dimension contrasts hierarchy versus egalitarianism (the
legitimacy of fixed roles and resource allocation vs. equality and social justice). The
third dimension contrasts mastery versus harmony (to actively seek, master, and change
the world; to bend it to our will and to assert control versus to accept the world as it is,
 The Cultural Lens   31

trying to preserve it). Furthermore, Schwartz (1994) provides ratings on the seven
domains for thirty-­one countries, basing his framework on the empirical analyses of
country-­level responses of large groups of people (mostly students and teachers,
however). There is a close match between the definition of the seven cultural domains
and the items, and the items were shown to have similar meanings across cultures. Given
the strong theoretical foundations of Schwartz’s model, it offers great potential for cross-
cultural HRM studies (e.g., Snir & Harpaz, 2009).

Global Leadership and Organizational Behavior

Effectiveness Framework
Building on the framework of Hofstede (1980), the GLOBE project (House, Hanges,
Javidan, Dorfman, & Gupta, 2004) offers a comprehensive, nine-­dimension framework
to explain cultural similarities and differences. While several of these dimensions have
been identified previously (e.g., individualism–collectivism, power distance, and
­uncertainty avoidance), others are unique (e.g., gender egalitarianism, humane orienta-
tion, performance orientation, and assertiveness). Gender egalitarianism refers to the
degree to which societies or organizations minimize differences in gender roles.
Societies low in gender egalitarianism are characterized by more rigid sex roles, higher
occupational sex segregation, and lower acceptance of women as decision-­makers or
authority figures. Humane orientation refers to the extent to which individuals in societ-
ies or organizations encourage and reward individuals for being fair, altruistic, friendly,
generous, caring, and kind to others. Societies high in humane orientation are likely to
promote sensitivity to all forms of racial discrimination. Performance orientation refers to
the extent to which a community encourages and rewards innovation, high standards,
excellence, and performance improvement. Societies high in performance orientation
value competitiveness, are likely to emphasize training and development, and view feed-
back as important for performance improvement. Finally, assertiveness is the degree to
which individuals are assertive, confrontational, and aggressive in their relationships
with others. High-­assertiveness societies are characterized as valuing competition, suc-
cess, and progress, while low-­assertiveness societies are characterized as valuing coop-
eration and warm relationships (House et al.,  2004). Moreover, GLOBE explicitly
differentiates between societal values and societal practices. The distinction made
between values and practices is similar to DeMooij’s (2005) distinction between “desir-
able” and “desired” values. Desirable refers to social norms that are held in a c­ ulture and
by an individual (corresponding to the “should be” on the GLOBE values), whereas
desired refers to individuals’ choices (corresponding to the “as is” on the GLOBE prac-
tices). Both values and practices are often contradictory in a culture and are therefore
seen as paradoxical values, which are found in many cultures. Given the fact that values
and practices in a society may be inconsistent and sometimes even contradictory, it is a
major strength that GLOBE clearly distinguishes between both levels of cultures.
32   Peretz and Knappert

Compared with the previously discussed frameworks, GLOBE presents the most
current data on cultural dimensions and it does so for a large number of c­ ultures
(sixty-­two cultures). A major limitation of the GLOBE study is its relatively small
sample, with an average of only about 250 subjects per culture. A second s­ erious limi-
tation is that respondents were middle managers in corporations. As with the
Hofstede study (where IBM employees were surveyed), a single (and small) group
within each culture was analyzed and used as representative of the entire country.
Transfer to other groups (for instance, consumers) remains speculative and requires
empirical testing.

Gelfand’s Framework of Tightness–Looseness

Recently, Gelfand et al. (2011), building on the definitions by American Finnish anthro-
pologist Pertti  J.  Pelto (1968), formulated the tightness–looseness framework. Pelto
(1968) was the first to suggest that tightness–looseness is an important cultural dimen-
sion that could be relevant for comparing societies, arguing that traditional societies
varied on their devotion to social norms. He identified the Japanese, Pueblo Indians,
and Hutterites as examples of tight societies, in which norms were expressed very clearly
and unambiguously and severe sanctions were imposed on those who deviated from
norms. By contrast, he identified the Skolt Lapps of Northern Finland and the Thais as
loose societies, in which norms were expressed through a wide variety of alternative
channels and where there was a general lack of formality, order, and discipline and a
high tolerance for deviant behavior.
According to Gelfand et al. (2011), societal tightness–looseness has two key components:
the strength of social norms, or how clear and pervasive norms are within societies, and the
strength of sanctioning, or how much tolerance there is for deviance from norms within
societies. More specifically, tight societies are characterized by stronger norms, more
restrictions regarding the range of permissible behavior, and stricter punishment of
deviant behavior. Tight societies have more authoritarian governments, more media
restrictions, fewer civil liberties, and greater use of the death penalty; have much more
constraint in everyday situations; and have citizens who exhibit greater prevention
focus, cautiousness, impulse control, need for structure, and self-­monitoring ability rel-
ative to loose societies. Tight societies have also experienced a greater number of eco-
logical and historical threats, including fewer natural resources, more natural disasters,
and a greater incidence of territorial threat, higher population density, and greater
pathogen prevalence compared to loose societies. Such threats increase the need for
strong norms and the sanctioning of deviant behavior, which help humans coordinate
social action for survival. India, South Korea, Norway, and Pakistan are examples of
tight societies. In contrast, loose societies have fewer ecological and historical threats
and can “afford” more deviant behavior. Israel, Hungary, Estonia, and Ukraine are
examples of loose societies.
 The Cultural Lens   33

Culture and Human Resource

Management Practices

In the literature to date, two particular approaches have been employed to inform the
relationships between HRM and culture: the international HRM approach and the
­comparative HRM approach.
International HRM has been defined as HRM issues, functions, policies, and
­practices that result from the strategic activities of multinational enterprises (MNEs)
(Tayeb, 2004). Here, the emphasis is on the MNEs’ ability to attract, develop, and deploy
talented employees in a multinational setting and to get them to work effectively despite
differences in culture, location, or language. International HRM involves the same
­elements as domestic HRM but is more complex to manage, in relation to the diversity
of national contexts and the makeup of the workforce. In particular, international HRM
challenges the balance between localization (i.e., an adaptation of HRM to national
­cultures and employment practices) and standardization (i.e., an adaptation of HRM to
corporate culture and practices).
Comparative HRM, in contrast, is a systematic method of investigation that seeks to
explain the patterns and variations encountered in cross-­national HRM (Brewster,
Mayrhofer, & Farndale, 2018). Extending sheer descriptions of HRM institutions and
practices in single societies, comparative HRM literature analyzes different national
business systems that arise from differences in specific historical, cultural, and institutional
heritage in certain countries. For example, comparative differences occur as a result of
significant historical events, such as the process of industrialization, or as a result of the
legacy of premodern forms of social organization.
Moreover, the dialogue between HRM and culture can be discussed from at least two
angles. On the one hand, culture is described as a predictor of HRM strategies and
­practices, mainly based on contextual theories, which consider the influence of the
external context on managerial decisions (Rousseau & Fried, 2001). On the other hand,
culture is described as a moderator between HRM practices and outcomes, mainly
based on fit theories, which broadly emphasize the importance of the fit between
­organizational practices and the larger social context. Here, the idea is that positive work
outcomes result from a high level of fit (Schneider, 2001).
In the following sections, we focus on the cultural aspect of the comparative HRM
approach, examining how culture shapes managerial choices across national contexts
and how these choices may explain differences in HRM. Whereas a range of HRM
­activities are subject to the influence of culture, we limit our review to the following
seven key HRM practices: recruitment and selection, performance management and
performance appraisal, training and development, compensation and benefits,
­flexible work arrangements, diversity management, and high-­performance work
­systems (HPWS).
34   Peretz and Knappert

Recruitment and Selection

Recruitment and selection are crucial HRM activities to attract, select, and retain the
talents that will help the company to achieve its goals. While the literature emphasizes in
particular the impact of recruitment activities (such as job advertisements versus informal
recruitment) and selection processes (such as interviews versus tests) on candidates’
organizational attractiveness (e.g., Ma & Allen, 2009; Walker et al., 2013), the effect of
staffing practices on employees’ job satisfaction, commitment, and intent to turnover
after joining the company has been discussed as well (e.g., Jiang, Lepak, Hu, & Baer, 2012;
Verquer, Beehr, & Wagner, 2003). Given cultural differences, it is likely that candidates
and employees across countries respond differently to the various recruitment activities
and selection processes that companies can choose from. Yet, some scholars highlight
that research on staffing practices across cultures is insufficient (Ployhart, 2006; Ployhart &
Schneider, 2012). Indeed, most cross-­cultural analyses in this field have remained at the
conceptual level (e.g., Aycan,  2005; Dipboye & Johnson,  2012; Ma & Allen,  2009;
Steiner, 2012; Stone et al., 2007) and empirical evidence including more than three coun-
try samples is scarce (for an exception, see Ryan, McFarland, Baron, & Page, 1999).
In relation to recruitment, organizations in collectivistic societies generally follow a
more personal, relationship-­oriented approach and are therefore assumed to prefer
informal and network-­based recruitment activities (Aycan, 2005; Steiner & Gilliland,
2001; Stone et al.,  2007). Similarly, based on case studies in the Middle East, Iles,
Almhedie, and Baruch (2012) lay out how the value of wasta—which is prominent in the
Middle East and refers to connections and networks—often leads to “wasta-based
recruitment” through word-­of-­mouth in informal networks. In individualistic societies,
however, organizations are assumed to highlight individual skills and competition and
are therefore more likely to recruit outside the organization (Dipboye & Johnson, 2012;
Ma & Allen, 2009).
Collectivism–individualism is also assumed to have an impact on the selection
­methods that organizations choose, such that in collectivistic societies, based on their
preference for a more personal approach, organizations prefer selection interviews,
while in individualistic societies individual selection tests are more popular. Further, in
their survey of 959 organizations in twenty countries, Ryan et al. (1999) found the
dimension of uncertainty avoidance to be of importance. In particular, they showed
how organizations in high uncertainty avoidance societies not only apply more test
types but also use them more extensively. Moreover, they found that these organizations
also conduct more interviews when filling a position.

Performance Management and Performance Appraisal

In programs for the appraisal and management of employee performance, organiza-
tions pursue the goal of developing “techniques that will help employees meet their per-
sonal goals (for growth, development and personal success), but which will also help the
 The Cultural Lens   35

organisation to function more effectively” (DeNisi & Smith,  2014, p. 128). Hence,
­performance appraisal and performance management are directly tied to the company’s
strategy and objectives (Aguinis, 2013; Armstrong, 2009). With performance management
being defined as an “extension of performance appraisal” (Lindholm, 2000, p. 45), five
key elements of performance management emerge from the literature: appraisal crite-
ria, the actors involved, applied methods, consequences of the appraisal, and the way the
feedback is provided (Festing, Knappert, Dowling & Engle, 2012).
While previous research has also put substantial effort into understanding best
­practices and universals—“principles that lead to effective performance management
regardless of cultural contexts” (Aguinis, Joo, & Gottfredson, 2012, p. 385)—a substan-
tial body of literature points out country-­specific peculiarities and cultural variation in
performance management. As Festing et al. (2012) identified in their literature review,
the most commonly used dimensions for the investigation of cultural differences in
­performance management are collectivism–individualism and power distance. For
example, with regard to the first key element—appraisal criteria—Aycan (2005) proposes
that in individualistic societies, appraisals are more likely to be based on individual out-
put. Conversely, in collectivistic societies, team performance and work processes are
more relevant for appraisal (Milliman et al.,  1998; Varma, Budhwar, & Singh,  2015).
Indeed, in their studies on performance management in highly collectivistic China, Bai
and Bennington (2005) found personal relationships to be the most important criterion,
while performance management in the highly individualistic United States is often asso-
ciated with a strong emphasis on results and individual achievements (Schneider &
Barsoux, 2003).
With regard to cultural variations on the second key element of performance man-
agement—the actors—previous literature has predominantly highlighted the important
role of power distance (e.g., Aycan, 2005; Festing & Barzantny, 2008; Milliman et al.,
1998). For instance, using Cranet data in a study across twenty-­one countries (for more
on the Cranet project, see Brewster, Mayrhofer, & Morley, 2004), Peretz and Fried (2012)
found organizations in low power distance societies to be more likely to rely on multiple
sources of raters (e.g., supervisors, subordinates, peers, and employees themselves)
compared to organizations in high power distance societies. Furthermore, their study
showed that in low power distance societies, organizations that have more sources of
raters as part of their performance appraisal are more likely to have lower rates of turnover
and absenteeism than are organizations that rely on fewer sources of raters.
Comparatively fewer studies have examined cultural variation in the third key
­element—appraisal methods. However, the cultural dimension that is mainly associated
with varying levels of the formality and explicitness of appraisal methods is uncertainty
avoidance (Festing et al.,  2012; Snape, Thompson, Yan, & Redman,  1998). Indeed,
analyzing the congruence between uncertainty avoidant societies and the prevalence of
formal performance appraisal, Peretz and Fried (2012) found that in societies with high
uncertainty avoidance, organizations that apply formal appraisal systems show lower
organizational absenteeism and turnover rates than organizations without formal
appraisal systems.
36   Peretz and Knappert

Several studies investigate the impact of culture on the fourth key element—the
appraisal’s purposes and consequences, such as career and salary decisions and HRM
planning (e.g., Milliman, Nason, Zhu, & de Cieri, 2002; Peretz & Fried, 2012; Shen, 2004;
Snape et al., 1998). For example, Varma et al. (2015) highlight the crucial country dif-
ferences regarding this element, such that in South Korea “the feedback and develop-
mental role of performance appraisal is increasingly emphasised,” whereas in the United
States, appraisals “are primarily used for administrative purposes, such as awarding merit
raises, and informing promotion decisions, with the use of performance management
systems (PMS) for developmental purposes remaining rather limited” (Varma et al., 2015,
pp. 414–415). Indeed, when empirically examining the purposes of performance apprais-
als in ten countries, Milliman et al. (2002) found some support for those patterns, such
that, for example, in Korea the administrative purposes of performance management
systems (like pay and promotion) were much less appreciated compared to other coun-
tries. Peretz and Fried (2012) provided an explanation for those findings, drawing on
individualism–collectivism. In fact, they found that in societies high on collectivism,
organizations are more likely to focus on broader organizational purposes (such as HRM
planning and development) as opposed to individual purposes (such as promotions) and
that, therefore, organizations following developmental purposes within their perfor-
mance appraisal systems are likely to have lower rates of absenteeism and turnover.
Finally, the way the appraisal is communicated varies substantially across cultures. In
particular, power distance is assumed to have an impact on the openness and direction
(top-­down versus bottom-­up) of feedback (Aycan, 2005; Festing et al., 2012), such that,
for example, high power distance in Hong Kong was seen to reduce subordinates’
­participation and involvement (Entrekin & Chung, 2001), while the opposite was found
to be the case in the low power distance United States, where through interactive and
bottom-­up feedback interviews “the participation from employees’ parts has been insti-
tutionalised” (Feng, Foster, & Heling, 2005, p. 19).

Training and Development

Organizational training is a strategic HRM function, designed to enhance the
­organization’s competitive position through the continuous improvement of its employees’
performance (Goldstein, 1986; Noe, 1986; Wexley, 1984). Training in organizations is a
major managerial tool that utilizes goals in a dynamic organization (Kontoghiorghes,
2001). Although training curricula vary among organizations and are devised for the
specific job, place, and career stage, the purpose of training is rather universal: to
­maximize employees’ abilities by imparting knowledge and skills to them. There is wide-
spread consensus in the HRM literature concerning the importance of training for
­organizational effectiveness. Training has received considerable attention in the com­
parative literature in recent years. Some studies have focused on government policy-
making, managerial practices, and organizational factors (e.g., Bartlett,  2001), while
others focus on the role of culture in training.
 The Cultural Lens   37

Cultural variation exists with regard to the importance of training and development,
the ways in which training needs are determined, the content and methods of training,
and the effectiveness of training methods in different cultural settings. With regard to
the importance of training, there is evidence that fatalistic cultures (i.e., cultures that
believe that controlling the outcomes of one’s actions and changing one’s destiny are
impossible) perceive training and development as less relevant for organizations given
the prevalent assumption that employees’ abilities cannot easily be enhanced (Aycan et al.,
2000). Peretz and Rosenblatt (2011), in a study of 5,991 organizations and twenty-­one
countries based on Cranet data, found that low power distance, high future orientation,
and high uncertainty avoidance predicted increased investment in training. Further, in
performance-­oriented cultural contexts, training and development are usually used as a
tool to improve individual or team performance; however, in collectivistic cultures,
training serves an additional purpose: to increase commitment and loyalty to the
organization (Aycan, 2005; Sinha, 1997). Wong, Wong, Hui, , and Law. (2001) reported
that providing training in Chinese organizations imparted the perception that the
­organization treated employees well. This perception, in turn, encouraged employees to
reciprocate the favor by staying committed to the organization.
The second issue concerns the ways in which training needs are determined. In low
performance-­oriented and high power distance contexts, decisions on who will participate
in training are based on criteria other than job performance. Employees who maintain
good relations with higher management are selected for attractive training programs as a
reward for their loyalty (Sinha, 1997). In collectivistic cultures, there is also in-­group prefer-
ence based on kinship or tribal ties (Wilkins, 2001). Additionally, in collectivistic and high
power distance cultures, training needs are determined by the paternalistic manager in an
authoritarian or consultative way, while in low power distance cultures, training needs are
usually determined jointly by the employee and the superior (Wilkins, 2001).
Regarding methods of training, Savvas, el-­Kot, and Sadler-­Smith (2001) proposed
that cross-­cultural variation in cognitive style must be taken into account in designing
training. Hayes and Allison (1998) found that managers in developing countries were the
most analytical, while those in Anglo, Northern, and Latin European were the most
intuitive. The implications for the design and delivery of training across cultures are
enormous. Analytical thinkers in high uncertainty avoidance and high power distance
cultures perceive the instructor as the “authority” who must provide definitive answers
and guidelines: THey hence prefer one-­way lecturing, rather than participative discussions
(e.g., Parnell & Hatem, 1999). Indeed, Earley (1994) asserted that individualism–collectivism
influences the way in which information was used during the process of training. He
found that group-­focused training (focusing on in-­group capability) was more effective
in improving performance for Chinese participants (highly collectivistic society), while
individual-­focused training (emphasizing personal capability) was more effective for
American participants (highly individualistic society). Furthermore, Reichel, Mayrhofer,
and Chudzikowski (2009) investigated manager development and found that high
uncertainty avoidance and low assertiveness drive managers to pursue internal, system-
atic, and long-­term orientations in personnel development.
38   Peretz and Knappert

Some studies examined the effect of training on organizational outcomes in a cross-

cultural setting. Based on the Cranet survey, Nikandrou, Apospori, Panayotopoulou,
Stavrou, and Papalexandris (2008) found that performance orientation moderates the
relationship between training needs analysis and firm performance. The higher the
­performance orientation, the stronger the relationship between training needs analysis
and firm performance. Finally, Rode, Huang, and Flynn (2016) described how institutional
collectivism moderates the relationship between training (the extent to which ongoing
training was emphasized and delivered) and organizational commitment such that the
relationship is stronger in high institutional collectivism cultures.

Compensation
Compensation refers to the rewards and benefits that employees receive within an
employment relationship. Compensation can be further split into basic salary, incentives,
and tangible and intangible benefits (Berber, Morley, Slavić, & Poór, 2017; Werner &
Ward,  2004). As such, this important HRM activity can have a crucial impact on
employee behavior and organizational effectiveness because it “influences the quality of
the people who apply, the quality of those hired, the likelihood of job acceptance, the
motivation and performance level of the workforce, and the quality of who stays with
the company” (Gupta & Shaw, 2014, p. 1).
Yet the various elements of compensation practices are valued differently across cul-
tures, leading to inconsistencies in their effects on outcomes such as employee motiva-
tion and performance. For example, distinguishing financial and nonfinancial rewards
and their specific effects on performance in the banking industry in Finland and Hong
Kong, Chiang and Birtch (2011) combined qualitative and quantitative methods with
more than five hundred respondents. They found that a financial orientation of reward
systems (such as financial rewards and competitive performance) was more aligned
with the cultural values of Hong Kong (i.e., masculine, high power distance, and low
uncertainty avoidance), while a nonfinancial orientation (alternative work arrange-
ments and training and development) was more aligned with the cultural values of
Finland (i.e., feminine, low power distance, high uncertainty avoidance). Accordingly,
they reported the effects of nonfinancial rewards on employee performance to be stronger
in Finland than in Hong Kong.
Earlier studies on international differences in pay practices showed large cultural
variations with regard to compensation practices. For example, Schuler and Rogovsky
(1998) combined data from Cranet, the International Social Survey Programme, and
IBM–Towers Perrin for their analyses across twenty-­four countries. They found that in
countries with high uncertainty avoidance, seniority-­based or skill-­based compensa-
tion was used more widely, because it offers more certainty. Conversely, they reported
share options and stock ownership to be more congruent with low uncertainty avoid-
ance, high individualism, and low power distance. Moreover, they described individual
incentives to fit better in countries high on individualism. In a more recent comparative
 The Cultural Lens   39

study that also draws on Cranet data, Berber et al. (2017) found power distance and
individualism–collectivism to be significant factors in relation to incentive pay practices
for managers in central and eastern Europe.
Taking this notion a step further, Greckhamer (2015) analyzed chief executive officer
(CEO) and worker compensation and the resulting pay dispersion across fifty-­four
countries. His results showed that high power distance is consistently linked to high
CEO pay (as is a lack of strong collective labor rights and the absence of a strong welfare
state), while low power distance turned out to be an important determinant of high
worker compensation. Greckhamer (2015, p. 808) concluded that “high power distance
facilitates hierarchical compensation systems favoring elites of organisations while its
absence is conducive to egalitarian compensation systems resulting in relatively high
compensation of lower-­level employees.” In earlier studies (Greckhamer, 2011; Tosi &
Greckhamer, 2004), Greckhamer investigated the effect of culture on different com-
pensation levels and the consequences for inequality across occupations (i.e., cleaners,
secretaries, mid-­level managers, CEOs/senior managers) and found a particularly
strong influence of power distance and individualism on inequality.
Finally, in a comparative study of compensation practices across nine countries, Lowe,
Milliman, de Cieri, and Dowling (2002) identified several differences between countries
and regions. Most important, however, they discovered variations in the differences
between “is now” and “should be” scores, that is, the gap between what respondents indi-
cated as current practice and what they wished for. While this gap was the largest for
respondents from the Americas, Asian respondents had comparatively smaller differ-
ence scores. Lowe at al. (2002) speculated that cultural differences in time orientation
were responsible for these findings. In particular, the authors assumed that, given future
time orientation in the West, respondents from the Americas emphasize requirements
for changes, while past time orientation in Asia leads people to emphasize the status quo
and stability in pay practices.

Flexible Work Arrangements

As Ollier-­Malaterre and Foucreault (2017) stated in their recent review and synthesis of
research on work–life research and flexible work arrangements (FWAs), several gaps
remain in our understanding of the role of societal values in relation to global firms’ use
of FWAs and the effects of FWAs on employee and firm outcomes. One of these gaps
concerns the limited range of national cultural values that have been investigated in
relation to FWAs. For example, the individualism–collectivism value dimension, as
defined by Hofstede (2001) and refined by House et al. (2004) in their GLOBE project,
has been extensively researched in relation to FWAs, but several other value dimensions,
such as power distance and performance orientation, which are likely to be important
for explaining the implementation and use of FWAs, have been relatively neglected by
researchers. These gaps are in part the result of a major limitation of previous studies—
their use of samples from organizations that are based primarily in the United States or
40   Peretz and Knappert

Europe (see, e.g., den Dulk, Goreneveld, Ollier-­Malaterre, & Valcour, 2013), neglecting
the increasing prevalence of FWAs across the world in response to global competition
(e.g., Kassinis & Stavrou, 2013; Stavrou, 2005).
Flexible work arrangements describe “practices that afford employees control over
when, where, or how much they work” (Leslie, Manchester, Park, & Mehng, 2012,
p. 1407), such as flexibility with regard to starting and stopping times, home office, or
part-time arrangements. The reported benefits of FWAs are, for example, high levels of
employee job satisfaction, improved organizational attractiveness, and talent retention
(e.g.,  Blair-­Loy & Wharton,  2002; Gajendran & Harrison,  2007). At the same time,
country-­level variables influence individuals’ and employers’ experiences of FWAs,
requiring a specification of these variables and their effects on individual and organiza-
tional outcomes (Ollier-­Malaterre & Foucreault, 2017; Powell, Francesco, & Ling, 2009).
Den Dulk et al. (2013) reported, however, that studies on FWAs often missed the oppor-
tunity of country comparisons and rather focused on single countries, mostly the United
States, the United Kingdom, or Australia. Exceptions to this rule are predominantly
studies emerging from the Cranet network (Kassinis & Stavrou, 2013; Peretz, Fried, &
Levi,  2018; Stavrou & Kilaniotis,  2010; Stavrou, Parry, & Anderson,  2015; Berkery,
Morley, Tiernan & Peretz, 2020; Berkery, Morley, Tiernan, Purtill & Parry, 2017) or
other large-scale investigations (e.g., den Dulk et al., 2013, used data from the European
Foundation for the Improvement of Living and Working Conditions; Masuda et al., 2012,
analyzed data from the Collaborative International Study of Managerial Stress).
Whereas den Dulk et al. (2013) described the negative impact of cultural centrality of
work (i.e., beliefs of work being an obligation and central to society) on the use of FWAs,
other researchers report influences of cultural dimensions such as individualism–
collectivism. For example, studying the impact of employees’ perceived work–life balance
on their job satisfaction, life satisfaction, and mental health by collecting data from 1,416
employees based in six countries, Haar, Russo, Suñe, and Ollier-­Malaterre (2014) found
general support for work–life balance being beneficial for employees from various cul-
tures. However, they also showed how individualism–collectivism and gender egalitari-
anism moderate these relationships, such that high levels of work–life balance had a
more positive effect on job and life satisfaction in gender egalitarian and individualistic
cultures and had more potential to reduce anxiety in gender egalitarian cultures.
Several studies investigated cultural variance in FWAs across cultural clusters. For
instance, in their study with 3,918 managers from fifteen countries, Masuda et al. (2012)
explored the availability of FWAs and their impact on managers’ job satisfaction,
­turnover intentions, and work-­to-­family conflict. They reported their results for three
cultural clusters: the Latin American, Anglo, and Asian clusters. In particular, they
found that managers from the Anglo cluster not only report generally more FWAs but
also show more beneficial effects of flextime on the outcome variables compared to the
other clusters. An earlier study by Stavrou and Kilaniotis (2010) highlighted that
­turnover in the Anglo cluster may increase with a rise in unsocial hours (such as
­overtime or weekend work). In line with Stavrou et al. (2015), they show that, when
­comparing the Nordic and the Anglo clusters, organizations in the Anglo cluster were
less likely to apply FWAs. On a more hopeful note, Stavrou and Kilaniotis (2010) also
 The Cultural Lens   41

indicated a decrease of turnover resulting from more FWAs in the Nordic cluster; they
explain this finding by emphasizing the more favorable institutional environment in
Scandinavian countries (e.g., tighter legislation, stronger union power, collective agree-
ments), but also by pointing to a more “employee friendly culture” in the Nordic cluster.
As Kassinis and Stavrou (2013, p. 474) clarified, “In such cases, culture may be a mechanism
that complements, even drives, both public policies and legislation.” That is, in culture
clusters that score highly on institutional collectivism, people tend to emphasize inter-
dependencies within organizations as well as the collective interests of their members,
leading to more use of FWAs that meet employee needs in the Nordic countries com-
pared to the rest of Europe (Stavrou et al., 2015).
Finally, in a recent study on FWAs in the international environment, Peretz et al.
(2018) confirmed the importance of a “fit” between the use of FWAs and the societal
context. They identified high future orientation, performance orientation, gender
egalitarianism, humane orientation, and assertiveness on the one hand, and low insti-
tutional collectivism, power distance, and uncertainty avoidance practices on the
other hand as strengthening the effect of employee use of FWAs on reduced turnover
and absenteeism. In explaining these findings, the authors speculated that, in a
­societal context that is supportive of FWAs, employees who use FWAs do so without
worrying about potential disapproval by others. Conversely, those who desire to use
FWAs that are inconsistent with the larger society’s cultural practices might face
­disapproval by others or conflict, which may eventually result in employee withdrawal
behavior.

Diversity Management
Diversity management refers to HRM practices that enhance workforce diversity and
include employees with different backgrounds and attributes in the organization.
Without these practices, the diversity of a workforce would remain untapped or might
even lead to negative consequences, such as increased conflict (Konrad, Yang, &
Maurer, 2016; Van Knippenberg, de Dreu, & Homan, 2004). While the importance of
context for diversity management is largely acknowledged (e.g., Jackson & Joshi, 2011;
Joshi & Roh, 2009) and several scholars call for a stronger cross-­cultural emphasis in
diversity research (e.g., Ferdman & Sagiv, 2012; Shen, Chanda, D’Netto, & Monga, 2009),
most country-­specific and comparative contributions on diversity management focus
on its legal aspects (e.g., Klarsfeld, Booysen, Ng, Roper, & Tatli, 2014). As such, the closely
related management of equal opportunities is mainly associated with governmental reg-
ulations (Cooke, 2015; Konrad & Linnehan, 1995), which also show large variation across
countries, yet remain without much reference to cultural perspectives (cf. Özkazanç-
Pan & Calás, 2016).
However, as identified in the GLOBE study, some cultural dimensions are closely
related to the values promoted by diversity programs. In particular, gender egalitarianism
includes the acceptance of women in positions of authority and less occupational sex
segregation, and a humane orientation endorses sensitivity to racial discrimination
42   Peretz and Knappert

(House et al., 2004). Indeed, in their study on diversity programs in over five thousand
organizations in twenty-­two countries, Peretz, Levi, and Fried (2015) found that diver-
sity programs1 are more likely to be applied by organizations in societies with cultural
values favoring diversity (such as gender egalitarianism, future orientation, and perfor-
mance orientation), while in societies with high power distance, collectivism, and
uncertainty avoidance, diversity programs are less common. Moreover, Peretz et al.
(2015) reported that in societies with cultural practices that are high in humane
­orientation and future orientation, diversity programs have a stronger impact on
­organizational outcomes such as reduced absenteeism and turnover because of the con-
gruence between organizational practice and national cultural practices. Conversely,
diversity programs that are not congruent with the societal culture (which is the case for
countries characterized by high institutional collectivism, power distance, and uncer-
tainty avoidance) led to higher rates of employee withdrawal behavior.
Other studies investigating the moderating role of culture on the effects of diversity
management could, for example, refine what is known about the link between diversity
and innovation. Van der Vegt, Van de Vliert, and Huang (2005) conducted a study across
twenty-­four countries and 248 organizational locations of one MNE in which they
showed that task-­oriented diversity (such as organizational tenure and functional
­background) was negatively related to innovative climate in high power distance coun-
tries, but positively related to innovative climate in low power distance countries.
Further, analyzing the moderating effect of age on the relationships between job
­characteristics and job satisfaction in Japan, the United States, and Germany, Drabe,
Hauff, and Richter (2015) found several generational differences across the three
­countries. For example, older employees in the United States put less emphasis on
advancement opportunities and job security, while in Japan they valued independent
work and job security less, compared to younger employees. Across generations,
­however, having an interesting job was of less importance for job satisfaction in Japan
compared to Germany and the United States, which the authors explain with the
­countries’ differences on individualism–collectivism.
Overall, previous literature has highlighted that while “the diversity field itself is not
very diverse and has been dominated by US-­centric research” (Jonsen, Maznevski, &
Schneider,  2011, p. 35), diversity management has different conceptualizations and
­interpretations across cultures (e.g., Klarsfeld et al.,  2014; Nishii & Özbilgin,  2007).
More specifically, the concept of diversity itself is associated with very different under-
standings and priorities across countries. For example, when it comes to managing peo-
ples’ diversity in organizations, what matters most in Japan and Korea is gender diversity,
because ethnic groups are relatively homogeneous, while organizations in the United
Kingdom or the United States prioritize ethnic diversity next to gender, but also reli-
gion, immigration status, and other diversity dimensions (Cooke, 2015). Based on this

1  The authors measured diversity programs with an index indicating the existence of programs
regarding recruitment, training, and career progression, with subitems asking whether the program
targeted certain groups, such as ethnic minorities, older workers, women, or people with disabilities.
 The Cultural Lens   43

observation and to overcome the tendency of the diversity literature to use preestablished
categories of diversity (such as gender, ethnicity, and class), Tatli and Özbilgin (2012)
offer an emic approach to researching diversity categories. In their review, they identify
“emergent and situated categories of diversity” that are “embedded in a specific time and
place” (Tatli & Özbilgin, 2012, p. 180).

High-­Performance Work Systems

High-­performance work systems are combinations of HRM practices that are designed
to increase organizational performance. Examples of these HPWS are selectivity in
staffing, incentive compensation, investments in training, and employee participation
(Combs, Liu, Hall, & Ketchen, 2006; Huselid, 1995; Pfeffer, 1994). In other words, HPWS
are bundles of practices targeting employee ability, motivation, and opportunity to per-
form (Appelbaum, Bailey, Berg, & Kalleberg, 2000). While some of these practices have
been discussed individually in the previous sections of this chapter, HPWS (1) aim to com-
bine the most effective (i.e., best) practices, (2) are assumed to improve performance
universally, and (3) are therewith particularly challenging in the international context.
Hence, HPWS are mainly investigated in relation to differences at the organizational
level (e.g., Jiang et al.,  2012), such as organizational culture (e.g., Chow,  2012; Lau &
Ngo, 2004; Rhee, Oh, & Yu, 2016), while investigations of differences across countries
are rare. In fact, in their meta-­analysis on the effect of HPWS on business performance,
Rabl, Jayasinghe, Gerhart, and Kühlmann (2014) included 156 studies (representing
35,767 firms) that covered twenty-­nine countries. Yet, none of these studies took more
than one country into consideration. Moreover, rather than applying cultural perspec-
tives, the contextual fit of HPWS is more often discussed by drawing on institutional
frameworks (e.g., Festing, 2012; Kaufman, 2012; Liang, Marler, & Cui, 2012).
However, there are some exceptions of studies that do look at cultural variance in
HPWS. For example, in their survey among managing directors and HRM corporate
managers in fifty-­eight foreign subsidiaries (twenty-­nine in Europe, sixteen in Latin
America, seven in Asia, and six in the United States) of Spanish MNEs, Lertxundi and
Landeta (2011) found that HPWS “have a more positive influence on results when they
are applied to companies located in countries characterised by strong masculinity and
individualism, and with low power distance and low uncertainty avoidance” (Lertxundi &
Landeta, 2011, p. 3963). These findings are understandable in light of the historical
­development of the concept of HPWS. Because the concept emerged from the US con-
text, it is likely to fulfill its intended function, particularly in contexts with a cultural
profile similar to that of the United States, while it is more likely to fail in countries with
values different from the United States. Accordingly, in their meta-­analysis, Rabl et al.
assumed that the “best fitting national culture for the success of an HPWS is one low on
power distance, low on collectivism (i.e., high individualism), and high on performance
orientation” (Rabl et al., 2014, p. 1013). Yet, they found this assumption to be true only for
societies with tight cultural norms (Gelfand et al., 2011), while in countries with loose
44   Peretz and Knappert

norms, the fit between HPWS and the country’s cultural profile was less critical for
­business performance. On the contrary, in loose cultures, Rabl et al. (2014) found evi-
dence that some firms are successful in implementing HPWS because it does not fit
the cultural profile and is therefore difficult to imitate for local competitors. Hence, Rabl
et al. (2014) not only highlighted the importance of culture fit for HPWS, but also, in
particular, identified tightness–looseness as an important moderator in the HPWS–
business performance relationship.

Conclusion and Practical Implications

Based on our literature review, it is evident that HRM is highly culture dependent and
that employees may respond differently to the same HRM practice depending on their
cultural context. More specifically, this chapter highlights the importance of culture as a
predictor of HRM, as well as the critical role of the fit between HRM and the cultural
context, where culture is conceptualized as a moderator between HRM practices and
positive work outcomes. Hence, organizations (must) consider the cultural context when
designing and applying HRM practices. These implications concern decision-­makers in
multinational as well as domestic organizations. For multinational organizations that
are pressured to find a balance between global standards and local responsiveness, this
chapter may serve as an overview of where additional room for localization is of particu-
lar relevance. For domestic organizations, the literature reviewed here offers some guid-
ance in accommodating the cultural differences of the early twenty-­first-­century
multicultural workforce.

Suggestions for Future Research

Drawing on the fields of international and comparative HRM, this chapter provides a
review of research on cultural variation in HRM from which several avenues for future
research emerge. First, some HRM practices clearly dominate cross-­cultural investiga-
tions (e.g., performance management and training), while other practices are highly
underresearched. In particular, we call for more (systematic) cross-­cultural research on
recruitment and selection, diversity management, and HPWS. Second, some cultural
dimensions clearly dominate as well. Although we started with summarizing various
influential models of culture (i.e., by Kluckhohn and Strodtbeck, Hall, Hofstede,
Tromepaars, Schwartz, and the GLOBE study), it appears that only some of these mod-
els (mainly those by Hofstede and GLOBE) and, more specifically, only some selected
cultural dimensions (mainly individualism–collectivism and power distance) find
broad application by scholars, while the potential of other useful cultural c­ onceptualizations
remains largely untapped. For example, because the concept of tightness–looseness of
 The Cultural Lens   45

cultural norms (Gelfand et al., 2011) is comparatively new, we find only a few studies
applying it. However, we see auspicious prospects for explaining conditional effects in
cross-­cultural studies, investigating the moderating effect of tight versus loose cultural
norms on cultural impact in HRM.
Third, and related to the previous comments, we can observe a development from
purely descriptive and partly eclectic studies in the early years of cross-­cultural HRM to
more explanatory and encompassing investigations in recent years. However, to account
for the whole spectrum of contextual differences, we would like to encourage scholars to
work toward a simultaneous understanding of cultural and institutional differences
and, therefore, put more efforts into conjoining cultural with institutional perspectives
when investigating cross-­national variation. Finally, we echo the concerns regarding the
US centricity of cross-­cultural HRM research. More truly international studies with
diverse teams of researchers are needed to overcome this bias. While we acknowledge the
difficulty in setting these studies up, some large-­scale investigations (such as Cranet) leave
us hopeful for additional studies that systematically identify cultural variation in HRM.

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 chapter 3

I nstitu tiona l
A pproaches to
Ex a mi n i ng the
I n flu ence of Con text
on Hum a n R esou rce
M a nagem en t

Matthew M. C. Allen and Geoffrey Wood

Key institutions, including corporate governance regulations and employment law,

govern the constitution of individual and collective actors, such as employees, manag-
ers, firms, and unions, and help to shape actors’ interests, potential powers, capacities
for action, and, hence, behavior (Jackson,  2010; Kristensen & Morgan,  2018;
Streeck,  1997b; Whitley,  1987). Institutions do not, however, determine outcomes,
­creating the possibility for actors, such as managers and employees, to influence
­outcomes (Kristensen & Morgan, 2012). Hence, institutions mold how firms respond to
competitive pressures and the increasing internationalization of some product,
­financial, and labor markets. These responses, in turn, have implications for societal and
individual outcomes, such as inequality, career prospects, work design, wealth, and
health (Allen & Allen,  2015; Judge, Fainshmidt, & Lee Brown,  2014; Wood &
Wright,  2015). One mechanism through which institutions shape these societal and
individual outcomes is human resource management (HRM) (Busemeyer, 2009; Hall &
Soskice, 2001).
Following Jackson and Schuler (1995), we define HRM broadly so that it can cover:
(1) a range of specific activities, including recruitment, selection, training, and
appraisal practices; (2) formal HRM policies that govern HRM practices; and (3) the
principles that underpin the organization’s policies and practices and that can, for
instance, inform decisions about redundancies, the outsourcing and/or offshoring of
54   Allen and Wood

activities that were or could be performed “in house” by employees, and the influence
that employees or their representatives have on important company or workplace deci-
sions. In real firms, practices, policies, and principles may not align well, and there may
be substantial variation in particular aspects of HRM across groups of employees within
the same organization, either by “design” (depending on what the company is seeking to
achieve with different workers) or by “accident” (depending on how different managers
interpret HRM) (Boxall, Purcell, & Wright, 2007). In addition, multinational compa-
nies may adopt different HRM practices in different territories for strategic and/or regu-
latory reasons (Allen, Allen, & Lange, 2018).
According to the Oxford English Dictionary, the word “context” derives from the Latin
contexĕre, which means “to weave together, connect.” To us, this suggests an interesting
ambiguity when applied to HRM: Is HRM separate from its institutional context or is it
constituted by the institutional context? More formally, are context and HRM conceptually
and ontologically separate or are they conceptually separate, but ontologically connected?
This chapter reviews three related, but distinctive, institutional approaches to
HRM  policies within organizations that view institutions and organizations and
their  HRM policies as conceptually separate, but ontologically connected. In other
words, these approaches do not view the context as something that is distinct from orga-
nizations and their HRM, as some research does (Campbell, 2004); rather, context and
HRM are intertwined, meaning that institutions play a key role in constituting what
HRM is in different contexts. We review work on HRM within (1) the “varieties”
approaches of the varieties of capitalism and business systems framework (Hall &
Soskice, 2001; Whitley, 1999), (2) historical institutionalism (Hall & Taylor, 1996; Streeck &
Thelen, 2005), and (3) the regulationist framework (Amable, 2003; Hollingsworth & Boyer,
1997). We highlight the similarities among, and differences between, these three
­perspectives. We acknowledge that the studies we review do not always fit neatly into
one of these three categories. The categories do, however, help us to highlight how the
similarities and differences in terms of assumptions and key concerns characterize
the analytical focus and key explanatory variables of HRM studies.
In the next section, we set out in more detail how key institutions constitute organi-
zations. All three approaches take organizational heterogeneity seriously and seek to
illustrate how institutions enable or constrain particular HRM approaches; institu-
tions, therefore, fundamentally affect organizations’ raison d’être, priorities, and capa-
bilities (Jackson & Deeg, 2008; Whitley, 2007). If research does not treat institutions in
this way, but views them instead as discrete and wholly separate from firms, a threefold
danger arises. First, companies will be assumed to be, more or less, the same
(Whitley, 1987, 2010b), leading to results that are very general and that overlook impor-
tant variation among firms, both within and between national economies (Brewster,
Brookes, Johnson, & Wood, 2014; Hall & Soskice, 2001; Lane & Wood, 2009). Second,
and important, if research ignores the institutional constitution of firms, it runs the
risk of ignoring the main strategic objectives, such as satisfying shareholder
demands or political requirements, that organizations are trying to meet with their
HRM practices (Cooke, Veen, & Wood, 2016; Goyer, Clark, & Bhankaraully, 2016;
 Institutional Approaches to Examining Context   55

Hall & Soskice, 2001; Whitley, 2007), leading to decontextualized findings that, potentially,

have little relevance for many other organizations. Finally, it can lead to an assumption
that organizations can pursue any HRM approach within all institutional settings
(Dobbins & Busemeyer,  2015; Dobbins & Dundon,  2015; Goyer et al.,  2016; Morgan &
Kristensen, 2014; Whitley, 1987), downplaying the role that institutions play in enabling
or constraining particular forms of HRM (Boxall et al.,  2007; Wilkinson, Dundon,
Donaghey, & Townsend, 2014).
The third section provides details about the assumptions and characteristics of the three
institutional approaches to HRM that we review here; it also reviews some important
empirical analyses within each approach. The final section summarizes the key contri-
butions that institutional approaches to HRM have made and how future studies could
examine the institutional specificity of firms to explain HRM and organizational outcomes
to even greater effect.

Institutions and Organizations

We focus here largely on national institutions because they often play a key role in shap-
ing HRM practices in organizations (Hall & Soskice, 2001; Whitley, 2007); however,
regional and sectoral institutions can also be important (Allen, 2013; Ebner, 2016). For
instance, labor market practices in northern Italy differ from those in southern Italy
(Colombo & Regini, 2016). Similarly, institutions can vary between industries as well as
between the public and private sectors within an economy (Allen, Liu, Allen, &
Saqib,  2017; Ebner,  2016; Schröder & Voelzkow,  2016). These variations can have
important HRM implications within organizations and the performance of those
organizations, as well as the industries that they constitute (Casper & Whitley, 2004;
Streeck, 1997a).
Even if practicalities limit the possibility for empirical studies to examine how key
institutions constitute firms, all three of the approaches that we review here share, to
varying degrees, an assumption that institutions lead to significant differences between
companies in terms of their identities, interests, and capabilities (Boyer,  2005;
Morgan, 2016; Thelen, 2014; Whitley, 2007; Streeck, 2014). For instance, corporate gov-
ernance institutions, which differ between countries, influence whether employee rep-
resentatives can or need to be on company boards, shaping the decisions that boards are
likely to take (Goyer, 2011; Whitley, 1999). These differences, in turn, shape how firms
manage their employees (Dobbins & Dundon, 2015; Harcourt & Wood, 2007). Indeed,
institutions, such as employment regulations, also affect who counts as an “employee” or
“worker” and who does not; such distinctions can, in the United Kingdom, for instance,
have important implications for the rights of individuals, with employees and workers
having more legal rights, such as paid holidays and pension contributions, than do the
“self-­employed,” who can, potentially, include delivery drivers and subcontracted
plumbers (Grimshaw, Johnson, Keizer, & Rubery, 2017).
56   Allen and Wood

Although important institutions constitute organizations and other actors, they do not
determine outcomes, meaning that the “presence” of an institution does not always result
in a specific outcome (Jackson & Deeg, 2008). In other words, while stressing the impor-
tance of institutions in shaping HRM, we do not deny some role for “agency” within orga-
nizations. Actors, such as managers and employees both individually and collectively, are
not “oversocialized,” so their behavior is not completely prescribed by institutions
(Morgan & Kristensen, 2014). The reasons for this are twofold. First, institutions must be
“enacted,” meaning that actors must make decisions and implement them in order to pro-
duce and “reproduce” institutions (Jackson, 2010; Kristensen & Morgan, 2012). In corpo-
rate governance, for instance, institutional investors, who typically have a short-­term
perspective (Whitley,  1999; Witt & Jackson,  2016), should, in general, prioritize more
immediate financial outcomes and undertake activities that convey their priorities to
senior managers in the firms that they have invested in to reproduce this institution. Of
course, not all actors or individual institutional investors will behave identically, because
they will have different ideas, for instance, about what will generate better financial
returns, depending on their training and perspective (Jackson & Deeg, 2008).
Second, actors do not operate in situations that they can fully control (Jackson, 2010),
meaning that actors’ abilities to pursue and attain their objectives will depend on other fac-
tors. At times, these broader situational factors are likely to facilitate actors’ ability to make
decisions and take actions that enable them to meet their objectives; at other times, the
­context will inhibit or prevent their capacities for certain actions (Bhankaraully,  2019;
Morgan & Kristensen, 2014). Consequently, institutions are likely to be associated with
“patterns” of HRM practices rather than close associations with those practices, meaning
that the links between a particular institution and a specific set of HRM practices, policies,
or principles is likely to be a tendency rather than a “law-­like” relationship (Dobbins &
Busemeyer,  2015; Hall & Soskice,  2001; Johnstone & Wilkinson,  2017; Whitley,  2007).
Institutions are likely to be associated with certain outcomes; they will not determine
outcomes. This has important implications for how research should be designed and the
types of analytical techniques that are most appropriate, meaning that analyses of par-
ticular companies or sectors and their institutional specificities at certain times using
case studies or statistical techniques that can capture that complexity as well as necessary
and sufficient conditions are required (Allen, 2013; Baccaro & Howell, 2011; Brewster
et al., 2014; Goyer et al., 2016; Kinderman, 2005; Lange, Geppert, Saka-­Helmhout, &
Becker-­Ritterspach, 2015).

Three Institutional Approaches:

Assumptions, Characteristics,
and Empirical Results

This section discusses the assumptions and characteristics of the three institutional
approaches to HRM that we review; we illustrate our arguments by referring to some
 Institutional Approaches to Examining Context   57

important empirical analyses within each approach. Some of the empirical studies that
we include here have not explicitly adopted, necessarily, the approach that we have
assigned them to; however, we think that their underlying assumptions and analytical
focus warrant their inclusion under one of our three categories. Table 3.1 sets out the key
similarities and differences between these approaches.

The “Varieties” Approach

Although the varieties of capitalism and the business systems framework differ in many
respects, we treat them as one category because of their similarities. Both frameworks
highlight how institutional differences between countries, such as the corporate
governance regimes and labor market systems, influence the types of firms that become
dominant in different national economies (Hall,  2015; Hall & Soskice,  2001;
Whitley,  2010b). This “institutional structuring” of firms has implications for their
strategic priorities and their organizational capabilities (Hall & Soskice,  2001;
Whitley,  2007). Consequently, the varieties approach examines how institutions
constrain or enable organizations to solve particular coordination problems, such as the
recruitment and retention of employees with particular characteristics, that often
involve employees and HRM (Hall & Soskice, 2001; Whitley, 1999, 2007). At a broader
level, firms’ abilities to surmount particular types of coordination problems influence
how well they can pursue specific strategic objectives and competition strategies
(Hall, 2015; Whitley, 2010a).
A corollary of the emphasis on how institutions can help firms develop their
competitive competencies was an assumption of stability within institutional
­
regimes (Hall & Soskice,  2001; Streeck,  2012; Whitley,  1999). If there was change,
then that change was likely to come from developments “outside” the institutional
system (Hall & Soskice, 2001, pp. 56–60; Whitley, 2010a). For instance, the spread of
capitalism to central and eastern Europe opened up the possibility for some
European firms to move or outsource some of their activities to the region that
offered skilled, and relatively cheap, labor, putting pressure, potentially, on existing
home-­country employees. Similarly, advances in computing and telecommunications
have enabled some companies to move certain activities to locations with low-­cost
workers (Lane, 2005). More recently, however, the varieties approach has recognized
the potential for change to come from “within” national institutional systems (Morgan,
2007, 2016), opening up the possibility of analyzing how collective actors, such as
firms and unions, engage in debates and contests to change, “remove,” or create
institutions.
Research has revealed variation in HRM within national economies. For instance,
work has found that employees’ direct involvement in shaping company decisions and
workplace practices that can form the foundation of a partnership approach between
employers and employees varies across Europe. Firms in countries that have stronger
rights for unions and employee representatives are more likely to include employees and
their representatives in decisions than are companies in countries with weaker rights for
58   Allen and Wood

Table 3.1.  Institutional approaches to human resource management

  Theoretical approach

Historical
  Varieties approach institutionalism Regulation framework

Assumptions: Key institutions and collective actors separate or intertwined?

Ontologically Intertwined Intertwined Intertwined

Conceptually and Often treated as separate, Intertwined Intertwined
analytically but also increasingly as
intertwined
Characteristics

Typical analytical Organizational capabilities; Inequality within Societal outcomes and

focus/seeks to competitive advantages; societies global developments
explain innovation in capitalism
Unit of analysis: Increasingly micro and Macro Macro
micro (firm), meso, but traditionally
meso (region or macro
sector), or macro
(country) level?
Sources of Initially exogenous, but Endogenous and Endogenous and
institutional increasingly endogenous exogenous exogenous
change
Emphasis on the Limited initial focus on the Limited initial focus on Greater initial emphasis
implications of international embedded- the international on international
the connections ness of national economic embeddedness of embeddedness of
between models, but more focus national economic national economic
countries for recently models, but more focus models that continues
national models? recently
Typical analytical Eclectic: “large N” Narrative analysis of key Narrative analysis of
techniques regressions, case studies, sectors and countries key sectors and
“fuzzy-­set qualitative countries
comparative analysis”
Typical findings and studies

Typical Institutions matter, General decrease in HRM Reduction in “HRM

conclusions resulting in HRM variation standards, but also standards” (especially
across countries and greater dualism (division pay and conditions) for
sectors of workforce into “good” many workers
and “bad” jobs)
Typical examples (Bhankaraully, 2019; (Baccaro & Howell, 2011; (Boyer, 2005, 2006;
Brewster, Wood, & Hassel, 2014; Vidal, 2013a)
Goergen, 2015; Goyer Kinderman, 2017)
et al., 2016)

Note: HRM, human resource management.

 Institutional Approaches to Examining Context   59

unions and employee representatives. In the latter group of companies, more

­“instrumental” forms of partnership, which act as mechanisms to convey managers’
HRM decisions to lower-­level employees, are more likely to exist (Brewster et al., 2014;
Wilkinson et al., 2014). However, such research has revealed that more extensive part-
nership approaches were not confined to “coordinated business systems,” in which
unions play a greater role and employment protection tends to be greater (Whitley, 1999);
similarly, instrumental approaches were not solely found in “compartmentalized busi-
ness systems,” in which the “market” is the main mode of economic coordination
(Brewster et al., 2014; Johnstone & Wilkinson, 2017; Walker, Brewster, & Wood, 2014;
Whitley, 1999).
Such studies have revealed that organizational types, sectors, and competition
strategies also played a role in shaping the form that partnership took within particular
companies (Brewster et al., 2014; Walker, Wood, Brewster, & Beleska-­Spasova, 2018).
Related work has revealed that, although quits, both voluntary and involuntary, are
more common in compartmentalized business systems than they are in coordinated
ones, there is much diversity within national economies (Croucher, Wood, Brewster, &
Brookes, 2012). Highlighting the importance of analyzing firms’ strategies (what they
are trying to achieve and how they are trying to achieve it) as well as their institutional
constitution and the interactions between the two to explain HRM in firms, this work
collectively, therefore, reinforces the need to take firm heterogeneity within any institu-
tional system into account when assessing the links between institutions and outcomes,
including HRM.
Corporate governance regimes shape important HRM outcomes, such as the provi-
sion of training for workers. In countries with corporate governance institutions that
restrict collective and/or individual redundancies, firms have more of an incentive to
invest in training that develops employees’ firm-­specific knowledge and skills compared
to countries with corporate governance systems that have fewer restrictions on layoffs
(Goergen, Brewster, & Wood, 2009). In more general terms, labor market institutions
that facilitate the use of temporary or agency workers as well as workers on “zero-­hour
contracts” have a detrimental effect on employees’ commitment and skill development
and, as a result, on their productivity (Rubery, Keizer, & Grimshaw, 2016).
Institutions, such as those governing the use of temporary workers, often differ
between the public and private sectors. Evidence has revealed that such differences,
along with broader institutional systems, can account for variation in the use of tempo-
rary agency workers in different workplaces. For example, although private-sector
workplaces in Europe are more likely, in general, to use temporary agency workers than
their public-­sector counterparts, this conceals much important variation between
countries. In those countries, such as the United Kingdom, that have relatively weak
worker rights, public-­sector workplaces are more likely to use temporary workers than
their private-­sector counterparts; by contrast, in other countries, such as Germany, that
have greater rights for workers, private-­sector workplaces are more likely than their
public-­sector counterparts to use temporary workers (Allen et al., 2017). The influence
of institutions also extends beyond the boundary of the legal firm, influencing the
60   Allen and Wood

prevalence of “precarious work” in supply chains, as research on public supply chains

has revealed (Jaehrling, Johnson, Larsen, Refslund, & Grimshaw, 2018).
Studies have revealed how contrasting institutional configurations can be associated
with similar outcomes. For example, in France, companies are likely to lay off workers
when three necessary conditions are met. These conditions are dispersed firm owner-
ship, owners and controllers who prioritize short-­term financial results over the firm’s
long-­term development, and relatively high debt leverage. By contrast, for companies
in the United Kingdom, there is only one necessary condition for redundancies, which
is that the firm is owned and controlled by a dispersed group of investors; relatively
high levels of company debt are, importantly, not necessary for downsizing to occur
(Goyer et al., 2016). Similarly, downsizing and wage moderation in Germany are likely
to occur when firms have high levels of debt and are owned and controlled by investors
who privilege shareholder value (Bhankaraully, 2019).

Historical Institutionalism
Historical institutionalism shares with the other two approaches reviewed here an
emphasis on how institutions constitute actors. Unlike the varieties approach, historical
institutionalism focuses more on macro-­level processes and outcomes, meaning that it
does not tend to look at HRM within particular firms, but analyzes how HRM-­related
processes occur at the societal (macro) or industry (meso) level. The reason for this is
that the approach typically seeks to explain levels of social inequality and social
exclusion rather than firm competitiveness, leading to a focus on socioeconomic and
sociopolitical issues rather than business and management issues (Crouch, 2012, 2013;
Emmenegger & Marx, 2011; Hassel, 2014; Hassel & Trampusch, 2006; Streeck, 2014; cf.
Rogers & Streeck, 1995; Streeck, 1997a, 1997b).
The focus of this approach may suggest that it does not have any implications for
HRM; however, that assumption would be incorrect. By focusing on issues related, for
example, to employee representation and collective wage bargaining at the
national level, historical institutionalism has implications not just for levels of inequal-
ity within society, but also for typical employment policies and HRM within firms
(Streeck, 1997a, 1997b). Although analyses can cover individual firms or sectors, the aim
is often to explain national-­level outcomes (Crouch, 2012; Emmenegger & Marx, 2011;
Kinderman, 2017).
Historical institutionalism’s emphasis on societal outcomes makes it more overtly
political than the varieties approach; consequently, it has a longer tradition of focus-
ing on potential conflicts of interest between different societal groups, such as
employers, on the one hand, and employees and their representatives on the other.
As a result, historical institutionalism has focused on institutional change and the
dynamism of capitalism itself longer than the varieties approach has (Hassel, 1999;
Regini, 2003; Streeck, 2008). Fundamental to historical institutionalism, therefore, is
the argument that institutions tend to be established in specific situations and, as
 Institutional Approaches to Examining Context   61

economies and societies change, institutions are likely to change to reflect those
developments (Benassi, Doellgast, & Sarmiento-­Mirwaldt, 2016; Streeck, 2012). In
particular, the dynamism of capitalism and capitalist firms to push, in many
instances, for greater marketization of social life is likely to lead to the erosion
of institutions that seek to reduce the potentially detrimental impact of capitalism on
individuals and the institutions that protect individuals, such as employees, from
market vicissitudes (Crouch, 2013; Greer & Doellgast, 2017; Streeck, 2014; Etienne &
Schnyder, 2014).
Much of the research within historical institutionalism analyzes collective wage
bargaining, which typically focuses on the pay as well as the working conditions of
those employees covered by the agreement. Such bargaining has implications for
organizations’ HRM. For instance, research has revealed how, within the automotive
industry, manufacturers use the threat of relocating production to another factory
within Europe to gain concessions from employees and their representatives in a ­process
known as whipsawing; this process leads to a weakening of institutions that protect
workers from reductions in their wages and/or working conditions (Greer &
Hauptmeier, 2016).
Other research that focuses on more macro-­level trends has revealed how the liberal-
ization of markets, which intensifies price-­based competition, often leads managers
(1) to exit collective actors, such as employers’ associations, rather than voice their recom-
mendations for improvement through them and (2) to focus their firms on nonproduc-
tive rather than productive activities where, frequently, financial returns are higher and
public scrutiny is less (Greer & Doellgast, 2017). Similarly, studies of employer prefer-
ences within Germany and Sweden in the 1990s and 2000s have, contrary to the expec-
tations of the varieties approach, found a desire to liberalize employment regulations
and welfare policies (Baccaro & Howell, 2011; Kinderman, 2017). Such preferences sug-
gest that, far from upholding labor market institutions, such as collective wage bargain-
ing, employee workplace representation, and employment protection, many employers
will seek to weaken them, which will have implications for HRM within companies
(Baccaro & Howell,  2017; Kinderman,  2017). Improvements in Germany’s economic
performance have scotched these demands for greater liberalization, but not “killed”
them (Kinderman, 2017); indeed, historical institutionalists highlight that many policy
makers remain wedded to neo-­liberalism, irrespective of the financial crisis that
impugned any potential benefits of liberalization (Crouch, 2013).
In the area of skills formation systems, which influence access to jobs and career pro-
gression, the contests over the appropriate policies seem less fundamental once the sys-
tem has become established. For instance, research on these systems in Denmark and
Sweden has found that, once a critical juncture has been passed and systems are in place,
actors accommodate their strategies and preferences to reflect the new institutional set-
ting (Dobbins & Busemeyer, 2015).
A study of industrial relations systems in fifteen western European countries found
that, despite superficial resilience, all have experienced greater marketization, leading to
a weakening of collective wage bargaining and, as a result, greater inequality and less
62   Allen and Wood

redistribution (Baccaro & Howell,  2011). Moves to export-­led growth rather than
domestic, consumption-­led growth have in some countries, such as Germany, resulted
in greater marketization of labor market institutions, leading to wage stagnation for
many workers (Baccaro & Benassi, 2017). Other research suggests that the reasons for
the undermining of Germany’s collective bargaining system lie in broader developments
within capitalism, such as the relatively common vertical disintegration of major
employers: As employers outsource work to smaller suppliers or temporary agencies,
frequently not covered by collective bargaining, the agreement on wages and working
conditions that unions and employers’ representatives negotiate applies to a smaller
percentage of employees (Doellgast & Greer, 2007).
Other historical-­institutionalist research seeks to explain why collective bargaining insti-
tutions in the telecommunications industry are strong in some European countries, but not
in others. It argues that (1) institutional loopholes in some countries enabled employers to
avoid collective bargaining, and (2) the lack of interunion cooperation accounts for the
variable strength of these institutions in different countries (Benassi et al., 2016).

The Regulationist Approach

We define the regulation framework in a broad way so that it covers not just those who
explicitly use the term to identify their own work, but also others who adopt related, but
in some ways distinct, approaches and who use different labels, such as variegated capi-
talism (Boyer, 1990; Jessop, 2012). The regulation framework is closer to historical insti-
tutionalism than it is to the varieties approach. The regulation framework adopts a
comprehensive view of capitalist systems to examine how (1) the social and technical
division of labor, (2) the influences on individuals’ behavior, and (3) typical patterns of
consumption and production are all interlinked and shape economic growth and devel-
opment (Boyer, 2005, 2011; Jessop, 2014). Therefore, in common with some historical
institutionalists, it focuses on consumption and production rather than just production,
as the varieties approach largely does (Baccaro & Benassi, 2017; Hall & Soskice, 2001;
Streeck, 1997b; Whitley, 2007; Hope & Soskice, 2016).
In addition, unlike the varieties approach, but in common with historical institution-
alism, the regulation approach has long emphasized the inherently unstable nature of
capitalism (Boyer,  2010), drawing attention to the systemic and periodic crises that
affect all forms of capitalism and that institutions can only temporarily “fix”
(Amable, 2016; Boyer, 2011; Jessop, 2014). As a result, the regulation approach was able to
more rapidly and easily address issues relating to financialization than the varieties
framework could (Boyer,  2000; Jessop,  2013). Financialization has implications for
HRM, such as pay rates and layoffs (Boyer, 2000, 2013b).
Furthermore, the regulation approach focuses on analyzing the typical working
conditions and consumption patterns of workers, often considered in nationally
aggregated terms rather than as either individual workers or groups of workers in
particular sectors of the economy. For instance, the approach initially sought to explain
 Institutional Approaches to Examining Context   63

the conditions that supported a stable Fordist mode of production and consumption for
many years, but then declined. Under the Fordist modes of production and consumption,
workers typically performed a narrow range of standardized jobs to produce a limited
range of products. This system helped to increase productivity, resulting in a virtuous
circle of cheaper products and potentially higher wages, which enabled more consump-
tion, production, and employment. Eventually, however, this virtuous circle came to an
end (Boyer, 2013b).
In more recent research, the regulation approach has focused on the causes of the
current crisis, which is characterized by rising incoming and wealth inequality,
precarious employment, and unsustainable growth models, as well as potential
institutional remedies to these problems (Amable, Guillaud, & Palombarini,  2012;
Becker & Jäger, 2012; Boyer, 2011; Jessop, 2014). There has also been an increased focus
on the problems of financialization (Boyer, 2000, 2006, 2013a). Pessimism about the
ability of capitalism to resolve the causes of these deleterious outcomes pervades much
of this work (Boyer, 2010; Jessop, 2001; Vidal, 2013a, 2013b).
Empirical work that draws either implicitly or explicitly on the regulation approach
frequently analyzes the nature of work and those work processes that are becoming
more prominent in developed economies. This analytical focus ties the empirical work
back to the regulation approach’s analysis of the typical patterns of production, which
has implications for HRM as well as consumption. For instance, research that examines
labor processes in the United States has revealed that over one-­third of jobs there have
low autonomy (Vidal,  2013a). Relatedly, comparative research that covers jobs in
Germany, the United Kingdom, and the United States reveals that job quality is
declining, in general, in all three countries, although there are important distinctions
between them (Vidal, 2013b).
Other work in this tradition has revealed how, in the United States, the nature of the
relationship between employees who “invent” new products has changed as a result of
institutional changes, especially those in the area of intellectual property rights, that
grant companies ownership of inventions created by workers who are “employed to
invent” and a nontransferable license where a worker has not explicitly been employed
to invent (Coriat & Weinstein,  2012). These changes have enhanced the power of
companies to use inventions as they would like at the expense of individual employees,
who no longer have complete control over their intellectual property.
Similarly, other work has highlighted how labor power in the Fordist golden era
between around 1945 and 1971 was at an unprecedented—and probably never-­to-­be-
repeated—high (Boyer, 2010). There are several reasons for this. They include interna-
tionalization, which has often made workers’ pay contingent on the performance of the
firm on international rather than domestic markets, and financialization, which has led
to a separation between senior managers and workers within organizations, resulting in
downward pressures on employment and working conditions when firm financial per-
formance is weak (Boyer, 2010). Other reasons include the stratification of workers and
the “split identities” of workers as wage earners, consumers, pension-­fund holders,
property investors, and taxpayers (Boyer, 2010).
64   Allen and Wood

Conclusion

Institutional approaches to examining the influence of context on HRM have made a

number of key contributions to the literature. First, the approaches reveal the
importance of examining the institutional construction of firms because this will affect
their strategic priorities and the types of HRM that they are likely to be able to adopt. If
institutions are treated as external to the firm, companies are treated the same, leading
to an assumption that all firms seek to maximize shareholder value. For firms that are
owned and/or controlled by the state, sovereign wealth funds, foundations, and families,
this may not be true (Allen et al.,  2018; Goergen, O’Sullivan, Wood, & Baric,  2018;
Keizer,  2016; Kristensen & Morgan,  2018). Key institutions, such as corporate
governance regulations and the financial system, will condition the types of company
that are likely to emerge and survive in different jurisdictions and influence how
managers treat different groups of employees as well as the boundary of the firm
(Whitley, 1987, 1999).
Second, institutional approaches have highlighted the dynamism of capitalism and
capitalistic firms (Boyer, 2011; Morgan, 2016; Streeck, 2014), leading to an emphasis on
change both within institutions and within organizations. This has implications for
HRM, suggesting that studies of HRM should address how and why HRM changes
within organizations. For instance, increasing competitive pressures may or may not
result in certain forms of HRM no longer being viable in some locations (Etienne &
Schnyder, 2014).
There are also areas in which institutional approaches could have a greater impact on
the study of HRM. For instance, institutional approaches have increasingly highlighted
the potential incompatibility or “noncompossibility” of different types of capitalism
and, hence, the typical forms of HRM associated with those different types of capitalism.
In other words, a capitalist system that ensures high wages and levels of employment
protection for all workers may be difficult to sustain in an economy that is increasingly
open to foreign competition, overseas investors, and new technologies. This suggests
that studies of HRM should increasingly seek to explain and examine HRM in
organizations within their national and international settings (Allen et al.,  2018;
Jaehrling,  2018; Jaehrling et al.,  2018; Rubery et al.,  2016), because national and
international institutional factors will influence the types of HRM that firms adopt and
their ability to achieve different objectives in contrasting locations.

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 chapter 4

Cr itica l
Con textua lized
Stu dies of H um a n
R esou rce M a nagem en t

Frans Bévort, Lotte Holck,

and Mette Mogensen

Human resource management (HRM) is often examined with universalistic “best

­practice” approaches (e.g., Brewster, 1999; Huselid, 1995). That is, researchers and practitio-
ners want to identify models and practices that are true, or effective, in all or most cases
and produce organizational performance. For example, high-­performance work prac-
tices are always (or almost always) seen as better than regular work practices, structured
interviews predict performance better than unstructured interviews, and so on. One
central point of the mobilization of the contextual approaches described in this hand-
book is to challenge this kind of assumption. In their most generic form, contextual
approaches subscribe to what is called a best fit view. In this view, HRM practices are
formed and molded by the contexts in which they have been developed, be they social,
industrial, organizational, or other contexts (Boxall & Purcell, 2016). In this sense, the
value and results of HRM are seen as (or supposed to be) always relative to the context in
which the organization is embedded. In many ways, this is influenced by the classic con-
tingency theory way of thinking (Burns & Stalker,  1961, Delery & Doty,  1996;
Woodward, 1958). Contingency theory emphasizes a strong connection between a spe-
cific context and a specific organizational form and therefore the need of managers (and
other personnel) to accept and act according to that fact.
With a critical management studies (CMS) approach, this relativization is taken fur-
ther. The basic assumption of, typically managerial, rationality is questioned. This
assumption is also present in most contingency approaches in the sense that managers
can, do, or should seek the “appropriate” fit between what they do and the context of the
organization. Critical approaches challenge the feasibility, primacy, and legitimacy of
72   BÉvort, Holck, and Mogensen

managerial rationality, which is usually seen as the point of departure of HRM. Also, as a
crucial point for the argument in this chapter, the position, interests, and assumptions of
the observer are taken into critical scrutiny as part of the context analysis. In this
chapter, contextual approaches to HRM are expanded with a critical HRM studies
dimension.
So, what is the HRM critique and why should we care? Grey (2008), a critical manage-
ment scholar, has described lucidly the immanent tension of HRM, as well as the spirit
of its most ardent critics, in an imagined dialogue between a boy and his father, a human
resources manager (pp. 48–49). In the dialogue, Grey presents two alternative plausible
answers to the son’s simple question: “What do you do at work?” The father’s first answer,
“Exploiting people,” as Grey suggests, will risk giving the boy an unfavorable impression
of his father. The second answer, “Helping people,” is the far more acceptable alternative.
Furthermore, it mirrors the spirit of the human relations school, which historically and
theoretically has laid the ground for HRM. In Grey’s account of human relations theory,
however, HRM is presented as a sophistication of the managerial exploitation developed
in the preceding scientific management theory (Taylor, 1911), rather than an introduc-
tion of humanism to management, as HRM evangelists have purported (e.g.,
McGregor, 1960). In this sense, the two answers are not presented as alternatives. On the
contrary, their coexistence is considered emblematic to the field of people management.
They represent the Janus-­faced nature of HRM, the ongoing tension between exploita-
tion and humanism, which is continuously fueling the critical voices of HRM. In line
with Grey’s analysis, which seeks to disclose the hypocrisy of the humanistic proponents
of HRM, it has been the trademark of critical HRM studies to unveil the exploitation
hidden behind seemingly humane practices and good intentions. The managers of
HRM might think they are helping people, while in fact they are supporting the subtle
exploitation of the resources of human beings.
The simple fact that human and management coinhabit the same concept in the HRM
acronym therefore tends to stir up feelings and strong sentiments of unfairness.
HRM appears one-­sided, because it denotes humans as simple resources to be managed,
as the management guru Handy (2019) only recently argued. Following HRM critics,
there is reason to question the interests informing HRM. As polemically put by critical
scholar Legge (2005), the question is, Who is HRM best practice actually best for? The
field of HRM is, in this view, controversial and often ridden with conflict because it
involves different and often opposing stakeholder interests.
Correspondingly, debates within HRM tend to become highly dichotomous, separat-
ing the discussing parties into either mainstream or critical. It becomes difficult not to
choose sides: to either accept the managerial mainstream perspective or to go down
the CMS road and reverse the perspective, taking sides with “the oppressed.” To be sure,
the mainstream view constitutes the majority of HRM research, representing writers
who are either explicit proponents of HRM as a normative prescriptive ideology
(Huselid, 1995; Ulrich, 1997) or implicitly accept the role of HRM as a more or less effi-
cient management tool in the hands of capital owners and politicians. Unfortunately,
 Critical Contextualized Studies of HRM   73

most of the truly critical studies of HRM tend to be only interested in HRM as a “straw
man” to exemplify the atrocities of modern managerialism. Alvesson (2009 p. 59), a
long-­time signature author within CMS, has put it as follows: “Part of this problem is the
shortage of critical studies genuinely interested in what goes on in terms of HRM.
Critical studies do not need to be empirical and the ideological and other critiques find
targets worthy of their criticism, but there are still important themes around HRM as a
social practice that have not, with a few exceptions, been investigated in much depth.
The entire critical project appears as one-­sided, narrow and reactive. It shares with the
mainstream work a tendency to black-­box HRM.”
The tendency for critical scholars to preoccupy themselves with ideology rather than
empirical studies of HRM as a specific social practice, so Alvesson (2009) argues, in
effect leaves the critical project with little relevance to the field of HRM—or its practitio-
ners. By introducing to critical HRM studies the importance of a contextualized
approach to HRM, the ambition of this chapter is to avoid the pitfall trap of falling into
either of the two extremes: uncritically accepting either a managerial or an antimanage-
rial stance, but to investigate HRM critically as a social practice with a view to finding
ways of improving the world of work for the involved stakeholders. To do this, the chap-
ter is structured as follows.
The following section discusses how it is possible to be critical and practically
­relevant at the same time by introducing the current debates on relevance within CMS,
under the labels of “critical performativity” (Spicer, Alvesson, & Kärreman, 2009) and
“Reconstructive reflexivity” (Alvesson, Hardy, & Harley, 2008). This is followed by three
critical, but equally constructive, analyses of HRM practices: the first addresses how
institutional logics affects the practice of HRM professionals; the second presents alter-
natives to best practice diversity management; and the third re-­evaluates meditation
practices as expressions of managerial control.
To conclude, the merits of the three ways to perform contextualized critical HRM
studies are summed up and discussed, thus setting the scene for how to move forward in
critical contextualized HRM scholarship.

Human Resource Management Critique—

from Antiperformativity to Engaged
Scholarship

Having as its default position a reading of HRM as an exploitative and managerial

regime, the focus of critical HRM studies, as part of CMS, has been to produce analyses
that serve to make evident the ugly face of neo-­liberal capitalism lurking behind the
apparent win–win arguments of mainstream HRM rhetoric. Looking across a range
of CMS scholars and their attempt to describe the diverse field of CMS, the following
74   BÉvort, Holck, and Mogensen

interrelated characteristics can be extracted (see Alvesson,  2008,  2009; Fournier &
Grey, 2000; Keegan & Boselie, 2006):

1. An “antiperformative stance” that refrains from means–ends considerations and

any input that would serve the creation of more efficient HRM practices;
2. A critical reflexivity aiming to acknowledge the power of knowledge and knowl-
edge production to practice—thus stressing the role of epistemology and the
responsibility of the researcher in terms of the versions of reality produced in
research;
3. Choosing analytical strategies and theories that aim to defamiliarize us from
mainstream HRM theorizing and practice;
4. Taking sides with the underprivileged against dominant ideologies, interests, and
institutions;
5. Having an ambition to inspire for social reforms, emancipation, and resistance on
behalf of the underprivileged.

Among CMS scholars, there are differences in relation to the weight given to these
characteristics. Some are more inclined toward the theoretical and epistemological
debates, while others are more strongly preoccupied with the latter aspect of producing
social change. To some degree, it is possible to place CMS scholars on a continuum, with
antiperformativity on one side and social reform on the other. The majority of scholars,
it should be noted, are found in the former category.
Since the beginning of the 2010’s, there has been an increasing awareness among
critical scholars that in order for HRM critique to have relevance beyond its own
boundaries, it needs to become more relevant both to HRM theorizing and to prac-
tice. In an exemplary comparison of the discursive impact of modernist and positivist
texts by Guest and critical texts produced by Legge, respectively, Harley and Hardy
(2004) point to the continuous difficulty critical texts have in becoming effective
“countertexts” and thus becoming relevant for the development of the academic dis-
course on HRM.
A “cynical distance” is often upheld (Spicer et al., 2009, p. 542); Adler talks of a certain
“complacency” within CMS (Adler, 2008), and Koss Hartmann adds to this by pointing to
the habitual preferences among critical scholars for philosophical and inaccessible
theories and styles of writing as the main problem (Koss Hartmann, 2014). In general, the
HRM critique seems to have developed a life of its own, with little interaction with
the wider field of HRM (Koss Hartmann, 2014; Spicer et al., 2009; Thompson, 2005).
Although critical reflexivity, defamilarization, and ideology critiques ideally serve as
invaluable sources of developing academic disciplines, including HRM (Janssens &
Steyaert, 2009), apparently critical studies on HRM are missing out on becoming rele-
vant when it comes to the development of both theory and practice. The question is,
then, how do we, with the words of Janssens and Steyaert (2009, pp. 143–144) in mind,
make sure that critical scholarship is not simply reacting to the mainstream research
agenda, but also contributing to setting it (see also Bévort et al., 2018)?
 Critical Contextualized Studies of HRM   75

Engaging Critique?

Following recent self-­reflexive debates within the CMS community, critical scholars are
increasingly considering the current value of the critique produced (Adler,  2008;
Mogensen, 2018; Spicer et al., 2009; Wickert & Schaefer, 2015). Doubts and regrets are
widely aired with regard to how CMS critique may live up to its inherent ambition of
reversing and making an impact on current management rhetoric and practice. Within
the CMS community, a need for critical scholars to engage more closely with the man-
agement practices under study can thus be identified, which in turn challenges the anti-
performative stance traditionally taken (Fournier & Grey, 2000; Spicer et al., 2009). As
purported by Alvesson, given the specific interest in a management context, critical
management scholars should display “some degree of appreciation of the constraints of
the work and life situations of people (including managers) in the contemporary or­gan­i­
za­tional world, e.g. that a legitimate purpose for organizations is the production of ser-
vices and goods” (Alvesson, 2009, p. 55). Among critical scholars there is thus a tendency
toward moderation, to increasingly accept if not embrace “the legitimate purpose for
organisations” while at the same time displaying an increased sensitivity toward the
reality and everyday lives as experienced by organizational actors. Without this compas-
sion and engagement in the reality of organizational actors’ experience, criticism is left
barren and cold.
For critique to have the potential to become engaging and practically relevant, and
thus feed into the constant and constructive development of HRM as a discipline and
practice, two strategies have been prominent in the debate:

1. A distinct kind of reflectivity—R(econstructive) reflectivity (Janssens & Steyaert,

2009); and
2. Critical performativity (Spicer et al., 2009), progressive performativity (Wickert &
Schaefer, 2015)

1.  Being a critically reflexive researcher implies being “mindful of the historical and
politically situated quality of our reasoning” (Willmott, 1993, p. 708). This means also
being critical toward the assumptions one subscribes to. This first strategy thus takes as
its point of departure the observation that most critical management scholars make use
of a specific kind of reflexivity (Alvesson et al.,  2008), that is, the way in which the
researcher approaches the very quality of being critical. The authors propose four kinds
of critical reflexivity—multiperspective, multivoicing, positioning practices, and desta-
bilizing reflexive practices (Alvesson et al., 2008, p. 487)—to describe the extant critical
management literature. The authors also suggest two tendencies that distinguish the
way researchers in practice choose to apply critical reflexivity: Deconstructive reflexiv-
ity and Reconstructive reflexivity (p. 497). The first is characteristic of the purely “nega-
tive” critique that is often found in CMS. The second implies a form of critique that
76   BÉvort, Holck, and Mogensen

engages with practice and tries to reach results that may, in one way or the other, seek to
improve existing practices. According to the authors, the two can and should be used in
sequence, beginning with the former and ending with the latter. Janssens and Steyaert
(2009) point to this approach as key to establishing a critical, as well as relevant, HRM
research agenda.
2.  Critical performativity has been coined as another yet similar answer to the general
call for engaged scholarship within CMS (Spicer et al., 2009). It aims to break away from
the overly abstracted theorizing of CMS, which has tended toward obscuring the practi-
cal usefulness of critical HRM research. Playing on the antiperformativity legacy of
CMS, it explicitly challenges the normal distance taken, presenting critical performativ-
ity as a “more affirmative movement.” Apart from (still) having a critical inclination,
aiming at questioning assumptions and minimizing managerial domination, the per-
formative aspect stresses the aim to produce new understandings that may engage with
and not least have effect on practice. In many ways, this resonates with the ambitions of
the reflexivity approach presented above, yet the call for critical performativity seems to
take critique a step further: a step into the organizational and managerial realities under
study looking not just for emancipatory effects but also for effects on practical or­gan­i­za­
tional work (Alvesson & Spicer, 2012, p. 376). Spicer et al. (2019) present a range of tac-
tics, which are all about minimizing the previous distance between critics and
practitioners: affirmation, which invites researchers to work in close proximity to the
object of study and critique; an ethic of care, which calls for taking seriously the con-
cerns of the actors in the field; a pragmatism orientation, which invites the critical
scholar to embrace and work with already established discourses in the field; a focus on
potentialities, which obligates the researcher in terms of presenting alternatives; and,
finally, a normative stance, reflecting on and making clear their own interests and orien-
tations (Spicer et al., 2009, pp. 545–554).

Contextualizing an Engaged Human

Resource Management Critique?

Taking seriously this move within HRM critique, from an antiperformative, distancing,
and primarily “negative” approach toward HRM theory and practice to critical perfor-
mative, engaged, and with a “positive” ambition to make a difference, a strategy of con-
textualization of critical HRM research seems like a productive way forward. In the next
section, three critical studies of HRM practices illustrate how a reconstructive and criti-
cal performative approach may apply to HRM research and add another dimension to
the contextual approaches described in this book.
The first is a critical analysis of HRM, inspired by new institutional theory. The study
directly questions the taken-­for-­granted assumptions about organizations that HRM
practitioners hold. Based on a case study of a professional service firm (PSF) and
 Critical Contextualized Studies of HRM   77

i­nterviews with HRM executives with careers in PSFs, it is shown that HRM practices
are by default calling forward a “bureaucratic” notion of the organizational context,
even when implemented in contexts where the inhabitants hold an altogether different
understanding of the organizational context. The study discusses the consequences of
this approach in practice.
The second analysis shows how studies of diversity management need to be taking a
much more situated and localized approach if we want to understand how diversity
management initiatives affect the involved employees. The remedy proposed is partly to
probe deeper into the organizational dynamics and local context to understand how the
diversity management initiatives are perceived by the employees at whom they are tar-
geted, in situ. By doing this, a critical HRM approach can bypass some of the structures
and cultural constraints that are perpetuating inequality.
The third analysis begins by claiming that a classical CMS perspective needs to be
amended if we want to understand the complexity of management initiatives. Critical
management studies tends to overstate the ability of organizations to implement the
ever more sophisticated management tools they choose to control employees and thus
becomes “blinded by control,” noting, for example, that control can become self-­control
through demands for “authenticity.” In a study of a “meditation aimed at stress preven-
tion” management among Danish probation services, it is shown how this is far from
having the (controlling) effect that a typical CMS analysis would find: By bringing work
back in to understand how managers and employees are affected, a much more nuanced
interpretation is achieved.
The three analyses that are rendered at more length below share common method-
ological, analytical, and practical grounds in the quest to achieve a more contextualized
critique of HRM practices, which also outlines the direction for future critical HRM
research proposed in this chapter:

Methodological: This approach uses qualitative studies such as ethnography, observa-

tions, and spending more time with informants as a way of getting close to the
organizational context, as well as understanding how organizational actors per-
ceive this context in a richer way.
Theoretical: This approach changes perspective, from the typical mainstream HRM
interest in managerial discourses and actions to seeing HRM as a complex social
practice; “a social practice perspective illuminates a new research path that aims
to understand how HRM in a specific organisation or context is produced through
connecting and interweaving various discourses, micro-­practices and rhetorical
strategies” (Janssens & Steyaert, 2009, p. 150). They apply a theoretical apprecia-
tion of the wider organizational context of HRM practices, noting the institu-
tions, discourses, or power relations that HRM practices are structurally
embedded within.
Practical/normative stance: As opposed to much critical work, this approach suggests
alternative paths of action based on academic inquiries that are engaged in, yet
also seek to challenge, the assumptions within the field.
78   BÉvort, Holck, and Mogensen

All three varieties of analysis aim to criticize the status quo and mainstream HRM
assumptions and practices, while still engaging in a constructive dialogue with the
HRM research and practice communities to inform alternative practices. In the conclu-
sion of this chapter, the wider potential of these approaches for HRM research in the
future will be discussed.

Human Resource Management and

Institutionalization in Specific
Organizational Contexts

From an institutional theory perspective, HRM is a set of management practices that are
likely to be strongly institutionalized (see Chapter 3 for an extended discussion of insti-
tutional theory and context). DiMaggio and Powell (1983) use personnel practices as an
example of management practices in which institutional isomorphism is highly visible
in the way the practices are diffused among US companies. According to DiMaggio and
Powell, HRM practices can be diffused through coercive, normative, or mimetic iso-
morphism. The point is that organizations conform to pressures in the environment
that are forced by law and regulations, by standards defined by professional practitioner
groups, such as HRM professional bodies, or by the peer pressure or bandwagon effects
created when many or prominent organizational actors adopt a specific practice. Baron,
Dobbin, and Jennings (1986) and Baron, Jennings, and Dobbin (1988) show how HRM
functions are developed in US corporations and other organizations as a way to handle
the institutional pressures of which specific legislative initiatives are important. Even
before that, Meyer and Rowan (1977) used HRM practices (selection) as an example of a
“rationalised myth” (p. 344), that is, practices that organizations adopt (at least for-
mally), not because they know they benefit from the practices directly, but because they
are deemed appropriate for a formal organization in the industrial environment and
because openly not conforming with the practices will affect the organization negatively
in several ways, by rendering it illegitimate as a player in the industry or in society. Other
examples could be performance management systems or company health policies.
Meyer and Rowan noted, “Such institutions are myths which make formal organizations
both easier to create and more necessary. After all, the building blocks for organiza-
tions come to be littered around the societal landscape; it takes only a little entrepre-
neurial energy to assemble them into a structure. And because these building blocks are
considered proper, adequate, rational, and necessary, organizations must incorporate
them to avoid illegitimacy” (p. 345).
One way of theorizing the context of HRM, using the new institutional theory tradi-
tion, is to understand organizational contexts as determined by the dominant institu-
tional logics within the organization and/or among the members of the organization. It
is a common for HRM practitioners in the West to hold rather strong assumptions about
 Critical Contextualized Studies of HRM   79

organizations (Bévort & Poulfelt, 2015), often similar to bureaucratic norms of good

governance, for example, equal treatment, transparency of responsibility, a division of
labor in roles, and a hierarchical structure of command. Many organizations do not
conform to these assumptions, which makes for potential conflict when the logics inter-
sect. Next, we elaborate how this type of analysis of clashing assumptions can be used to
critically investigate HRM practices and propose new ways to understand and develop
HRM practice.

Clashing Institutional Logics in

Professional Service Firms

The basic premise of a traditional contextual approach is that the properties of the con-
text in which actors act influence their choice of behavior. However, the argument in
Bévort and Poulfelt (2015) is based on the idea that context is not something that is
defined independent of the actors engaging with it. What “the context is” becomes con-
troversial in the sense that different actors see and interpret context differently, even
when they are in the same situation, for instance, an organization. Actors make sense
(Weick, 1995) of their worlds in different ways. Although institutional theory takes on
this basically phenomenological view, it is not entirely within the discretion of the
involved actors to choose how they view and act in their world. Interpretations are
bounded by structural arrangements of cognitions and practices—that is, institutional
logics (Friedland & Alford, 1991; Thornton, Ocasio, & Lounsbury, 2012). Actors choose
from a requisite selection of institutional logics that are present in the situation and to
which they have been exposed in their personal and professional history (Bévort, 2012).
Bévort (2012) showed how certified accountants, who were appointed as managers,
were exposed to—and inclined toward—two logics of organization and management.
The two managers, who were part of the same organization and even the same manage-
ment development program, drew on different logics to inform their management
behavior. The study concluded that, comparatively, the manager who was able to draw
on the “bureaucratic logic” had a much better chance of sustaining a meaningful iden-
tity as a manager and thus performing more efficiently the behavioral scripts required of
him (Bévort & Suddaby, 2016).
In Bévort and Poulfelt’s (2015) research, the organizational context is similar—PSFs
(Nordenflycht, 2010)—and the point is how HRM as a professional practice seems to
encounter the same kinds of challenges as the managers mentioned above. In fact,
accounts from five human resource managers who have made careers in PSFs show
severe incompatibilities in the how HRM professionals view the way organizations work
and should work compared with the leading partners who employ them. Bévort and
Poulfelt (2015) use the analysis of the institutional logics at play in Bévort (2012) (see
Table 4.1). One logic was a professional logic, which adhered to the traditional logic of
80   BÉvort, Holck, and Mogensen

Table 4.1.  Contradicting logics of management in professional service firms

Bureaucratic logic of
  Professional logic of management management

Orientation Outward (client) Internal

Organizational relation Autonomy Interdependency
Roles/competences Generalist (professional) Specialized/role specific
Employer–employee Collegial Manager–employee
relations
Authority Professional meritocracy (collective decisions Office, position
in partnership)
Quality Professional standards Efficiency
Criteria for success Personal achievement (billing) Unit goal achievement

Note: Adapted from Bévort (2012).

management in the Big Four accountancy firms. The other logic was a bureaucratic
logic, which represented a more managerial understanding of the organization and
which was only slowly becoming more salient there and within PSFs in general.
The two institutional logics illustrate fundamental differences in the way different
actors understand the underlying mechanisms of the organization. The differences are
fundamental in the sense that this is a deeply taken-­for-­granted way of understanding
that is not open for discussion. The actors are barely aware that other actors may have
other ways of understanding the context. Furthermore, it is very difficult to hold, let
alone act in accordance with, both logics at the same time. If we consider the first param-
eter, namely orientation, the client is the most important actor and the center of atten-
tion in the organization, which makes everything else secondary: internal meetings,
communication, managerial tasks. If we consider the last parameter, namely criteria for
success, having billing as the main criterion makes it difficult to support a climate of
teamwork and common purpose at all levels of the organization. The reader will appre-
ciate that the professional logic, as described, is the exotic variety reserved for profes-
sional organizations, while the bureaucratic logic is the generic, classic ideal of a
hierarchical, coordinated organization with a high level of division of labor according to
predefined roles. The argument that Bévort and Poulfelt (2015) make is that HRM pro-
fessionals tend to subscribe, though they are often unreflective of the fact, to a bureau-
cratic logic as their default standard for appropriate organization and management.
Because professional logic dominates the thinking and acting of staff in PSFs,
and because most HRM professionals are influenced by bureaucratic logic, they ­understand
the same organizational (or industrial) context in very different ways. Bévort and
Poulfelt (2015) report that HRM professionals repeatedly think that they are on the same
page as their PSF leading partners in relation to the organizational situation and the
need for managerial action, but often realize that this is not the case, even several
months into the implementation of joint-­consent management initiatives. Even if
 Critical Contextualized Studies of HRM   81

PSF ­partners readily engage in a general conversation on management, the intentions

discussed are very hard to implement when it comes to the real commitment of time
and resources.

Achieving License to Operate across

Differing Logics

What should HRM professionals do, according to this analysis? This question has no
straightforward or definitive answers. Given the present situation, HRM professionals
do not hold any “license to operate,” in the sense that the PSF partners (in the PSFs stud-
ied) do not entrust them with the mandate necessary to do their assigned job. Bévort
and Poulfelt (2015) suggest four actions that HRM professionals may implement to
achieve license to operate in PSFs:

• Understand the logic governing the PSFs thoroughly.

• Speak the language of the professional organization.
• Argue for the value of the HRM professional contribution in the PSF context.
• Challenge the status quo of management with sound HRM craft.

Thus, HRM professionals need to understand the different worldviews at play in the
contexts they inhabit and draw on the institutional logics that dominate the specific type
of organization. Equally, they must promote the relevant HRM practices that intelli-
gently draw on the insights of how the dominating institutional logic interprets the
organizational context.

Lessons from Institutional Logics

Analysis in Human Resource
Management Research

Based on institutional logics, a critical analysis of the challenges for HRM professionals
in PSFs opens up constructive action in several ways. First, it challenges the idea that
HRM professionals simply possess the knowhow of universal best practices for HRM
that they can meaningfully bestow upon any organisation. On the contrary, these HRM-
professionals are likely to be victims of their own preconceived notions of organizations
and management—bureaucratic logic—which is not helpful, especially in contexts like
PSFs. The analysis conversely shows how the institutional logic dominating PSFs is cre-
ating “blind spots” for management, that is, institutionalized ideas of what can and can-
not work in a PSF context.
82   BÉvort, Holck, and Mogensen

Second, as illustrated in the case example, the clash between different interpretations
of an organizational context is not reflexively accounted for. This involves a distinction
between organizational reality and perceived organizational reality. On the one hand is
an appreciation of how, for example, a bank is organized differently from a PSF; on the
other hand, we must accept that actors are “formed” by their perspective. That is, if you
place bankers in a PSF, they will try to “rediscover” the bank in that organizational con-
text or even try to recreate it.
The so-­called new institutional theory departs from the CMS angle toward HRM.
That is, instead of confirming the ever-­rising rationalization of managerial exploitation,
it questions economic rationality and adds a broader range of possible rationalizations,
as well as introducing the all-­important notion of legitimacy as a measuring rod for con-
textual success in addition to measures of, for example, profitability and efficiency. In
this way, institutional theory offers a number of alternative explanations for why organi-
zations are induced by their context to adopt, at least formally, specific HRM practices.
The institutional logics analysis above highlights how actors are inevitably embedded
in definite sets of institutional logics. Nevertheless, actors can choose to become more
insightful about dominant institutional logics besides the ones they hold from the out-
set. In the HRM context, this will typically mean that practitioners could profit from
being more sensitive about how the “baggage” they carry affects their perceptions of
their organizational context.

Human Resource Management and

Diversity Management in the
Organizational Context

The second analysis shows how studies of diversity management must take a more situ-
ated or localized approach if we want to understand how diversity management initia-
tives affect the involved employees. The remedy proposed is partly to probe deeper into
the organizational dynamics and local context to understand how diversity manage-
ment initiatives are perceived by the employees they are targeting in situ. By doing this, a
critical HRM approach can bypass some of the structures and cultural constraints that
perpetuate inequality.
Diversity management has become a major task for HRM departments in most
advanced economies. Organizations operate in and with increasingly diverse work-
forces resulting from demographic changes and mobility across borders (Collings, 2014;
Schuler, Jackson, & Tarique, 2011; Scullion & Collings, 2011). This growing diversifica-
tion of organizations and the workforce makes issues such as employee perception of
organizational justice and fairness important for companies (Swailes, Downs, &
Orr, 2014). Global trends toward more inclusive HRM (Meyers et al, 2020) and the HRM
orthodoxy argue that investing in the company’s human resources and the well-­being of
 Critical Contextualized Studies of HRM   83

employees creates better organizational performance (Drucker,  1954), in order to

convince companies to invest in diversity and inclusion as a path to a more pleasant
working environment characterized by openness, trust, and overall well-­ being
(Warren, 2006).
However, HRM practices of diversity management have been haunted by best prac-
tice presumptions designating one-­size-­fits-­all solutions to problems of organizational
inequality and disadvantage based on demographic background. Diversity manage-
ment often addresses organizational inequality in sociopsychological terms as the effect
of (majority) prejudice. Mainstream diversity management research suggests that this
must be rectified through universal, generalized HRM best practices, such as objective
procedures, training, and mentoring/network activities (Bleijenbergh,  2018; Dobbin,
Soohan, & Kalev, 2011; Holck & Muhr, 2017; Janssens & Zanoni, 2014; Qin, Nuttawuth, &
Chhetri, 2014; Williams & Mavin, 2014). According to critical diversity scholars, how-
ever, these widespread HRM practices of diversity management have generally proved
insufficient. In fact, little empirical evidence supports their ability to foster workplace
equality (Dobbin et al., 2011; Dover, Major, & Kaiser, 2016; Janssens & Zanoni, 2014;
Oswick & Noon,  2014; Zanoni & Janssens,  2015) as social exclusion and economic
inequality continue to characterize most organizations (Ferdman,  2017; Janssens &
Steyaert, 2019; Nkomo et al., 2019; Shore et al., 2018).
One line of critique pinpoints how most diversity research has been conducted at the
team and individual levels in controlled, cross-­sectional environments and has intro-
duced artificial situations, for example, lab studies using student samples, rather than
organizational studies (Jonsen, Maznevki, & Schneider, 2011). When researchers remain
outside the organizational flow and activities and instead rely on archival data, large-
scale quantitative surveys, and secondary databases as the primary data sources, they
tend to make overly broad assumptions. In addition, they are not able to capture the
complexities of the social fabric of organizational life. Another line of critique suggests
that the inadequacy results from the targeting of cognition rather than the structural
dimensions of privilege, domination, and disadvantage (Oswick & Noon, 2014; Zanoni
and Janssens, 2015). These critics suggest that such practices might even backfire, result-
ing in stereotyping and remarginalization (Kalev, Dobbin, & Kelly, 2006).
This insistent focus on cognition in a sociopsychological and individual perspective
downplays the dynamics of the organizational setting, “leaving organisational struc-
tures and routines which reproduce inequalities and normalize the privileges of the
dominant group (e.g. white and male employers) unchanged” (Janssens & Zanoni, 2014,
p. 2). Disregarding these more subtle, everyday organizational interactions that are
(re)productive of organizational inequality structures might partly explain the inability of
diversity research to mitigate current diversity challenges in the workplace (Dobbin et al.,
2011; Holck, 2016b; Jonsen et al., 2011). Diversity research then loses sight of important
organizational dynamics, including the organization of tasks, operations, and situational
challenges that are connected to but distinct from the discourses that are often at the fore
of HRM diversity literature (e.g., Romani, Holck, & Risberg, 2019; Śliwa & Johansson,
2014; Zanoni & Janssens, 2004, 2015).
84   BÉvort, Holck, and Mogensen

The next case study offers an example of how generalized HRM diversity management
practices might have adverse effects by paradoxically perpetuating rather than changing
organizational inequality. The study draws on extensive ethnographic research obtained
through longitudinal two-­year research demonstrating the potency of or­gan­i­za­tionally
embedded, qualitative research.

The Interconnectedness of Human

Resource Management Diversity
Practices and the Organization of
Work (Case Study)

The case study is a team-­based Danish municipal organization employing interna-

tional high-­skilled knowledge workers (Holck, 2016a, 2016b, 2018). The organization
successfully applies the municipal diversity and equality policy, which almost solely
focuses on recruitment strategies aimed at ensuring that staff composition mirrors the
demographics of the municipal area. Many of the employees with international back-
grounds are employed through various public subsidized labor schemes aimed at
improving their language skills, helping them become accustomed with typical Danish
workplace culture, or upgrading their professional skills. Hence, international employ-
ees are employed in temporary (at least initially) training positions with little access to
career mobility.
Despite the values of diversity and inclusion, the organization is troubled by poor
employee satisfaction because employees, especially those with international back-
grounds, express experiences of harassment based on language, skin color, and race.
Through interviews and participative observations, the researcher identifies how poor
employee satisfaction stems from similarity attraction guiding collaboration based on
stereotypical perceptions of minority and majority members’ skills and capabilities. The
emerging themes among the employees deal with how an international background is
seen as a skill in itself (giving access and legitimacy when dealing with international
business partners) and as an inherent deficiency with regard to the required Danish-
language competence, which makes international employees “difficult to work with.”
Digging deeper into employee relations reveals that the organization of work in teams,
coupled with ongoing organizational change, actively hampers cross-­racial collabora-
tion. A dual structure of informal teams combined with a formal municipal bureau-
cratic structure results in an opaque organizational landscape. The dual structural setup
encourages peer competition, anxiety, and a lack of orientation and puts minorities in a
particularly disadvantageous position (Holck, 2018). These structural features promote
similar attraction that guides collaborative patterns and results in numerous divisions
among employees, thereby rendering differences petty as opposed to progressive.
 Critical Contextualized Studies of HRM   85

Hence, the organization of work in a dual formal–informal hierarchy and ongoing

change result in some of the root causes of the employees’ experiences of harassment
and sense of unfairness.

Lessons from Contextualized Human

Resource Management Research on
Diversity Management

First, the case illustrates how generalized HRM diversity practices might reinforce rather
than reduce organizational inequality. Because the organization predominantly recruits
staff with international backgrounds through several integration programs for migrants,
the staff are perceived as vulnerable groups in need of help on behalf of the majority to
access the labor market. Diversity management then becomes entwined with the logic of
corporate social responsibility and becomes a moral obligation of the corporation to care
about “vulnerable groups in the labor market” by recruiting and including them in the
organization (Holck & Muhr, 2017). By drawing on the values of doing good and helping
migrants embedded in HRM diversity programs, managers and HRM professionals
actively undermine the competences and capabilities of high-­skilled migrants. Through
recruitment practices of corporate social responsibility, an ethnic hierarchy of
benevolent-­majority Danes helping “needy” migrants is instilled: THe migrant “other” is
seen as vulnerable and—despite being highly skilled—in need of kindness and help from
those (majority Danes) who are more fortunate. This reinforces the managers’ and HRM
professionals’ actions as acts of generosity, rather than simply recruitment of competent,
highly skilled people. Paradoxically, the HRM professionals and managers in charge of
recruitment in the organization—despite being committed to diversity and inclusion—
actively contribute to the continuation of discrimination. The general tendency of main-
stream HRM diversity research to study discrimination from the perspective of the
victims—as disadvantaged individuals—misses out on the ability to identify the struc-
tural causes of discrimination that might stem from the context, such as the organiza-
tional setup or diversity initiatives (see also Romani et al., 2019).
Second, the case study underlines how HRM diversity practices must be explored in
situ—as embedded in formal and information structures of everyday organizational
processes. There is no best way or best practice, only local, situated solutions. This neces-
sitates an approach that moves beyond the stylized typologies and decontextualized
approaches that prevail within the current HRM (diversity) management research (e.g.,
Ahonen, Tienari, Meriläinen, & Pullen, 2014; Ariss, Koall, Özbilgin, & Suutari, 2012;
Jonsen et al., 2013; Kalev,  2009; Mamman, Kamoche, & Bakuwa,  2012; Oswick &
Noon, 2014; Van Laer & Janssens, 2011). In terms of the practical implications of the case
study, the results suggest HRM practitioners should look for situational relevant and
customized initiatives to promote organizational equality and inclusion, instead of
86   BÉvort, Holck, and Mogensen

proposing generalized HRM diversity management initiatives. Relating to the case

study, such initiatives could imply compulsory rotations in teamwork to promote col-
laboration beyond demographic and educational differences; conflict resolution to
ameliorate cross-­cultural and cross-­educational collaboration; and international staffs’
access to crucial information and resources as well as involvement in high-­prestige
mainstream tasks. As we will argue, formal HRM practices—such as objective proce-
dures when recruiting, sensitivity training to prevent discrimination, and networking to
break with the isolation commonly encountered by employees with a diverse profile—
often fail because they are not embedded in a situational assessment of the tacit, organiza-
tional “underbelly” of power battles related to privileges, disadvantages, and resistance.

Contextualization of Critique: Bringing

the Work Organization Back In

In traditional HRM studies, encompassing everything from the cultivation of a com-

mon culture to competence development and mindfulness, HRM programs are typi-
cally considered rational means by which HRM and management are able to develop
and optimize the individual, the group, and the wider organization—to the benefit of all
parties. In critical HRM studies, however, the same programs are typically analyzed as
more or less sophisticated ways of exploiting employees, as ways of exerting control (see,
e.g., Fleming, 2005; Nicholson & Carroll, 2013). Fleming and Sturdy (2009) differentiate
between forms of control, depicting at the same time a historic development of the
employment relationship: from a classical and bureaucratic, top-­ down oriented
approach, which tries to discipline employees from the outside, to an approach working
increasingly to internalize the rationale of the managerial programs in the employees
themselves, by way of widespread autonomy and self-­management. Human resource
management programs are no longer just intended to shape employees to become
“organisation men” (Whyte,  1956) in accordance with organizational norms. Rather,
new forms of control carry an ambition to foster authenticity, prompting employees to
“become themselves” in the name of flexibilization, innovation, and productivity
(Cederström & Fleming, 2012; Fleming & Sturdy, 2009; Spicer, 2011).
The HRM critique focusing on management programs and their specific forms of
control is important and relevant insofar as it reminds us to question one of the most
basic and hardwired assumptions within HRM theory and practice: that HRM is a win–
win situation—that it is possible to unite concerns for productivity with concerns
for employee well-­being, satisfaction, and happiness. However, as pointed out by
Ekman (2014), CMS critique is often crafted as a story of “the usual suspects,” which
implies that in critical analyses, managers and employees are cast in predefined
roles: the exploiters and the exploited, respectively. This predefined role descrip-
tion tends to keep us from valuable insights. As HRM programs always appear in
 Critical Contextualized Studies of HRM   87

specific  organizational contexts, attentiveness toward practice and situated social

dynamics shows they produce diverse outcomes and consequences for critical HRM
analysis as well as practice.
A specific way to theorize and mobilize context in critical HRM analyses comes from a
focus on the work organization. “Bringing work back in” to organization and manage-
ment theorizing has been promoted and reinvigorated by several organizational scholars
(Barley & Kunda, 2001; Du Gay & Vikkelsø, 2013; Lopdrup-­Hjorth, 2015; Mogensen, 2012)
who argue that it offers a much needed contextualization and specification of organiza-
tion theory as well as the role of management (Du Gay & Vikkelsø, 2012). Focusing on the
actual work, work roles, and their mutual coordination situates/contextualizes the study
of HRM practices and thus challenges the current basis and assumptions of HRM. As we
will demonstrate in the case study in the next section, which focuses on a stress-
preventive meditation program within the Danish Probation Services, the effects of the
meditation program are inseparable from the specific work and work organization. By
situating our analyses in the work organization, HRM programs may turn out to be far
less univocal and also far less controlling and powerful than both the official managerial
discourse and the usual critical approach of CMS tend to imply.

Meditation as Stress Prevention in the

Danish Probation Services (Case Study)

This study sought to investigate empirically (qualitative interviews and documents) the
ambitions and effects of a meditation program called “Project Peace (of mind)”
(Mogensen 2018). The program was initiated by the HRM department of the Danish
Prison and Probations Services and supported by external consultants. Participation in
the program was voluntary and ran for seven weeks, during which groups were edu-
cated weekly in meditation techniques and additionally offered individual healing ses-
sions by the external consultants. The organizational ambition of the program was to
prevent stress among employees within the probation services, thus lowering the levels
of illness, especially short-­term illness. In the official presentation directed toward local
managers and employees, the program was presented as a way to “help employees recre-
ate contact with their inner peace,” as a result creating “greater happiness as well as per-
formance both in their private lives and their work lives.”
Keeping with the official presentations and ambitions of the meditation program, it
would be an obvious analytical strategy for the CMS scholar to look toward theories of
neo-­normative control and critical debates on employee authenticity for inspiration
(Cederström, 2011; Fleming & Sturdy, 2009; Spicer, 2011). An analysis along those lines
would typically address the formal discourse of the program, seeking to document
how the Project Peace program would manage and exploit the employees. Because
meditation techniques would help employees connect with their hitherto undiscovered
88   BÉvort, Holck, and Mogensen

resources of “inner peace,” under the guise of being relieved from stress, the employees
would in fact make themselves accessible to further exploitation by the organization.
However, supplementing the focus on the managerial discourse with an analysis of the
specific work organization in question—the specific organization of work among and
between the participating counselors and administrative staff—thus situating the analy-
sis as well as the critique, produces a quite different story, a story that challenges and
displaces (at least two) basic assumptions within CMS: the generic employee identities
and the powers of management.

From Generic Identities to Specific

Work Roles

Critical management studies tends to treat employees as generic, interchangeable

identities, which leaves critical analyses unable to appreciate the importance of contex-
tual ­differences in employee responses (Fleming & Sturdy, 2009; Mogensen, 2018).
Acknowledging the differences between employees—in this case the participating coun-
selors and administration staff in the meditation program—produces important nuances
in terms of grasping the actual effects of HRM programs and thus also a different outset
for critique. While the counselors in the probation services worked autonomously, rely-
ing on their professional judgment and the ability to plan their work individually, the
administration staff was far more dependent. Because they were acting in a supportive
role to the counselors, as well as being tied up by fixed office hours for incoming calls and
visits from clients, their workdays proved far less flexible. Furthermore, they were work-
ing in an open office environment instead of the single offices of the counselors. This may
seem of little importance to the analysis of the meditation program; however, it turned
out to be decisive. To the administration staff, their specific working conditions made it
difficult, if not impossible, for them to keep up with meditation as a regular practice.
While counselors could decide for themselves to close their door and take five minutes
for meditation, administration staff were inevitably bound to a work setup that simply
did not match the prescribed identity of the meditation program. As a result, the admin-
istration staff was frustrated, not because they found themselves exploited and caught in
an “authenticity trap” (Spicer, 2011), but because they did not have the work autonomy
that allowed them to make use of the meditation techniques taught.

From Powerful to Powerless

Management

In CMS critique, HRM programs are often considered an expression of managerial

rationality relating to the story of “the usual suspects,” just as HRM programs are
 Critical Contextualized Studies of HRM   89

often treated as a proxy for management. When appreciating an organizational and

­contextualized approach to HRM, however, there might be quite a gap between managerial
discourse and actual managers, not least when it comes to their impact and powers in
practice. There is a need for greater empirical sensitivity in order to acknowledge that “the
‘exploitation’ of authenticity discourses at work is practiced by employees as much as by
management” (Ekman, 2014, p. 304). When it comes to the case of the meditation program
within the probation services, there was quite a difference between the discourse among
local managers and the official program. While the program was able to facilitate activities
and new practices among the employees (at least to some extent), the local managers were
more or less excluded from the project. Because the program was run primarily by an
external consultancy and because not all employees participated in the voluntary program,
in practice the managers had a hard time becoming involved and making the program one
of common organizational concern. This left the managers unable to support the ambitions
of the program and the participating employees as they would have liked to. This
managerial support would have been needed if the administration staff had the possibility
to take time out for meditation. In other words, contrary to the traditional HRM critique,
the problem was not the powerful role of management, but rather the lack of it.

Lessons from “Bringing Work Back in” to

Human Resource Management Critique

By introducing classical aspects of work tasks, work roles, and their organization to the
critical analysis of HRM programs, important nuances to our critical lens are produced.
It invites us to shift our focus from abstract employee identities to the characteristics of
particular work roles, as well as the specific work tasks and their organization. Returning
to the issue of stress prevention, which was the aim of the meditation program and the
main concern among the employees involved, the study showed that the most impor-
tant issue to be critically addressed was not the introduction of the meditation program
in itself. The main concern related to general high work pressures and the uneven distri-
bution of work autonomy between counselors and administration staff. These problems,
as we suggest, cannot be addressed by criticizing the meditation program as a matter of
subtle managerial control, as would be the predominant strategy of CMS. As the case
further illustrates, the relationship between specific HRM programs and specific man-
agers and their managerial powers may be rather feeble. Correspondingly, this suggests
a different take when it comes to the usual storyline of power and control in CMS. It calls
for researchers to move their attention within critical HRM analysis away from manage-
ment and management discourse and their implied abstract employee identities.
Instead, it invites us to base our critique as well as our possible suggestions for improve-
ment in the work reality of the specific actors involved. It calls for a contextualization
that puts work and its specific work roles and organization in the center—if we are to
make our critical HRM analysis truly useful in practice.
90   BÉvort, Holck, and Mogensen

Concluding Discussion: Engaged

Criticism of Human Resource
Management Practices in
Contextualized Organization Studies

Studying HRM practices as embedded in a complex pluralistic world, with a multitude

of stakeholders and perceptions of reality, may seem like a daunting task, with the likely
result of reaching inconclusive and impractical results. On the contrary, the view sub-
scribed to in this chapter is that the typical propensity of HRM research to abstract itself
from this complexity, by uncritically assuming a unity of interests of organizational
actors or by accepting simple causalities between HRM actions and their effects on the
involved actors and organizations, is threatening to render it irrelevant to HRM aca-
demia and practice alike.
In the examples of analyses of HRM as a social practice given in this chapter, the
notion of organizational context is expanded with an awareness of how HRM practices
and its practitioners are embedded in specific institutional contexts (and how these
change), how the local specificity of context can affect the way HRM initiatives
are implemented and their consequences, and finally the role of employees as active
­co-producers of organizational reality and not just passive recipients of managerial
­initiatives. In all three analytic examples, a critical perspective on HRM practices is
installed by an in-­depth structural, contextualized perspective zooming in on the inter-
play between generalized HRM practices and their organizational “situatedness.” This
perspective does not promote organizations as crude “organigrams” or background
information, but as practical tools to tackle the organizational situation at hand (Du Gay &
Vikkelsø, 2013, 2014). This advocates for bringing the organization (back) into HRM
research and hence to base it on a more thorough assessment of the organization in
order to develop adequately “situated” and organizationally relevant HRM practices
(Holck, 2018; Romani et al., 2019; Vikkelsø, 2015). As the three case analyses illustrate, a
greater awareness of organizational dynamics is necessary to discern what enables and
constrains more emancipatory or stakeholder ways of organizing HRM. Methodologically,
the three case studies highlight the relevance of a critical ethnographic and qualitative
research approach, which enables the researcher to observe and interact with organiza-
tional actors and their acts in situ. The purpose of such an approach is not to tell a good
story, but to move beyond participants’ experiences to access deep structures of repres-
sion and to generate critical awareness of alternative, nonuniversal ways of organizing
HRM practices of diversity management or a mediation program (Duberley & Johnson,
2011; Ghorashi & Sabelis, 2013). This challenges the prominence of HRM research based
on abstract theoretical assumptions and large-­scale secondary data. Every organizational
structure and form potentially both enables and constrains the organization of HRM
practices differently, which is a neglected fundamental dynamic that practitioners must
take into consideration (Holck, 2018). Accordingly, there is a need to expand the scope
 Critical Contextualized Studies of HRM   91

of contemporary HRM research to move beyond stylized typologies and theoretical

assumptions by grounding research more firmly in empirical studies of organizations.
The three analytical examples support a productive way ahead for critical HRM stud-
ies to follow the three approaches offered in the introduction to this chapter:

Critical and constructive reflectivity: A distinctive kind of reflectivity aware of the

­different institutional logics at play offering best practices that are often unconsciously
reproduced—no matter whether the organization works with professionalization,
diversity, or stress reduction. This often goes through the researcher making illus-
trative negations, deconstructions, or defamiliarization, as suggested by Alvesson
et al. (2009), to create organizational awareness of taken-for-­granted institutional
logics, stereotypes about different demographic identities, or challenging ideolo-
gies of meditation as always being good for employees.
A performative critique: Critical performativity aiming to transform “pure critique” into
a critique that informs practice. This necessitates insisting on criticizing the organiza-
tion to make it progress or being aware of the “default” assumption of why HRM
initiatives do not have the intended consequences, but with an affirmative gesture of
recognizing the organizational history and culture and in appreciation of the con-
straints of the work and life situations of people (including managers) in the contem-
porary organizational world, for example, that a legitimate purpose for organizations
is the production of services and goods, as mentioned by Alvesson et al. (2009).
Contextualized critical HRM studies: Last, but not least, by contextualizing practice
we create a genuine awareness of the impact of context and the blind spots of both
the best practice and the best fit approaches to studying HRM. Contextualized
critical HRM studies presuppose a research strategy that brings the researcher
close to the organization and its inhabitants and indicate that it is important to
spend time to understand the organization in order to understand how the or­gan­
i­za­tional actors at different levels perceive it. This kind of creating proximity to the
phenomenon must be supplemented with a theoretical analysis that goes beyond
notions of whether or not a behavior supports managerial objectives. And finally,
it takes researchers who have an interest in producing a kind of knowledge that
can help the stakeholders of HRM improve their organizations and working lives.

Ultimately, the basic argument of this chapter is that contextualized critical HRM
studies can contribute to improve HRM research, both in terms of a better understand-
ing of the role and impact of HRM in organizations and society and in terms of the rele-
vance of HRM research for organizational stakeholders.

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 chapter 5

The Per for m a nce L ens

The Public-Sector Case

Paul Boselie and Carina Schott

The relationship between human resource management (HRM) and performance is

one of the most popular themes in HRM and management debates since the turn of the
twenty-­first century (Guest, 2017). A substantial body of empirical research focuses on
the added value of people management in organizations. However, many issues remain
unsolved. One of these issues is the relationship between HRM and performance in
public-­sector contexts (Knies, Boselie, Gould-­Williams, & Vandenabeele, 2018). Public-
sector contexts such as national government, local government, international govern-
mental organizations, nongovernmental organizations, healthcare, military services,
and education represent a wide range of service organizations aimed at some kind of
public value creation as the “ultimate business goal.” People play a key role in reaching
this goal given the labor- and service-­intensive character of public-­sector work
(Knies et al., 2018). Put differently, without the many highly skilled and motivated
teachers, nurses, and police officers working all over the world, public service delivery
would fail.
Defining performance is heavily contextualized and highly dependent on both exter-
nal (for example, political and institutional mechanisms) and internal (for example,
workforce characteristics such as the proportion of professionals) mechanisms
(Andersen, Boesen, & Pedersen, 2016). Healthcare quality and safety, for example, are
heavily contextualized and determined by both legislation and professional norms and
standards of medical professional associations. HRM and performance in these public-
sector organizations is also highly dependent on the nature of the activities and the mul-
tiple stakeholders involved that determine a possible value chain (Van der Wal, de Graaf,
& Lawton, 2011).
To fully understand the HRM value chain in public-­sector contexts, it is important
to take into account the internal and external context of these specific organizations.
98   Boselie and Schott

The Harvard model (Beer, Spector, Lawrence, Mills, & Walton, 1984) is one of the most
popular models that can be characterized by the specific attention paid to internal and
external context, multiple stakeholders, and a multidimensional performance con-
struct. Recently, Beer, Boselie, and Brewster (2015) made a plea for putting the Harvard
model in the spotlight again in response to the often one-­sided economic value chains
that have dominated both theory and practice since the 1980s. This model is highly valu-
able because it provides a more nuanced framework for analyzing the HRM–performance
relationship (Boselie, Dietz, & Boon, 2005). Public-­sector contexts, however, each have
their own complexity, dynamics, and HRM issues that might not be fully captured by
the more generic Harvard model. In addition, public-­sector employees have been found
to differ significantly from employees working in the private sector in relation to their
motivational profiles and the values they identify with (Van der Wal, de Graaf, &
Lasthuizen,  2008), suggesting that nuances to the Harvard model may be necessary
when being applied in a public context. Wright and Nishii (2013) have proposed a
generic value chain model—the HRM process model—outlining the mediating variables
in the HRM–performance relationship, thereby presenting a very useful refinement of
the Harvard model. To our knowledge, Vandenabeele, Leisink, and Knies (2013) are one
of the first to present a public management model for theorizing the HRM value chain in
public-­sector organizations. However, they only pay limited attention to the idea that
performance is a multidimensional concept, as discussed in the Harvard model.
The aim of this chapter is twofold. First, a nuanced Harvard model will be developed
that blends contemporary general HRM insights with public administration and public
management literature. This refined model will be more meaningful for a public-­sector
context because it highlights the stakeholder interests, situational factors, and mediat-
ing factors (HRM policy choices and HRM outcomes), as well as long-­term conse-
quences, from a public-­sector context perspective. Second, an overview of HRM and
performance findings based on an analysis by Boselie, Veld, and Van Harten (2019) will
be presented to show what we already know about the added value of HRM in a public-
sector context. On the basis of this literature review, we will identify gaps in the litera-
ture, thereby providing a research agenda for the future.

The Harvard Model

The Harvard model by Beer et al. (1984) represents a contextualized HRM value chain
that recently received new attention as a result of the global financial crisis and the lack
of stakeholder perspectives in HRM approaches (Beer et al.,  2015). In the Harvard
model, attention of context is threefold. First, there is specific attention for situational
factors, including workforce characteristics, business strategy and conditions, manage-
ment philosophy, labor markets, unions, task technology, and laws and societal values.
Workforce characteristics include, for example, the level of education, employee age,
 The Performance Lens: The Public-Sector Case   99

employee tenure, and the percentage of female workers. Business strategy and conditions
reflect the strategic choice made by top management in combination with the state of
the market in which an organization operates, for example, in terms of growth, stability,
or decline. Management philosophy represents the core values of an organization and its
cultural heritage. The labor market represents the ability of its managers to compete
­successfully with other organizations for human resources. Beer et al. (1984, p. 29) write
that “the boundaries that define the labour markets in which a firm competes may vary
dramatically from one group of employees to another.” Trade unions (and works
­councils inside an organization) affect HRM-­related issues such as working conditions,
formal employee involvement, collective payments (for example, through collective
bargaining agreements), and due processes in the case of conflicts. Beer et al. (1984,
p. 32) define task technology as “the way equipment (hardware and software) is arranged
to perform a task.” Law and societal values vary across countries and even across sectors.
They take into account the unique culture or ideology of each country and region.
Second, specific attention is paid to stakeholder interests, including shareholders,
management, employee groups, government, community, and trade unions. This
dimension of stakeholder interests is also known as the multiple stakeholder perspec-
tive, in contrast to the shareholder model that mainly focuses on the principals (the
owners) and the agents (top management) (Beer et al., 2015). In the original book by
Beer et al. (1984, p. 21), the authors describe the stakeholder interest perspective as
follows:

One way of viewing a company is as a mini society made up of large numbers of

occasionally harmonious, occasionally conflicting constituencies, each claiming an
important stake in the way the company is managed and its resources are deployed.
Central to the HRM approach of this book [Beer et al., 1984] is the assumption that
general managers must recognize the existence of the many stakeholders and be
able to comprehend the particular interests of each stakeholder. In thinking about
various HRM policies and practices, then, the general manager plays an important
role in balancing and rebalancing the multiple interests served by the company.

This citation presents the heart of the Harvard model in which not only are multiple
stakeholders acknowledged, but also it is pointed out that their interests can be mutual
or conflicting and that it is up to managers to continuously find the right balance in the
shaping of HRM in an organization. This is where balanced approaches in HRM find
their origins, as presented in the work by Paauwe (2004) and Boselie (2014).
Finally, the ultimate organizational outcomes or long-­term consequences are defined
in relation to organizational effectiveness, employee well-­being, and societal well-­being,
reflecting a multidimensional performance construct for HRM value creation.
Organizational effectiveness is defined by Beer et al. (1984, p. 16) as “the capacity of the
organisation to be responsive and adaptive to its environment.” This outcome is often
represented by a combination of indicators such as quality, productivity, efficiency, flex-
ibility, innovation, market share, market growth, sales, and profits. Employee well-­being
100   Boselie and Schott

Stakeholder interest
Stakeholders
Management
Employee groups
Politicians
Community
Unions HRM policy choices HRM outcomes Long-term consequences
Employee influences Commitment Individual well being
Human resource flow Competence Organizational
Reward systems Congruence effectiveness
Situational factors Work systems Cost-effectiveness Societal well-being
Workforce characteristics
Business strategy and
conditions
Management philosophy
Labor market
Unions
Task technology
Laws and societal values

Figure 5.1.  Harvard model. HRM, human resource management. Adapted from Beer et al.
(1984), Figure 2-­1, p. 16, Map of the HRM Territory. Used with permission.

refers to the employees’ health (for example, in terms of stress and burnout risk) and
perceptions (for example, in relation to job satisfaction, affective commitment, trust,
and motivation). Societal well-­being is related to employee security in a broad sense,
fairness, social legitimacy of organization’s activities, and industrial democracy
­principles (for example, the right to organize into a trade union and the degree of
formal employee involvement in decision-­making) (Beer et al., 1984). The nature of
the three-dimensional performance construct itself is asking for contextualization
and is (in)directly related to the first two dimensions of stakeholder interests and
­situational factors.
In the Harvard model, the stakeholder interests and the situational factors are
assumed to affect the strategic choices (HRM policy choices) of managers with respect
to the shaping of employment relationships through employee influence, human
resource flow, reward systems, and work systems. Beer et al. (2015) are very clear in stat-
ing that employee influence is the most important HRM domain. Chapter 3 in their clas-
sic book is focused on employee influence. Beer et al. (1984, p. 40) start by writing that
an employee’s stake consists of an economic part (for example, efforts versus payment),
a psychological part (for example, dignity and meaningful work), and a political part
that has to do with power, freedom, and control: The central question in the model
toward this factor is, “How can they [employees] act to improve or protect their eco-
nomic share, psychological satisfaction, and rights?” Human resource flow is very much
related to recruitment, selection, socialization, and employee development. It also
relates to employee mobility and managing outflow. Reward systems cover all aspects
that have to do with pay, salaries, performance-­related pay, bonuses, profit sharing, and
the distribution of rewards in an organization. Finally, work systems refer to a particular
combination of job tasks, technology, skills, management style, and personnel policies
and practices. It is the way jobs are organized, for example, in relation to autonomy,
teamwork, job enlargement, job enrichment, rotation, and the degree of self-­regulation.
If this is done in the right way, a work system can become a high-­commitment work sys-
tem, or what is nowadays known a high-­performance work system. The four elements of
 The Performance Lens: The Public-Sector Case   101

HRM policy choices in the Harvard model are intertwined and aligned in an ideal
situation.
The HRM outcomes in the model consist of commitment, competence, congruence,
and cost-­effectiveness. The HRM policy choices presented above are assumed to posi-
tively affect the HRM outcomes, and these HRM outcomes are assumed to contribute to
the long-­term consequences in relation to organizational effectiveness, individual well-
being, and societal well-­being. Commitment refers to the affection employees have with
the organization and their job. Competence represents the necessary knowledge, skills,
and abilities of employees for their own employability and the organization’s future.
Cost-­effectiveness relates to the costs of given policy in relation to wages, benefits, turn-
over, absenteeism, strikes, and so on. Finally, congruence represents the state of agree-
ment on HRM policies and practices between management and employees, different
employee groups (for example, core versus peripheral), the organization and the com-
munity, employees and their families, and within the individual employee.
Taken together, the Harvard model is a contextualized HRM value chain, although
still rather generic, with limited attention for sector specificities, for example, between
private-­sector and public-­sector organizations and the characteristics of the people
working in these organizations. In the next section, the HRM and performance chain
will be (1) contextualized further on the basis of public administration and public man-
agement literature and (2) refined based on insights from recent developments in the
generic HRM literature to develop a nuanced Harvard model that is more suitable for
the public-­sector context in the early twenty-­first century.

Human Resource Management and Performance: Insights

from Public Administration Literature
As described, the ultimate outcomes of private-­sector organizations according to the
Harvard model are organizational effectiveness, employee well-­being, and societal well-
being. But what are public organizations expected to deliver? Vandenabeele et al. (2013)
have argued that Moore’s (1995) notion of “public value creation” and Jørgensen and
Bozeman’s (2007) “inventory of public values” are useful to answer this question,
thereby providing meaning to the concept of public-­sector performance. While public
value creation is what we expect from public organizations, “the assessment and justifi-
cation of what public value public organisations create can be understood in terms of
public values described by Jørgensen and Bozeman (2007)” (Vandenabeele et al. 2013,
p. 41). We agree that value creation and public values help to contextualize performance
in a public-­sector context. However, different public values can be conflicting in specific
situations. Stimulated by the rise of managerialism (Frederickson, 2005) and economic
individualism (Bozeman,  2007), public organizations are increasingly challenged to
balance “classical” public values such as integrity, neutrality, and legality, on the one
hand, with more “business-­like” values such as efficiency, innovation, and effectiveness
on the other (Schott, Van Kleef, & Steen, 2015). Fortunately, value conflicts are not the
102   Boselie and Schott

norm because most values are complementary in relation to service outcomes. However,
situations also exist where safeguarding one value means trading off another. A telling
example can be found in the daily work of medical doctors studied by Jensen and
Andersen (2015). Medical doctors can prescribe antibiotics whenever they will have the
slightest chance to cure a patient of an illness. However, prescribing antibiotics increases
the likelihood of bacterial resistance, a state that eventually renders particular drugs
ineffective for future treatment. As a consequence, the question of what we expect from
public organizations and public servants becomes difficult to answer. Medical doctors
are forced to weigh responsiveness to the individual patient against the public interest.
More than a half century ago, Bailey (1964) pointed to the bittersweet character of public
policy: “Welfare policies may mitigate hunger but promote parasitic dependence; vaca-
tioning in forests open for public recreation may destroy fish, wild life, and through
carelessness in the handling of fire, the forests themselves” (p. 267).
These examples illustrate that value creation and public values themselves are not suf-
ficient to clarify what performance in a public context means. On the basis of the notion
of value creation, we would expect that public organizations contribute to both sides of
the coin: enough food for everyone and biodiversity; individual patient health and pub-
lic health. Because this may not be possible at all times, we need alternative—or at least
additional—approaches to clarify the concept of performance in public organizations.
One way to reach this aim is to determine who decides what good performance is
(Andersen et al., 2016). While in private organizations the authority to define good per-
formance is primarily associated with the owner or owners of the organization, public
organizations have stronger relationships with governmental and political authorities.
This means that good performance in a public context is about attaining democratically
stated goals, which can change over time and may be influenced by professionals who
also hold the authority to define what good performance is (Ouchi, 1980). The need to
include multiple stakeholders is also central to the Harvard model, as discussed previ-
ously. For the public sector, political authorities (politicians) are important stakeholders
who need to be included in the model.
If we want to study the added value of HRM in a public context, the question of how
to measure public-­sector performance needs to be addressed. We have discussed the
fact that defining good public-­sector performance is difficult. The notion of value cre-
ation is rather abstract and public values—which provide a justification of what value
public organizations are expected to create—can be conflicting. This makes the assess-
ment of public-­sector performance difficult, too. De Bruijn (2002) argues that public-
sector performance is difficult to measure because it depends on too many factors. Put
differently, “the time between effort and its effect may be too long to conduct meaning-
ful research” (de Bruijn 2002, p. 579). Rather than focusing on outcomes, public-­sector
performance is therefore often measured by more direct effects, also called “output”: for
example, the number of the graduates leaving a university, the number of patients
treated by a medical doctor, and the number of fines reported by a police officer.
Although frequently used, this focus on output has two important limitations. First,
output presents only a partial picture of what we expect from public organizations.
 The Performance Lens: The Public-Sector Case   103

Hatry (2015) therefore stresses the need for multiple types of performance indicators.
Second, measuring performance by output may prompt game playing. For example,
concentrating on the number of students graduating from high school each year can
tempt teachers to primarily prepare their students for passing state exams, thereby
neglecting their task to raise responsible, social, and independent citizens. Because of
these limitations, researchers have looked for alternative ways to measure the added
value of HRM in a public context. In the next section, we discuss the findings of a recent
review on the relationship between HRM and performance in the public sector.

Situational Factors
Situational factors in the Harvard model refer, among other things, to the characteristics
of the workforces and conditions for the business strategy. A large body of research has
found attitudinal and behavioral differences between public- and private-­ sector
employees. We argue that it is important to pay attention to these differences to make
the model more suitable for the public context. At an individual level, an extensive body
of research has documented higher levels of public service motivation, which can be
defined as “an individual’s orientation to delivering services to people with a purpose of
doing good for others and for society” (Perry & Hondeghem, 2008, p. vii) among public-
sector employees compared to employees working in the private sector (e.g., Andersen,
Pallesen, & Pedersen, 2011; Lewis & Frank, 2002). Aggregated results of a systematic lit-
erature review by Ritz, Brewer, and Neumann (2016) suggest that public sector–motivated
individuals tend to choose public service jobs. An explanation for this finding is that
public organizations provide more opportunities to perform public service and societal
meaningful work compared to profit-­oriented private organizations. At the same time,
public service motivation has been found to be stimulated by specific HRM practices
(Giauque, Anderfuhren-­Biget, & Varone, 2013; Schott & Pronk, 2014). This means that
public service motivation can also be seen as a public sector–specific HRM outcome.
Public sector–motivated individuals are expected to perform better because they per-
ceive their work to be meaningful and rewarding (Ritz et al., 2016).
Next to this high level of public service motivation, strong evidence exists that public-
sector employees are more intrinsically and less extrinsically motivated than individuals
working in the private sector (Bullock, Strich, & Rainey, 2015) and that these two groups
of employees differ regarding the values they identify with. For example, a preference for
“traditional” public values was found in a Dutch study among public managers, while
private-­sector managers seem to consider “profitability” and “innovativeness” more
important than “lawfulness” and “impartiality” (Van der Wal et al., 2008). Moreover,
public servants tend to be more risk averse (Wildavsky & Dake, 1990) and are more
likely to collaborate in situations that demand competition (Esteve, Van Witteloostuijn,
& Boyne, 2015).
Finally, differences also seem to exist in the “need for closure,” which can be defined
as an individual’s desire for a firm answer to a question as compared to confusion and
104   Boselie and Schott

ambiguity (Kruglanski,  2004). For example, Franco, Rouwette, and Korzilius (2016)
found a higher need for closure among business administration students compared to
public administration students. At one organizational level, public organizations are
also increasingly held up to higher standards for transparency and accountability
(Bovens, Schillemans, & ‘t Hart,  2008). Public organizations differ from private
­organizations regarding their degree of organizational formalization. Private organi-
zations seem to have more red tape and rules than private firms. In particular,
sharp  differences about personnel and purchasing rules seem to exist (Rainey &
Bozeman, 2000).

Insights from Recent Developments in the Human Resource

Management Literature: The Human Resource Management
Process Model
Wright and Nishii (2013) have proposed a generic value chain model—the HRM process
model—outlining the mediating variables in the HRM–performance relationship. The
model has been empirically applied and tested in multiple HRM studies, for example, by
Knies (2012). The authors make a distinction between intended HRM practices (strat-
egy and policies), actual HRM practices (implementation), and perceived HRM prac-
tices. Vandenabeele et al. (2013) integrate the HRM process model into their model of
the HRM–performance relationship for public-­sector organizations, thereby presenting
a contextualized HRM value chain in public organizations. In this model, the relation-
ship between HRM and performance is realized through “management intentions,”
“management actions,” and “workforce perceptions.”
The strength of the Vandenabeele et al. (2013) model is the public-­sector contextual-
ization, while its performance rationale, for example, in relation to a multidimensional
performance perspective, is less developed. When comparing the Harvard model and
Vandenabeele et al.’s (2013) HRM value chain, the relatively restricted approach to per-
formance in the Vandenabeele et al. model is noticeable. At the same time, the
Vandenabeele et al. model is much more specific in outlining the causal chain between
HRM and performance. For this reason, we decided to develop a slightly nuanced ver-
sion of the Harvard model for the public sector that combines the best of both models
while also taking into account the specific situational factors of the public sector
(Figure 5.2).
Figure 5.2 represents an adapted version of the original 1984 Harvard model, includ-
ing the latest HRM insights from the HRM process model by Wright and Nishii (2013),
in particular with respect to a further refinement of what Beer et al. (1984) call HRM
policy choices into intended, actual, and perceived HRM practices. In addition, the
adapted version of the original Harvard model includes contextual insights from the
Vandenabeele et al. (2013) model, for example, with respect to the HRM outcomes that
are relevant and meaningful in a public-­sector context, such as employee commitment,
 The Performance Lens: The Public-Sector Case   105

Stakeholder interest
Stakeholders
Management
Employee groups
Politicians
Community
Unions HRM outcomes
Commitment Long-term consequences
Job satisfaction
Public service motivation Individual well being
Intended Actual Perceived
Stress/burnout
Situational factors HRM HRM HRM
Organizational citizenship behavior Organizational
Workforce characteristics practices practices practices
Trust effectiveness
(e.g., professionals) Perceived justice
Business strategy and Intention to leave Societal well-being
conditions (e.g., red tape) Absence because of illness
Management philosophy
Labor market
Unions
Task technology
Laws and public values

Figure 5.2.  Adapted Harvard model for public-­sector organizations. HRM, human resource
management.

job satisfaction, public service motivation, and job stress. See Figure 5.2 for an overview
in which the building blocks of the original Harvard model are maintained. The long-term
consequences (threefold outcomes) still hold, while some minor adjustments have been
made to the stakeholder interest box (for example, adding politicians) and to the
­situational factors (for example, red tape and bureaucracy, which often characterize
public-­sector contexts).
It is not our intention to develop a new model. Instead, the model presented in
Figure 5.2 is an updated and contextualized version of the original 1984 Harvard model
that, in our opinion, still holds and is highly relevant for understanding HRM and per-
formance in a public-­sector context. The model in Figure 5.2 is therefore a nuanced and
refined Harvard model. Next, we will look at what we already know about empirical
research on HRM and performance in a public-­sector context. The nuanced and refined
model will be used as a framework for defining performance.

What We Already Know: Empirical

Findings

The first part of the chapter is focused on presenting a more refined HRM value chain
for public-­sector organizations, building on the generic Harvard model and insights
from public administration literature. In this section, the focus is on the second aim of
the chapter: providing an overview of HRM and performance findings based on an
analysis by Boselie et al. (202019) of what we already know about the added value of
HRM in a public-­sector context. Boselie et al. (2019) selected fifty-­six empirical articles
on HRM and performance that were published in the period 2000–16 in high-­quality
HRM, public administration, and public management journals (e.g., Human Resource
Management Journal, International Journal of Human Resource Management, Public
106   Boselie and Schott

Administration, and Review of Public Personnel Administration). All articles in the

­analysis are focused on the added value of HRM, providing a rich source for lessons on
what is known about the impact of HRM on outcomes in public-­sector organizations.
All the organizations in the analyses can be labeled public-­sector organizations, includ-
ing healthcare, education, government (local, central, federal, provinces), police, mili-
tary services, and social services.
The most popular outcomes used in the fifty-­six articles are job satisfaction (ten arti-
cles) and organizational commitment (ten articles) of employees (cf. Gould-­Williams,
2004). This does not come as a surprise because these HRM outcomes also play a key
role in the model by Vandenabeele et al. (2013). HRM outcomes (for example, commit-
ment, satisfaction, trust, engagement, emotional exhaustion, motivation, intention to
stay, stress, absence because of illness, employee turnover, o ­ rganizational citizenship
behavior, and perceived justice) can be found in twenty-seven of the fifty-­six articles,
reflecting a dominance of HRM and HRM outcome research in public-­sector contexts.
In the overview article by Boselie et al. (2019), specific attention is paid to the two most
frequently studied HRM outcomes: job satisfaction and commitment. Table 5.1 provides
an overview of these findings to highlight what is already known about these two
employee well-­being outcomes. Perceptions of HRM practices and HRM bundles are
positively related to job satisfaction and employee commitment. It is notable that all
HRM outcomes in empirical research on HRM and performance in public-­sector orga-
nizations are generic and not context specific. The same outcomes can also be found in
private-­sector research, as presented in the overview by Boselie et al. (2005). This means
the majority of HRM outcomes in the fifty-­six empirical articles studying HRM in a
public context are employee perception data representing the individual employee in
organizations.
Organizational performance as a long-­term consequence of HRM is also studied in
the articles included in this review (in ten articles), but in most cases the variable is
based on subjective input (survey data). Rodwell and Teo (2008), for example, focus on
the influence of strategic HRM on perceived performance in health services organiza-
tions. Melton and Meier (2016), in contrast, focus on objective performance data in their
analysis. Only one article used some kind of societal well-­being outcome variable: fair-
ness, equality, and transparency in the context of talent management (Van den Brink,
Fruytier, & Thunnissen, 2013).
The ultimate aim of the review performed by Boselie et al. (2017) was to answer the
question of whether there is support for the added value of HRM in a public context in
the fifty-­six empirical articles included. The answer is that in thirty-­five articles there is
support for a positive relationship between HRM and some, but not all, outcomes being
studied. Mostafa (2016), for example, finds a positive effect between HRM and work-
related stress plus intention to leave, but only indirectly via person–organization fit. We
argue that the positive effects need to be treated with great caution, because the majority
of the findings are based on subjective and self-­reported data, in relation to both HRM
and outcome measurement. In other words, the main focus is on p ­ erceptions of
HRM policies and practices on perceived outcomes rather than ­objective data.
 The Performance Lens: The Public-Sector Case   107

Table 5.1.  Human resource management and performance in public-­sector

organizations
Author(s) and year HRM Employee outcome
Melnik, Petrella, & Richez-­Battesti (2013) + with actual HRM Overall work
satisfaction
Gould-­Williams (2004) and Gould-­Williams & + with perceived HRM practices Job satisfaction
Gatenby (2010)
Gould-­Williams (2003) and Gould-­Williams + with perceived HRM bundle Job satisfaction
et al. (2014)
Kooij et al. (2013) + with perceived HRM bundle Job satisfaction
Mostafa & Gould-­Williams (2014) + with perceived HRM bundle Job satisfaction
Park (2010) + with perceived HRM bundle Job satisfaction
Steijn (2004) + with perceived HRM bundle Job satisfaction
Decramer, Smolders, & Vanderstraeten (2013) + with performance management Satisfaction
Gould-­Williams (2004), Gould-­Williams & + with perceived HRM practices Organizational
Davies (2005), and Gould-­Williams & commitment
Gatenby (2010)
Brunetto, Farr-­Wharton, & + with perceived HRM bundle Affective
Shacklock (2011) commitment
Gould-­Williams (2003) and Gould-­Williams + with perceived HRM bundle Organizational
et al. (2014) commitment
Kooij et al. (2013) + with perceived HRM bundle Organizational
commitment
Mostafa, Gould-­Williams, & + with perceived HRM bundle Affective
Bottomley (2015) commitment
Conway & Monks (2008) + with satisfaction HRM practices Commitment to
change
Ashikali & Groeneveld (2015) + diversity management Affective
commitment

Note: HRM, human resource management.

In summary, in the fifty-­six empirical studies on HRM and performance by Boselie

et al. (2017), performance is mostly defined in terms of attitudes. Job satisfaction and
commitment are the most frequently studied concepts. Almost all HRM outcomes used
in the analyses are context unspecific and are also used in the private sector. A few stud-
ies pay attention to organizational performance, a concept that can be linked to organi-
zational effectiveness in the Harvard model. Most studies use some kind of subjective
measurement of organizational performance. Societal well-­being in relation to HRM
can only be found in one of the fifty-­six studies. These first findings raise several ques-
tions about the multidimensional performance construct in the Harvard model in
relation to the context specificity of public-­sector organizations.
108   Boselie and Schott

Conclusion

The aim of the chapter was twofold. First, we wanted to develop a nuanced Harvard
model of HRM and performance in public-­sector organizations using contemporary
general HRM insights (HRM process model by Wright & Nishii,  2013) with public
administration and public management literature (e.g., the HRM value chain model in
public-­sector organizations by Vandenabeele et al., 2013). Figure 5.2 presents an over-
view of this adapted Harvard model, more nuanced and more refined than the original
model from 1984. This adapted model can be used as a framework for studying the
added value of HRM in public-­sector organizations.
Second, the chapter provides a short overview of empirical research on HRM and
performance in the public-­sector context on the basis of an overview conducted by
Boselie et al. (9). From the adapted model point of view (see Figure 5.2), the empirical
evidence on the added value of HRM in public-­sector contexts is mainly based on
employee perception data (surveys). The employee perceptions include both perceived
HRM practices and particular HRM outcomes (mostly commitment and satisfaction).
The existing evidence shows a general positive relationship between the perceived HRM
practices and the HRM outcomes studied. On the basis of this analysis, we identify sev-
eral gaps that could be the basis for future HRM research on the added value of HRM in
the public sector. Our adapted Harvard model will be used to map these gaps and deter-
mine directions for future research.
First, little or no attention is paid to the different stakeholder interests and situational
factors that affect HRM policy choices, in particular, intended HRM practices. How, for
example, do politicians affect and influence HRM strategies and policies with respect to
payment and diversity management? Pay and diversity are politically sensitive and societal
themes if put in a public-­sector context. Civil servant payment, for example, is not just a
strategic choice of a public-­sector organization, but also a political and societal issue.
Within the Harvard model box outlining situational factors, we would like to highlight at
least three aspects that are highly relevant and characteristic of public-­sector organizations:

• The workforce often consists of professionals such as judges, teachers, and medical
specialists, with each having unique normative and coercive mechanisms that
affect the shaping of the employment relationship of themselves and the other
workers in their organization;
• The bureaucracy and rules, called red tape, are a burden in public administration
and often cause serious limitations in the leeway with respect to HRM policy
choices and intended HRM practices;
• The laws and public values that are not just there, but also visible in the media and
public debate, causing issues of transparency and social legitimacy.

Second, Table  5.1 shows a dominance of employee data that are labeled perceived
HRM practices in the HRM process model (Wright & Nishii,  2013). There is little
 The Performance Lens: The Public-Sector Case   109

e­ mpirical research on the strategic decision-­makers and policy makers (intended HRM
practices) and the HRM enactors, often line managers (actual HRM practices). The
addition of intended, actual, and perceived HRM practices to the Harvard model can
help in understanding effective HRM implementation in public-­sector organizations as
an essential part of the creation of a contextualized HRM value chain. Moreover, this
addition can help to gain a deeper understanding of why HRM implementation does
not have the desired effects. The presence of public (HRM) managers with a strong pub-
lic service ethos may help to explain why HRM practices are not always implemented
the way they were intended.
Third, employee attitudinal outcomes of “commitment” and “satisfaction” are domi-
nant, leaving room for many other relevant attitudinal as well as behavioral HRM out-
comes, such as public service motivation, job stress, burnout risks, organizational
citizenship behavior, trust in the organization, trust in management, trust in colleagues,
perceived justice, intention to leave, and absence because of illness. These outcomes are
relevant indicators that reflect the state of the workforce given societal (for example,
labor market shortages) and organizational (for example, stress and burnout as a result
of work pressure and performance pressures) challenges. There are many theories, such
as job demands–job resources theory, social exchange theory, attribution theory, and
public service motivation theory, that can help build innovative and relevant avenues for
research in these areas.
Fourth, the long-­term consequences in relation to individual well-­being, organiza-
tional effectiveness, and societal well-­being need to be taken into account and poten-
tially be contextualized given a certain public-­sector context. We have discussed here
that the concept of public-­sector performance is difficult to define and measure. In con-
temporary HRM research there is, for example, growing attention for potential conflict-
ing outcomes (such as organizational effectiveness negatively related to outcomes such
as stress and burnout) and mutual gains (such as commitment positively related to
higher service levels of an organization) (e.g., Van der Voorde, Paauwe, & Van
Veldhoven, 2012). We argue that insights from this stream of research may help to clarify
what the long-­term consequences of HRM in the public sector are and how they can be
measured.
Overall, there is a need for more research on objective outcomes and organizational
performance linked to what in the Harvard model is called organizational effectiveness.
Although frequently used (Groeneveld, Tummers, Bronkhorst, Ashikali, & Van
Thiel, 2015), the predominant use of self-­reported data is associated with social desir-
ability, which refers to the tendency of respondents to answer items in a way that pres-
ents them in the best possible light (Dooley, 2001). This tendency can provide a risk for
the validity of research findings.
To conclude, our brief review of empirical studies on the added value of HRM in the
public sector suggests that perceived HRM matters in relation to the attitudinal HRM
outcomes of “commitment” and “job satisfaction.” In contrast, we know little about the
effects of intended and actual HRM practices on both HRM outcomes and what they
mean for long-­term consequences. By developing a nuanced Harvard model on HRM
110   Boselie and Schott

and performance in public-­sector organizations on the basis of contemporary general

HRM insights (HRM process model) and public administration and public manage-
ment literature (e.g., the HRM value chain model), we provide a framework that reveals
relevant and remaining questions that need to be answered so that that the full potential
of HRM for public-­sector organizations can be evaluated.

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 chapter 6

Hum a n R esou rce

M a nagem en t i n
Em ergi ng M a r k ets
Theoretical Perspectives for Understanding
Contexts

Frank M. Horwitz, Fang Lee Cooke,

and Ken N. Kamoche

Thought systems in emerging markets variously include features such as differences

in strengths and weaknesses of institutions, cross-­cultural diversity, a relatively strong
influence of religiosity and traditional culture in guiding workplace behavior and social
relations, the use of symbolism to make sense of the world, and a strong emphasis on
family and the immediate community. This importance of social cohesion, family,
harmony, and collective solidarity is seen in the network of interrelationships,
extended family, and mutual obligations, not dissimilar to the constructs of Confucian
social cohesion and paternalism found in Chinese and African firms. In the case of
certain African firms, this cultural backdrop results in a sense of communalism
and traditionalism (Horwitz, Kamoche, & Chew, 2002; Nzelibe, 1986). This is similar
to the above Confucian influence on East Asian culture. Originally coined as a term
for a grouping of developing countries that were neither mature market economies
nor “Third World” (van Agtmael,  2007), albeit with earlier linked terminologies,
emerging markets reflect an evolving and diverse literature with a series of opportuni-
ties, encompassing the purely theoretical through to the methodological and the
analytical.
According to Horwitz, Budhwar, and Morley (2016), “The very term emerging
markets represents something of a new frontier for academics and practitioners
alike” (p. 470). It reflects an interest for “multiple constituencies built on a series of
116   Horwitz, Cooke, and Kamoche

altered insights garnered from several academic fields and multiple levels of analysis”
(Alkire, 2014, p. 334). Emerging markets as a context for a sustainable research agenda
represent “a heterogeneous group of economies and societies” and an “important testing
ground for our existing theories, models and concepts of business and management,”
affording those who focus on them as a research location the opportunity for “the devel-
opment of new theoretical contributions in the field” (Akbar, 2006, pp. 1–2). Given this
diversity and heterogeneity, it is therefore not surprising and indeed instructive that
human resource management (HRM) in emerging markets may be better understood
considering an available array of diverse theoretical and methodological perspectives.
This chapter provides an overview examination of such theoretical approaches, indi-
cating where there might be similarities, differences, or advantages to deploying multi-
ple approaches to better understand the complexity and diversity of HRM in these
contexts. Examples of research using these approaches are given. The theoretical
approaches include institutional theory, cross-­cultural perspectives, emerging market
multinational companies (EMMNC) internationalization perspectives, the Afro-­Asian
nexus, resource and social capital–based perspectives, the postcolonial approach, and
an examination of hybrid models. The latter may include similarities, convergence, and
the interplay between one or more of these approaches.
Starting with institutional theory, one of the widely used theoretical approaches in
international HRM and employment relations (see Chapter 3), it is not the purpose of
this chapter to focus on one or two such theories, but rather to provide an overview and
indicative context where these approaches are applied.

The Institutional Theory Approach

Institutional analysis of particular institutional contexts and associated regulatory

regimes (North, 1990), and with different forms of capitalism, is a widely used theoreti-
cal perspective in relation to emerging markets and, indeed, in many other contexts, as
we have seen in several other chapters through this volume (Asiedu, 2006; Boyer, 2002;
Burbach & Royle, 2014; Frynas & Paulo, 2007; Hall & Soskice, 2001; Hancke, Rhodes, &
Thatcher, 2007; Streeck, 2011, 2012; Thelen, 2012; Wood, Dibben, & Ogden, 2013; Wood &
Frynas, 2006; Wood & Horwitz, 2016; Wood & Lane, 2011). In the emerging markets
context, for example, Kamoche and Harvey (2006) argue that for foreign multinational
companies (MNCs) to be successful in Africa, they must eschew cultural imperialism
and gain a deep understanding of Africa’s institutional context, in particular the regula-
tory, cultural, and social. This argument is equally pertinent for EMMNCs more broadly.
The particular competencies of an EMMNC itself, such as experience in managing large,
complex institutional environments and markets and infrastructural development chal-
lenges, such as in telecommunications, are important (Gugler, 2008).
However, institutional and regulatory theory have been criticized by labor process the-
orists, such as Braverman (1974), Thompson and Vincent (2010), and Pontusson (2005).
 Human Resource Management in Emerging Markets   117

These critiques posit that the dynamic and complex nature of institutions and regulations
is neglected in such analyses. In a critical vein, and sometimes using a labor process per-
spective, are evidence-­based exploratory/investigative analyses (for example, in the
International Labour Review and South African Labour Bulletin), focusing on perspec-
tives on labor practices in MNCs and the effects of foreign direct investment on labor
standards and minimum wages. Jackson (2014) argues that trade unions in Africa are
generally weak, given the lack of institutionalized regulatory processes for collective bar-
gaining, dispute resolution, and suspicion toward them. This enables MNCs to adopt low
wage–low cost strategies, which have often been controversial in terms of accusations of
foreign exploitation of local workers. This is consistent with Wood and Horwitz (2016).
Understanding the context of HRM in EMMNCs is important, particularly because
employment relations often reflect the centrality of a social contract with EMMNCs,
that is, more of a socioeconomic pact than an overtly politically motived or driven rela-
tionship (Horwitz,  2015; Wood,  2015). Economic, rather than political, motives of
EMMNCs will likely have a different impact on HRM decision choices. This “pact” seeks
the export of Africa’s commodities such as oil, which other emerging markets require,
but with a “promise” of social and human resource development, hence a different
model from a traditional or pure commercial and instrumental exchange. Following the
labor market mode of analysis referred to above, the literature on comparative political
economy theory also offers a set of analytical frameworks (e.g., Hall & Soskice, 2001;
Wood & Lane, 2011).
These analyses are augmented by work dealing with potentially negative institutional
and relational impacts, such as the state of trade unions and employment losses affected
by in industries such as clothing, textiles, and oil, and the impact of the African Growth
and Opportunity Act promulgated in the United States on preferential access for certain
African exports effects on employment and working conditions (Power, 2008). This has
been followed by trade and investment agreements with Brazil, Russia, India, China,
and South Africa.

Institutional Perspectives, Labor

Markets, and Human Resource
Management

Labor market, employment, and human resource effects of regional EMMNC invest-
ments are increasingly studied. Researchers such as Adisu, Sharkey, and Okoroafo
(2010), Bhorat (2007), Hanson (2008), Jackson (2014), Kaplinsky, McCormack, and
Morris (2007), and Wood (2015) critically evaluate these issues. Variously, they found
evidence of adverse impacts on wage levels, employment, and skills transfer to the local
population. Such trade and investment, for example, squeezes local domestic markets and
competition in external markets from export-­oriented EMMNCs with cheap products
118   Horwitz, Cooke, and Kamoche

and pricing structures that adversely affect local competitiveness, given the ­considerably
larger production base and economies of scale of MNCs from countries like China. A
further variable in addition to these economies of scale and lower pricing is the associ-
ated lower production costs, including the cost of labor (Tull, 2006; and v­ arious articles
in the South African Labour Bulletin, for example).
HRM in emerging markets therefore has to consider institutional idiosyncrasies,
variations in strength and weakness of institutions, and “institutional voids” in some
emerging markets (Doh, Rodrigues, Saka-­Helmhout, & Makhija, 2017) to which MNCs
must adapt (Heinsz, 2003). Institutional and regulatory regimes are especially relevant
factors in investment decisions by MNCs in emerging markets, where weak institutions
may increase transaction costs, often hidden and unanticipated. Intellectual property
considerations and legal protections in China have been problematic given weaker insti-
tutional regulation and inconsistencies between jurisdictions within the country
(Kumar & Gammelgaard, 2016). State-­owned enterprises may hold (unfair) competitive
advantage over firms of other ownership forms, including foreign MNCs, in China
because of the strong institutional support of the f­ ormer. However, such “competitive”
edge may be lost or, indeed, serve as a liability when Chinese state-owned firms seek to
expand their global footprints and are confronted by resisting forces from various insti-
tutions. These include, for example, host country government protectionism in the
name of national security, trade union mobilization to exert pressure on the govern-
ment, negative media coverage, and campaigns from national firms (e.g., Cooke, 2014;
Kragelund, 2009; Nyland, Forbes-­Mewett, & Thomson, 2011). Therefore, the relation-
ship between foreign MNCs and host country institutions, both at national and at sub-
national levels, is dynamic and interactive. Here, it is important to see MNCs,
particularly the large and powerful ones, as a potentially important institutional actor in
emerging markets, where they are able to exert influences as the institutional system
evolves and jointly shape it to their benefits (Child & Tsai, 2005).
Using research case studies and other qualitative research methods, a second area of
research considers impacts on local trade unions and domestic firms arising from the
lack of skills transfer from foreign EMMNCs to the local workforce, with few positive
effects on local workforce development. For example, cheap imported and manufac-
tured clothing and textiles have forced the closure or takeover of local firms in South
Africa. Adverse effects on employment standards have been found where long hours of
work, pay below minimum regulatory wages, and undercutting local pay rates have
reduced employment with little pressure from the host country, such as China and
India, on their MNCs (Akorsu & Cooke, 2011). This forms a further argument regarding
the relative strength or weakness of local institutions and regulatory regimes affecting
the HRM policies and practices of EMMNCs in Africa, Asia, and Latin America, which
may influence the degree of autonomy and flexibility these EMMNCs have in relation to
local or regional employment relations laws and institutions, that is, the extent to which
they may circumvent, ignore, or comply with local legislative regimes. The South
African telecommunications EMMNC MTN (discussed later) in Nigeria has, for example,
 Human Resource Management in Emerging Markets   119

received a substantial fine for irregularities in relation to local commercial laws. In a

special edition of Employee Relations edited by Wood (2008), both thematic and coun-
try analyses are made from institutional theory perspectives, with some of this work
explicitly evaluating employment relations and HRM in an MNC context.

Dynamic Institutional Contexts

As Zheng (2013) argues, existing international HRM models are inadequate in their
application to EMMNCs, given that motives for internationalization and different
institutional contexts are dynamic rather than static. These dynamic contexts represent
an opportunity for scholars to observe whether and how core tenets of HRM are
unfolding as part of a wider developmental trajectory, which may be important given
that the emergence of HRM in Western contexts has been a source of intense theoreti-
cal and empirical foundations debate and practical implications (Horwitz, Budhwar, &
Morley, 2016; Morley, Minbaeva, & Michailova, 2012). This variation plays a significant
part in the extent to which HRM is adopted and adapted in emerging markets with
­ethnocentric, polycentric, and transnational variation in how HRM policy and practice
are diffused in MNCs in these markets. This is underlined by many researchers, for
example, Jackson (2016), Khan, Wood, Tarba, Rao-­Nicholson, and He (2018), and
Kumar and Gammelgaard (2016), Nkomo, du Plessis, Haq, and de Plessis (2016), and
Wood and Horwitz (2016). Kumar and Gammelgaard (2016) find that cross-­cultural
negotiations in emerging markets are strongly mediated by the effects of the institutional
environment, such as the extent to which agreements are enforced or otherwise politically
stable institutions versus uncertain and unstable environments. Further, Scott (1995)
found that normative, cognitive, and institutional elements are important in evaluating
the context in which negotiations occur in emerging markets such as India and
China, with significant sociocultural differences occurring between emerging markets
in this regard (for example, Confucian and Hindu belief systems in China and India,
respectively).
This is echoed in the work of Jackson (2016) on cross-­cultural diversity, including
race, ethnicity, and gender impacts on HRM in Brazil, Russia, India, China, and South
Africa (also see Nkomo et al., 2016), where variations occur in institutional and legisla-
tive regimes dealing with diversity, employment equity, and workplace discrimination.
Evidently, the institutional theory approach provides a wide range of perspectives and
research avenues for investigating the complexity of HRM. The contribution of this
approach has enhanced understanding by scholars and practitioners of how institu-
tional factors influence or mediate human resource policy options for organizations,
considering the relative strength or weakness of institutions of both home and host
countries and the interplay between institutions, culture, and strategic choices made by
firms (Khan et al., 2018).
120   Horwitz, Cooke, and Kamoche

The Cross-­C ultural Approach

According to Farndale and Sanders (2017, p. 134), cultural tightness, or looseness,

focuses on societal-­level cultural values in understanding how HRM systems are per-
ceived by employees (see Chapter 2 for a more detailed discussion of this cultural the-
ory). Tight societies (for example, emerging economies such as Turkey and Pakistan) do
not permit contravention of national values with sanctions and rules being imposed,
whereas loose cultures (such as Brazil) are more tolerant in regard to the extent of con-
trols exerted over individual behavior (Farndale & Sanders, 2017, p. 140). This has con-
ceptual parallels with the “thickness” and embeddedness of certain “high context
cultures” (Meyer, 2015, pp. 34–35, 67–78) constructs such as African ubuntu and national
cultures such as Chinese Confucianism (Zhu & Warner, 2017). These high-­context cul-
tures, combined with locally legitimate nuanced approaches to doing business, such as
Blat in Russia, wasta in the Middle East (Budhwar & Mellahi, 2016), guanxi in China,
and jeitinho in Brazil, can shape certain elements of both the adoption and the adapta-
tion of HRM practices, along with legitimate managerial practices, postures, and nego-
tiating styles (Horwitz et al.,  2016, pp. 471–472). Negotiations, though sometimes
difficult, appear less adversarial and more strongly collaborative where social cohesion
or group harmony dynamics and a notion of social contracts pertain. This may be con-
sidered more important than win–lose adversarial and short-­term legal contract–oriented
negotiations in Western societies. There are important lessons for managers in MNCs in
this regard that, if not learned, can bedevil effective cross-­cultural diversity, negotiation,
and relationship building vital for effective development and implementation of contex-
tually relevant HRM policies and practices.

The Social Capital Approach

The home nations of many EMMNCs are relationship-­rich cultures (Contractor, 2013),

which in turn calls for attention to the importance of social capital perspectives (Gomez &
Sanchez, 2005), cross-­cultural intelligence, and intercultural competence in this arena
(Earley & Ang, 2003; Morley & Cerdin, 2010; see also Verberg et al, 1999; and Ward,
Pearson, Entrekin, & Winzar, 1999), to relationship and social capital building and the
development of trust. This approach offers an emphasis on interactive, relational pro-
cesses rather than formal win–lose positional bargaining between negotiators from dif-
ferent cultures (Gammelgaard, Kumar, & Worm, 2013). A social capital perspective is an
instructive approach in itself for enhancing our understanding of HRM and the cross-
cultural diffusion of HRM policies and practices (Ahlvik & Bjorkman, 2015; Chiang,
Lemanski, & Birch, 2017). It may contain or pertain to mediating variables such as cultural
and regulatory factors particularly pertinent in emerging markets. High- and low-context
 Human Resource Management in Emerging Markets   121

cultures may also be viewed in relation to Hofstede’s (1980, p. 45) power distance
­construct as a measure of the distributed inequality of institution’s and organizations.
Using this approach is pertinent in emerging markets where, for example, high inequality
­levels may occur, as observed in Malaysia, South Africa, Mexico, and Chile. This is
consistent with research by House, Hanges, Javidan, Dorfman, and Gupta (2004) and
the moderating effects of power distance between high-­performance work practices and
employee engagement (Sanders, Yang, Li, & Wang, 2016). Other dimensions of Hofstede
(1980), such as uncertainty avoidance, may also be applied as proxies for a national
­culture lens and individual behavior in organizations. Emerging market countries with
high uncertainty avoidance include several Latin American countries such as Chile,
Mexico, and Costa Rica.

The Emergent Market Multinational

Company Approach

While it might be argued that the EMMNC approach is not a theoretical construct, we
submit that there are theoretical constructs associated with the rationale and strategies
of EMMNC internationalization. These constructs are discussed here. They may act as
mediating variables in understanding the nature of HRM in their host country opera-
tions. Luo and Tung (2007, p. 4) and Luo and Zhang (2016, p. 334) define EMMNCs as
“international companies that originated from emerging markets and are engaged in
outward FDI where they exercise control and undertake value-­adding activities in one
or more foreign countries.”
Thite (2016) identifies common features of EMMNCs as including a high degree of
adaptability in overcoming uncertainties in the external environment (Gullén & Garcia-
Canal, 2009); ability to overcome “institutional voids” turning adversity into an oppor-
tunity (Khanna & Palepu,  2005); pursuing a “springboard strategy” of simultaneous
entry into developed and developing country markets (Luo & Tung, 2007); entry via
global alliances and acquisitions (Sun, Peng, Ren, & Yan, 2012); often deploying lower-
cost advantages (Madhok & Keyhani, 2012) relevant in the African EMMNC context;
and building political connections using social networks and government support
(Gammelgaard et al., 2013; Wood, 2015). Though grand theory seeking is illusive, there is
potential for developing models and conceptual frameworks that recognize and incor-
porate indigenous human resource systems in studying EMMNCs (Cooke,  2014;
Cooke & Lin, 2012; Horwitz et al., 2016; Jackson, 2014; Thite, 2016).
According to Wilkinson, Wood, and Demirbag (2014, p. 838), the recent surge of for-
eign direct investment by EMMNCs and their aggressive market-­entry strategies has
triggered a new debate around the rigor of existing theories of internationalization.
Madhok and Marquis’s (2013) postulation that business models adopted or developed
by EMMNCs are characterized by agility, risk taking, willingness to experiment, and
122   Horwitz, Cooke, and Kamoche

responsiveness to change is relevant to South African EMMNCs’ strategies as discussed

in this paper. The relative lack of sophisticated institutions in other emerging markets is
not unfamiliar to EMMNCs, thus enabling quick entry and adaptation to similar insti-
tutional conditions and a local sociocultural context (Deng, 2013).
Thite (2016) identifies a number of human resource challenges for EMMNCs. These
include developing global human resource competencies, developing innovation-
centric mindsets and global leadership pipelines rather than an overreliance on home-
grown talent moved abroad as expatriates, developing and managing talent in
economies outside of the home country base, increasing workforce capabilities, and
managing expectations of employees in foreign operations. Matthews (2006) posits a
framework of linkage, leveraging, and learning in this regard. There is an emergent
managerial belief in South African MNCs that there are lessons to be learned from
Indian, Chinese, and Japanese managerial practices, particularly because they might
have potential for adoption or adaptation in the African cultural context (Horwitz, 2017).
This may, however, be a somewhat normative belief because there are fundamental dif-
ferences between them (Horwitz, 2017). Concerns have also been raised about the prac-
tices of some Chinese firms in Africa, such as the failure to develop managerial expertise
and enduring cross-­cultural differences (Kamoche & Siebers, 2015), the export of poor
labor practices from China (e.g., Lee, 2009), and the dispatch of Chinese workers to
Africa rather than employing and training local workers in order to overcome language
barriers, bypass local labor regulation, and exert more control on the working time (e.g.,
Cooke, Wang, & Wang, 2017). Thite (2016) argues in this regard the need to move away
from static distinctions of convergence and divergence between HRM practices and
toward hybrid models (discussed in a later section of this paper) and away from descrip-
tive cross-­cultural adoption and toward within-­cultural variables (Chatterjee & Pearson,
2001; Horwitz, 2017; Jackson, 2001). For example, the literature on HRM in EMMNCs
seems to support the Afro-­Asian nexus proposed by Horwitz (2017) for Chinese and
Indian MNCs (Cappelli et al., 2010a and 2010b).

Country-­of-­O rigin Approach

Allied to the EMMNC and institutional theory approaches discussed above, a further
approach is that of “country-­of-­origin effects” as a construct and analytical approach
that may mediate both sociocultural and institutional theory perspectives. This
approach would both theoretically and empirically have an association with the
EMMNC approach discussed previously as a country of origin’s institutions and culture
would be mediating variables in EMMNC policy and strategy (see, for example, Khan
et al., 2018). However, arguably, the latter would also have greater agency theory utility
in individual firm strategic choices, in the sense that cultural high context and thickly
embedded home country characteristics could have an important mediating role on
their EMMNCs, HRM policy, and conduct abroad, including the degree of flexible
 Human Resource Management in Emerging Markets   123

adaptation to the local host country context or the extent to which they are more deeply
embedded with little adaptive ability in host country contexts. This is especially perti-
nent in evolving conceptual frameworks around mergers and acquisitions and interna-
tional joint ventures between Western and EMMNCs and between EMMNCs
themselves from different socio-­cultural and institutional home country contexts
(Gammelgaard et al., 2013; Schuler, Khilji, & Ruel, 2016). The notion of home versus host
country business systems fit or alignment or the converse may also be potentially associ-
ated with the socio-­cultural theorizing and institutional theory previously discussed
(see Chiang et al., 2017). This approach considers how home country regulations and
legal institutions affect the policies, organizational culture, and business practices of
their MNCs abroad, for our purposes, the emerging market context.

An Afro-­A sian Emerging Market

Approach

Within a cross-­cultural perspective, an expanding body of research has looked at best

HRM practices in African and Asian emerging economies and suggests that a strong fit
between HRM practices and the Afro-­Asian context within which they operate is
required for high effectiveness (Horwitz & Budhwar, 2016, Jackson & Horwitz, 2017).
For example, in sub-­Saharan African countries like South Africa, the importance of
family and community are seen in the network of interrelationships, extended family,
and mutual obligations. This results in a sense of communalism. Some advocate African
ubuntu (see Mbigi & Maree, 1995) as a basis for fostering an Afrocentric managerial cul-
ture with region-­centric HRM practices (Mbigi, 2000). The notion of ubuntu literally
translated means “I am who I am through others,” a value that stands in contrast to the
Western belief of cogito, ergo sum—“I think therefore I am.” It is this contrasting of a
form of communal humanism with individualism and instrumentalism that has a nor-
mative appeal for advocates of an African economic and cultural renaissance and is
posited as having the potential to build competitive advantage (Jackson,  2004;
­
Mangaliso, 2001).
Jackson (2004, 2016) proposes a typology of Western instrumentalism and African
humanism and East Asian attributes as a useful analytical framework. The latter concept
reflects values such as sharing, adherence to social obligations, collective trust, defer-
ence to rank and seniority, sanctity of commitment, and good social and personal rela-
tions. As discussed above, these arguably reflect a conceptual proximity to Confucian
humanism and Chinese guanxi, with social cohesion and cooperative rather than adver-
sarial and competitive relations. Jackson (2016) submits that a nascent African manage-
ment approach with roots in a humanistic tradition could reflect a potentially positive
contribution to global HRM. His typology has been extended to identify important
HRM dimensions.
124   Horwitz, Cooke, and Kamoche

However, there is a danger in presenting both African and East Asian systems in this
way. An unrealistic, idealized, or indeed romanticized conception may not have signifi-
cant empirical or managerial support. Kamoche, Siebers, Mamman, and Newenham-
Kahindi (2015) argue that any meaningful engagement and transfer of knowledge and
practices, for example, between China and Africa, must recognize the significant
changes taking place in China, potentially entailing the transfer of a culturally complex
system of HRM practices into an equally diverse African context. Second, there is a
latent assumption of both homogeneity and unique distinctiveness that obfuscates the
reality of inter-­regional, intercountry, and inter-­ethnic diversity. Hence, a hybrid per-
spective is important. This has led some authors like April and Shockley (2007), Jackson
(2004), and Mangaliso (2001) to propose an epistemological shift away from the pre-
dominant Western management theories to alternative ones based on Asian and African
perspectives in MNCs from these economies. Oppong (2017) and Nakamura (2010)
posit the use of indigenous methodologies in which certain emerging markets might
reveal some common features (for example, Asian and African countries). These include
cultural heterogeneity as a source of mutually beneficial win–win cooperation, a poly-
ocular vision with regard to what constitutes “objective” truth, the mental connected-
ness the worker shares with group members, and the idea that the individual assumes a
relational existence and identity whose raison d’être is located within the community to
which they belong.

The Post-­c olonial Analytic Approach

Following parallels with cross-­cultural perspectives and institutional theory and con-
serving the effects of colonial systems on indigenous culture and institutions, Oppong
(2017), Nkomo et al. (2016), Kiggundu (1991), Jackson (2016), and others offer perspec-
tives based on the effects of colonialism on management and administrative capabilities
of postcolonial societies. This perspective posits that precolonial systems, for example,
in African countries, did have organization and indigenous management systems. This
is often analyzed in terms of dichotomous Western approaches and indigenous systems
(e.g., African approaches with strong collectivist, family, and communal relationships as
against the individualism of Western values) (Oppong, 2017). Sometimes this is pre-
sented as an imperialist hegemonic discourse in the literature (Jackson,  2016;
Oppong, 2017). In their analysis of Chinese management practices in Kenya, Kamoche
and Siebers (2015) adopt a postcolonial lens and argue that where ethnocentric practices
have an effect of “othering” Africa(ns) and treating the institutional context in stultify-
ing terms as “backward,” a postcolonial ethos in economic and business terms may be
inferred irrespective of the preexistence of a colonial political relationship.
Dibben et al. (2017) adopt this approach within the context of Portugal’s relationship
with Mozambique where the authors argue that abiding institutional legacies from colo-
nialism, inter alia, have meant that the HRM approach has continued to mirror that of
 Human Resource Management in Emerging Markets   125

the former colonial power. Some critics of a neo- (or post-) colonial approach argue that
it is inappropriate for certain countries such as China in its Sino-­African cooperation to
be evaluated from a postcolonial perspective, rejecting the notion that its increased
operations in Africa reflect a neo-­colonial ambition (Addis & Zuping, 2018).
Many postcolonial societies are in a developmental process including management
development and capacity building in MNCs and state institutions, this given the lack of
local managerial talent and its development. This approach proposes that postcolonial
research methods in the social sciences are contextually more relevant than positivist,
instrumental approaches (Jackson, 2016; Jackson, Amaeshi, & Yavuz, 2008; Nakamura,
2010; Nkomo, Zoogah, & Acquah, 2015; Oppong, 2017). The former focus strongly
on seeking in-­depth understanding of local contexts from the perspectives of those
studied (akin to the phenomenological approaches of Habermas, 1973, for example).
Phenomenological and qualitative research using semistructured interviews on man-
agement and productivity have occurred in the sub-­Saharan context (Abugre, 2017).
Qualitative research methods such as ethnographic research methods, interviews
and focus groups, and critical discourse analysis are examples aimed at obtaining indig-
enous understandings of local contextual experiences in organizations and potential
approaches for management development. Though not limited to the postcolonial
framework, the use of qualitative methods to study HRM in emerging markets and
other high-­context societies is arguably more fruitful in understanding the societal and
organizational complexity than quantitative-­oriented positivist research, which has
become the dominant trend in the HRM field (Kaufman,  2015; Paauwe, Guest, &
Wright, 2013).

Resource-­Based View

The resource-­based view has been one of the core theories used in HRM studies. This
approach to examining emerging markets might be viewed from two perspectives. The
first is as an external resource motivation of EMMNCs associated with their interna-
tionalization motives in resource seeking such as commodities (e.g., oil, coal, and other
critical resources) by internationalizing their operations to resource-­rich countries:
China, for example, with its internationalization to countries such as Angola and
Nigeria (see Peng, 2012). The second is that of talent management with a research focus
on appropriate mechanisms for attracting, motivating, and retaining talent in interna-
tional operations (Collings & Mellahi,  2009; Parry, Dickman, Unite, Shen, &
Briscoe, 2016; Skuza, McDonnell, & Scullion, 2016).
Part of this discourse includes the now quite extensive research on expatriation,
including increased focus on models of expatriation between Asian and African coun-
tries (Jackson & Horwitz, 2017). This approach also seeks to understand the issues of
diversity, in respect to the talent management of local host country talent attraction
development, and advancement, in relation to the deployment of expatriates from the
126   Horwitz, Cooke, and Kamoche

home country (Jackson & Horwitz, 2017). Mediating factors relevant to this perspective
include a multiapproach analysis, for example, cross-­cultural and institutional frame-
works of both home and host countries pertaining to the issue of resource management,
particularly human resources (see the earlier discussion of these approaches). These
include, for instance, institutional regulatory requirements pertaining to indigenous
resource development legislation dealing with employment equity and Black economic
empowerment in South Africa and the Bumiputras provisions in Malaysia.

Hybrid Models of Human Resource

Management

As previously referred to, researchers have argued that the much cited dichotomous
convergence–divergence debate in understanding HRM systems and practices in differ-
ent societal contexts is over simplistic (Brewster, Mayrhofer, & Cooke, 2015; Chiang,
Lemanski and Birch et al., 2017; Farndale, Ligthart, Brewster, & Poutsma, 2017; Zhu &
Warner, 2017). Rather, examining the conditions under which hybrid models are devel-
oped in practice in a particular context is more gainful and theoretically and empirically
more robust (e.g., Budhwar, Varma, & Patel, 2016; Gamble & Huang, 2009). In this sec-
tion, we attempt to formulate a rationale for a more critical analysis of the diffusion of
practices between two regions. It appears that the adoption of East Asian HRM in south-
ern African firms derives from both increased investment and the consequent influence
these firms have in Africa and an emergent managerial belief that there could be lessons
learned from Indian and Chinese practices, particularly because they might have a
higher likelihood of adaptation or “recontextualization” in other emerging market
sociocultural contexts. This argument may, however, be a somewhat normative belief.
While there are indeed some similarities, for example, between African and East Asian
cultures, there are also fundamental differences. It may be argued that Chinese HRM is
not based on the ILO’s notion of decent work, notably in the freedom of association,
independent trade union rights, workers’ representation, and a minimum living wage.
An enduring theme in the literature on developing countries is the appropriateness of
Western management principles and practices. Many authors have challenged the ten-
dency by MNCs, as well as local managers, to adopt practices with little consideration as
to the legitimacy, suitability, and relevance of such practices. Some have identified the
limitations of concepts formulated in the West, while others have offered empirical evi-
dence on the nature of extant practices, pointing to their appropriateness or lack thereof
(Kamoche, Chizema, Mellahi, & Newenham-­ Kahindi,  2012; Kamoche, Debrah,
Horwitz, & Muuka,  2004;Mangaliso,  2001; Nzelibe,  1986). This growing critique has
highlighted the need to understand the emerging market context as well as the indige-
nous thought system and in particular the perspective of workers in these diverse econ-
omies. The dependence of context in developing and adapting HRM practices where
 Human Resource Management in Emerging Markets   127

“hard” scientific management practices, such as lean operational management, may

occur alongside “soft” HRM practices based on neoclassical HRM theories, such as
empowerment, questions the appropriateness of Western motivation theories in a col-
lectivist culture (Zhu & Warner, 2017, p. 7).

Conclusion

In this chapter, we have discussed various intellectual perspectives from which to under-
stand emerging markets as important locales for HRM practices, both within these mar-
kets and in EMMNCs in other parts of the world. Each of these theoretical perspectives
has its values and pitfalls. Their utility is contingent on the specific context at a given
time. Furthermore, the same organizational phenomenon may be interpreted differ-
ently according to the researchers’ disciplinary perspectives and fields of research inter-
est. For instance, Cooke’s (2018) study of corporate social responsibility activities in a
garment factory, a subsidiary of a Chinese-­funded MNC in Sri Lanka, illustrated that
the case can be sensitized from global political economy, strategic management, HRM,
and critical management studies perspectives (see Chapter 4 for a discussion of CMS).
Combined, these perspectives allow the case to be understood from different (macro,
meso, and micro) levels, as well as the respective and interactive roles of institutional
actors (e.g., key players in the global value chain, host country government, MNC, man-
agers of the company, employees and their families) and previously referred to institu-
tional shortcomings or voids. We therefore call for more multi-­level, multi-­disciplinary,
and multimethod studies in emerging markets to deepen our understanding of how
HRM systems, policies, and practices may be underpinned by these diverse and fast-
changing political, economic, and social contexts.

Acknowledgments
This chapter is based on an invited paper to the Academy of Management Third Human
Resource Management International Conference, Dublin, January 9–11, 2019.

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 chapter 7

The Con text of

Ter ror ism for
M a nagi ng Peopl e i n
M u lti nationa l
En ter pr ise s
Toward a Human Resource Management
Terrorism-Response Theory

Benjamin Bader and Carol Reade

Terrorism has long been present in the global operating environment of the
­multinational enterprise (MNE). However, it has only been in the last 30 years that
international business (IB) scholars have focused on terrorism as a critical factor that
impacts business effectiveness (Alexander, 2004). Harvey (1993) is generally credited
with introducing the topic of terrorism to the IB research agenda with his seminal study
on corporate programs for managing terrorist threats published in the Journal of
International Business Studies. The topic of terrorism and its impact on business did not
gain much traction during that time, and researchers in the IB field were not receptive to
it, according to Harvey in a recently published personal reflection (Harvey, Dabic,
Kiessling, Maley, & Moeller, 2017). Harvey shares that, during a conference presenta-
tion, his peers jeered and commented that he “had lost [his] mind” and that the reviewers
who accepted the paper must have been “drinking while writing the review” (Harvey
et al., 2017, p. 1).
It took the tragic events of 9/11 in New York to bring the topic of terrorism back on the
IB research agenda (Czinkota, Knight, & Liesch, 2004; Kotabe, 2005). A trickle of such
works appeared over the next several years, and they focused predominantly on the
direct effects of terrorism on business, such as disruptions to supply chains, and strategies
136   Bader and Reade

for managing those challenges (Suder, 2006). Very little academic work addressed the
indirect, psychological effects of terrorism on employee attitudes and behavior, what
this might mean for the organization, and how it might be managed (Alexander, 2004;
Downing,  2007; Howie,  2007; Mainiero & Gibson,  2003; Reade,  2007). Even at an
emerging research frontiers conference of the Academy of International Business that
featured papers on terrorism and IB, only one dealt with employee and human resource
management (HRM) issues (Reade, 2007). Subsequently, HRM was included as a com-
ponent in an IB-­ driven terrorism research agenda (Czinkota, Knight, Liesch, &
Steen, 2010). This was a long overdue recognition of the importance of HRM, given that
people, not just physical assets, are affected by terrorism when units of the MNE are
located in terrorism-­endangered locations.
Consequently, empirical work has increasingly been published not only on the
effects of terrorism on international business (Oh & Oetzel,  2011; Witte, Burger,
Ianchovichina, & Pennings, 2017), but also specifically on HRM issues (Bader, Reade,
& Froese, 2017; Bader & Berg,  2013; Bader, Berg, & Holtbrügge,  2015; Bader &
Manke,  2018; Bader & Schuster,  2015; Lee & Reade,  2015; Paulus & Mühlfeld,  2017;
Reade, 2009; Reade & Lee, 2012, 2016). While these empirical HRM studies make valu-
able contributions to the literature, there is to date no unifying theory at the organiza-
tional level regarding terrorism and HRM. Many of the terrorism–HRM studies are
conducted at the individual level. They rely on theories from a range of fields depend-
ing on the focal issue, for instance, stress theory (Bader et al., 2017), social identity the-
ory (Lee & Reade,  2015), and social exchange theory (Bader & Schuster,  2015); and
provide only  implications for HRM. Further, extant writings on an organizational
response to terrorism (e.g., Alexander, 2004), including theory building in that area
(James, 2011), do not specifically address HRM in the context of terrorism. Given the
heightened incidents of terrorist attacks (Global Terrorism Database, 2017; Institute for
Economics and Peace, 2016), the increase in global foreign direct investment (World
Bank, 2018), and the continuous rise of MNEs making use of expatriate assignments
(Brookfield, 2016), it is timely to develop an HRM terrorism-­response theory that can
be applied to future research.
The aim of this chapter is to review the extant literature in the field, bring together
the various research strands and theories adopted, and propose an organizational-
level theory on the HRM response to terrorism. Following Cornelissen’s (2017) typo-
logical style of theory development, we categorize the specific theoretical features of
previous research on terrorism and business and offer a two-­dimensional approach to
HRM terrorism response, which we propose as a framework for future empirical
research in this area. To achieve this, our theorizing first highlights relevant charac-
teristics of terrorism and MNE employees affected, before we turn to integrating indi-
vidual responses and theories applied and the respective organizational responses.
This is followed by a pres­en­ta­tion of our theoretical framework, after which we
develop a set of propositions illustrating four generic HRM responses that are central
to our HRM terrorism-­response theory. We conclude with implications for research
and practice.
 The Context of Terrorism for Managing People   137

Terrorism and Multinational

Enterprise Employees

Terrorism is a phenomenon that increasingly plagues societies around the world. Terrorism
can be defined as “the threatened or actual use of illegal force and violence by a non-­state
actor to attain a political, economic, religious or social goal through fear, coercion, or
intimidation” (Institute for Economics and Peace,  2016, p. 8). While there are many
other definitions of terrorism, we adopt the global terrorism index definition because it
takes into consideration not only the physical act of terrorism but also the psychological
impact on people and society that is highly relevant for individual and HRM responses
to terrorism.
Terrorists often target economic and business interests to achieve political or ideo-
logical goals (Alexander, 2004). For instance, KFC in Pakistan was targeted as an act
against the Western lifestyle, while the shooting of editorial staff at Charlie Hebdo in
France was claimed as revenge on infidels for demeaning the prophet Muhammad.
The  bombings in Mumbai, India’s commercial capital, and the suicide bombings in
Colombo, Sri Lanka’s capital and business center, were aimed at crippling economic
and business activities as a means to destabilize the government. Terrorism severely
affects business activity, such as disrupting global supply chains (Czinkota et al., 2010)
and increasing transaction costs (Lutz & Lutz, 2006). In recent years, terrorists have
increasingly aimed for soft targets like hotels, restaurants, and other public places (Czinkota
et al., 2004, 2010) because hard targets like embassies and military outposts have become
more heavily protected. As a result, terrorist attacks have become more unpredictable,
indiscriminate, and deadly for the civilian (and working) population (Bader, Schuster, &
Dickmann, 2019; Bader, Suder, & Grosse, 2020; Institute for Economics and Peace, 2016;
Jain & Grosse, 2009; Reade, 2007), making the HRM response to terrorism an increas-
ingly important consideration for MNEs.
In the context of terrorist attacks that affect the business interests and/or employees of
MNEs, it is useful to consider the characteristics of terrorism that are particularly
relevant for HRM—dimensions and levels of terrorism—and the main categories of
MNE employees affected by terrorism, that is, expatriate and local employees. This has a
bearing on individual employee responses to terrorism and the appropriate HRM
response to the threat of terrorism.

Characteristics of Terrorism
Here we examine two characteristics of terrorism that are particularly relevant for
HRM—dimensions and levels of terrorism. Dimensions of terrorism help us distin-
guish whether terrorist acts are predominantly international or domestic in scope
138   Bader and Reade

(Beutell, O’Hare, Schneer, & Alstete, 2017; Reade, 2009), while levels of terrorism help
us determine the intensity of terrorist acts (Institute for Economics and Peace, 2017).

Dimensions of Terrorism
As the earlier examples of terrorist acts suggest, there are different motivations for, and
manifestations of, terrorism. We suggest that such examples can be categorized into
either a predominately international or a domestic dimension of terrorism (Beutell
et al., 2017). The implications for HRM, we propose, will differ depending on whether
terrorism is (predominantly) international or domestic in scope. A differentiation is
therefore useful.
International terrorism refers to terrorist activities that transcend national boundar-
ies (Beutell et al., 2017). Although international terrorism has long existed, it has been
on the rise since 9/11 (Global Terrorism Database,  2017). International terrorism is
characterized by groups of terrorists with international networks who target the busi-
nesses and civilians of primarily Western countries “as a means to undermine or
destroy the Western-­dominated international economic order and those who support
it” (Bader et al., 2017, p. 5). Whereas international terrorism involves citizens or the ter-
ritory of more than one country, the picture becomes complicated when nationals
engage in terrorist acts in their home country for reasons that are ostensibly aligned
with the political and ideological goals of international terrorist networks, such as
­al-­Qaeda or ISIS. For instance, a terrorist attack in London in 2005 was “carried out by
four Muslim men, three of whom were born in Britain, and the fourth in Jamaica”
(Czinkota et al., 2010, p. 828). It is not known whether al-­Qaeda directed these attacks.
There have been many more significant incidents with possible linkages to international
terrorist groups.
In contrast to international terrorism, which generally targets Western businesses
and persons, whether located outside or inside their home country, we refer to domestic
terrorism as terrorism that accompanies various forms of ongoing sociopolitical
­violence, armed conflict, or civil war in a specific country context (Hironaka, 2005;
Institute for Economics and Peace, 2016). Countries afflicted with domestic terror-
ism are typically located in the developing and emerging economies of the Middle
East, Asia, and Africa and are characterized by political instability, institutional
voids, or socioethnic violence, which serves to perpetuate conflict and terrorist
activities (e.g., Reade & Lee, 2012; Suder, Reade, Riviere, Birnik, & Nielsen, 2017).
Lebanon and Sri Lanka, for instance, experienced long civil wars accompanied by
terrorism, while political insurgencies accompanied by terrorism continue in the
early twenty-­first century in the Philippines and Thailand. India has experienced a
high level of ethnonationalist and Maoist terrorism in recent years. Reade and Lee
(2016) have pointed out that global firms, which are increasingly shifting their invest-
ments from developed countries to developing and emerging economy countries,
need to consider the potential impact of sociopolitical violence, including terrorism,
that may be present.
 The Context of Terrorism for Managing People   139

Levels of Terrorism
When considering the effects of terrorism on international business in general and on
MNE employees in particular, the level of terrorism is important. By level of terrorism
we mean the frequency and potency of terrorist attacks. The Institute for Economics and
Peace calculates terrorism levels based on statistics of past incidents and reports them
in their annual Global Terrorism Index (Institute for Economics and Peace, 2017).
Objective measures of terrorism levels take into account the frequency of terrorist inci-
dents, the number of people killed or injured, and the amount of property damaged.
Thus, countries with high levels of terrorism refer to those countries with a relatively
high frequency of terrorist incidents, number of civilian casualties, and/or amount of
terrorism-­induced property damage (Institute for Economics and Peace, 2017).
The level of terrorism is an indicator of business risk (Institute for Economics and
Peace, 2016, 2017). The World Economic Forum regularly assesses the global risk for
businesses and found that terrorism was among the four most likely threats for busi-
nesses, exceeded only by extreme weather events, natural disasters, and large-­scale
involuntary migration (World Economic Forum, 2017). It should be noted that the latter
is often caused by violent conflict within a country that may be accompanied by domes-
tic terrorism. Thus, among the top four risks in terms of likelihood of occurrence, two
are related to terrorism. Additionally, the World Economic Forum reports in their sur-
vey that both terrorist attacks and involuntary migration currently have an adverse
impact on businesses, and this impact will likely be even greater in the future. Notably,
those surveyed were far more concerned by terrorism than by anything directly related
to economic and/or business activity (World Economic Forum, 2017).
The level of terrorism is also an indicator of personal safety risk or threat for employees.
The relationship between level of terrorism and perceived threat has been substantiated
in previous research on expatriates (Bader et al., 2017; Bader & Schuster, 2015). In those
studies, it was shown that the higher the level of perceived threat, the greater the negative
impact it had on a range of employee attitudes. These studies will be elaborated later in the
chapter when discussing the research on responses to terrorism.

Multinational Enterprise Employees Affected

The HRM function needs to plan for staffing the MNE’s subsidiaries and also account
for the relationship between host country nationals (HCNs) and expatriates (Bader,
2017). In recent years, there has been an upsurge in different types of international
assignments and use of nontraditional employee categories (Collings & Isichei, 2017).
For the purpose of our theorization, however, we consider two main categories of
employees: expatriates and local employees. These categories, which encompass parent
country nationals (PCNs), third country nationals (TCNs), and HCNs, play a role in the
way an MNE manages its HRM function (McNulty & de Cieri,  2011). For instance,
140   Bader and Reade

in terms of staffing a given subsidiary, an MNE needs to decide on the relative mix of local
employees (HCNs), people from its home country (PCNs), or those from other units in
the MNE’s global network (TCNs). Previous research in a domestic terrorism context
suggests that employee and HRM responses to terrorism may be different for local
employees compared to expatriates (Reade & Lee,  2012). Therefore, since PCNs and
TCNs are generally considered expatriates,1 we categorize PCNs and TCNs together as
expatriates and categorize HCNs as local employees.
When considering the employee category in conjunction with the dimension and
level of terrorism, the following picture emerges. The level of international terrorism,
which is deadly but sporadic around the world and targets predominately Western insti-
tutions, is likely to be relatively lower than the level of domestic terrorism that targets
national groups and accompanies civil wars and other protracted violent conflicts
within nation-­states that may go on for years. The implication for expatriates and their
businesses, especially those from the West, is that with international terrorism they may
be targeted in any area of the world, both in developed countries and in less developed
areas of the world “where political instability and weak governance structures provide
the opportunity for terrorism to thrive” (Bader et al., 2017, p. 5). At the same time, host
country nationals of MNEs operating in terrorism-­endangered areas are affected by
domestic and possibly international dimensions of terrorism. Consequently, it makes
sense for the MNE to adjust its HRM responses depending on geographic location, taking
into consideration the dimension and level of terrorism confronting the organization
and the employee category.

Research on Responses to Terrorism

We now consider the individual and organizational responses to terrorism. Most

research explicitly or implicitly involves the individual and the organization. This is
important from the perspective of an MNE faced with terrorism because, to manage the
organization effectively, the MNE needs to consider the effects of terrorism on the indi-
vidual as well as on the organization as a whole. This includes ensuring the well-­being of
all affected employees, whether expatriate or local, and ensuring that organizational
goals are met. It is in the best interest of the MNE for expatriates to have a successful
assignment and for local employees to be motivated and committed to organizational
goals. After all, employee attitudes, commitment, and well-­being have significant impli-
cations for organizational performance in MNEs (Taylor, Levy, Boyacigiller, &
Beechler, 2008). Next, we summarize existing empirical research, briefly outlining the
key findings, and derive the respective theoretical lenses and implications.

1  While PCNs and TCNs may be employed in a foreign subsidiary on a permanent basis, that is, not
traditional expatriates, we argue that in this regard the nationality of an individual is more important
than the individual’s work contract status.
 The Context of Terrorism for Managing People   141

Individual Response
Especially since the 9/11 terrorist incident in New York, a growing number of empirical
studies have been conducted on the impact of terrorism on individuals, including
employees. Many of these studies focused on employee attitudes and well-­being in
response to what we have referred to earlier in this chapter as international terrorism, an
event which at the time was relatively isolated (e.g., Mainiero & Gibson, 2003; Ryan,
West, & Carr, 2003). Other studies have been conducted in countries where terrorism
has been more prevalent in daily life, sometimes over decades (e.g., Reade & Lee, 2012).
We consider the latter research settings to be mainly examples of domestic terrorism,
though some studies include countries that can be considered breeding cells of interna-
tional terrorism, such as Pakistan or Afghanistan (Bader & Schuster, 2015). Such stud-
ies have focused on countries in the Middle East (Messarra & Karkoulian, 2008) and
countries in parts of Asia (Bader & Berg, 2013; Bader & Schuster, 2015; Reade, 2009;
Reade & Lee, 2012).
The results of the research we surveyed, representing both international and domestic
dimensions of terrorism and covering both expatriates and local employees of multina-
tional business enterprises, reveal at least two areas of commonality. First, commonali-
ties are found in the way both expatriates and local employees view their work and the
organization. Employee responses to terrorism include lower work motivation and
involvement (Bader & Berg, 2013, 2014; Reade, 2009). This is likely related to other find-
ings that show employees feel less connected with their organization and experience a
lack of concentration at work (Mainiero & Gibson, 2003). Employees exposed to terror-
ism appear to have lower job satisfaction (Mainiero & Gibson, 2003; Reade, 2009) and
commitment (Reade, 2009; Reade & Lee, 2012; Vinokar et al., 2011) and higher absen-
teeism (Byron & Peterson, 2002). There have also been reports of heightened levels of
strain (Byron & Peterson, 2002), sensitivity (Reade, 2009; Reade & Lee, 2012), and stress,
anxiety, and depression (Bader & Berg, 2014; Canetti et al., 2010; Mainiero & Gibson, 2003),
which figure prominently in many of these studies.
From a theoretical standpoint, we observe that stress theory, or the stress perspective
(Lazarus & Folkman,  1984), is the most widely adopted theoretical approach in the
research to date. In brief, the logic behind this theoretical approach is that individuals
are surrounded by, and appraise, potential stressors. When a stressor is appraised as
“negative,” stress, sensitivity, and eventually strain occur, which in turn impacts several
individual outcomes related to work (Bader & Berg, 2013; Reade & Lee, 2012). In other
words, this is the mechanism through which terrorism evokes an individual response.
Bader et al. (2017) confirmed this notion and related it to another individual response,
turnover intention. Expatriates in countries with high levels of terrorism were more
likely to show turnover intentions, including a desire to leave the host country. In the
case of HCNs, sensitivity to terrorism was found to negatively affect a range of employee
attitudes toward the job, team, and organization (Reade, 2009). While most of these
studies show negative outcomes connected with terrorism-­induced stress (including
the related concepts of strain, anxiety, and sensitivity), at least one empirical study
142   Bader and Reade

shows greater employee innovation behavior in the face of employee sensitivity to

­terrorist threat (Reade & Lee, 2016). In sum, stress theory is a useful approach to explain
individual responses.
Directly related to the stress perspective is the concept of coping. Beutell et al. (2017),
for instance, examined the role of fear and respective coping mechanisms in the case of
expatriates. The study examined the entire assignment process, that is, accounting for
predeparture anxiety to potential posttraumatic stress disorder after repatriation. While
coping is a way to deal with stress, it can be considered a second-­order individual
response, indirectly triggered by terrorism. In the same vein, research applying organi-
zational support theory in the case of HCNs (Reade & Lee, 2012) found that support by
the organization can be a way to help employees cope with their experiences regarding
terrorism. This is an extension of the individual coping mechanism in that it serves to
link organizational responses.
The second area of commonality between the studies concerns employees’ psycho-
logical responses to terrorism and the effects of terrorism on interpersonal relationships
at work. For instance, social support was found to be important for expatriates in a con-
text of international terrorism (Bader, 2015), while it was also found to be important for
local employees in a context of domestic terrorism (Reade & Lee,  2012). Employees
exposed to terrorism have expressed feelings of not being supported by colleagues and
top management (Reade,  2009). Relationships at work are sometimes strained, with
anger and other negative emotions expressed by employees toward supervisors and the
organization (Mainiero & Gibson, 2003). Consequently, the social network of expatri-
ates, including the social support they draw from colleagues, friends, and family, has
been subject to deeper analysis (Bader & Schuster, 2015).
From a theoretical point of view, these studies can be considered in the larger context
of social exchange theory (Emerson, 1976) and family systems theory (Minuchin, 1974).
These approaches place the individual response to terrorism within a series of interac-
tions between individuals that eventually generate obligations, that is, the core of social
exchange theory. For instance, while, for example, Bader and Schuster (2015) employ a
social network perspective, the underlying mechanism is social interaction and social
exchange such that expatriates increase their well-­being by interacting with their net-
work peers. In the expatriate context this was generally found to be a way not only to
receive information but also to reduce uncertainty for HCNs, PCNs, and TCNs alike
(Caligiuri & Lazarova,  2002). In the same vein, drawing on social exchange theory,
besides interacting with colleagues, Bader (2015) also considered the social exchange
with the organization, a phenomenon widely referred to as perceived organizational
support (POS) (Eisenberger, Huntington, Hutchison, & Sowa, 1986). Moreover, organi-
zational support theory and the buffering hypothesis were used in a study by Reade and
Lee (2012), where POS acted as a buffer between employee response to ethnic-­based
terrorism and employee commitment to the organization.
Social identity theory (Ashforth & Mael,  1989) and contact theory (Allport,  1954)
have been used in domestic terrorism–related research. A study by Lee and Reade
(2015), set in Sri Lanka during the ethnic-­based civil war, focused on issues of social
 The Context of Terrorism for Managing People   143

polarization and homophily in the workplace brought about by violent ethnic conflict
and terrorism in the country. Much of the conflict in the world is intergroup conflict,
such as that between ethnic groups and religious groups. Examples of this type of con-
flict can be seen especially in the developing world (e.g., the Middle East and Maghreb
and sub-­Saharan Africa) (Heidelberg Institute, 2017). This affects the MNE in the sense
that social dynamics are reflected in the organization and can impact relationships
between employees and the way employees are managed (e.g., Reade & Lee, 2020). Thus,
social identity theory and contact theory are relevant in contexts of domestic terrorism
where communities are split along ethnic or religious lines in intergroup conflict. Social
identity theory has been included in the James (2011) model as a theory relevant to
terrorism studies because of its explanatory power.
The above theories help us to understand the various responses to terrorism at the
individual level. As noted earlier, there are complementarities in the responses of local
employees (HCNs) and expatriates (PCNs and TCNs) across a wide range of organiza-
tional behavior phenomena, in contexts of both domestic and international terrorism.
One area of response that may differ is with regard to the intention to remain a member
of the organization or to stay in the country affected with terrorism. For instance, Bader
et al. (2017) found that expatriates responded to the stress of terrorism by desiring to
leave the host country. Typically, this is not possible for local employees. While an expa-
triate always has the option to quit the assignment and return home, local employees
have their roots and their family in the host country and, more important, they do not
necessarily have a job opportunity in another unit in the MNE’s global network.
Moreover, in the current climate of anti-­immigration in some countries, such as the
United States and the United Kingdom, obtaining visas and work permits is becoming
more challenging. A study by Reade and Lee (2012), which focused on local employees
of foreign-­invested and indigenous firms in Sri Lanka, found no statistically significant
difference between employees of the two types of firms regarding the effect of domestic
terrorism on employee commitment, which is often correlated with turnover intention.
However, only in foreign-­invested firms (including MNEs) was the moderating effect of
POS significant for ameliorating the negative effect of terrorism on employee commit-
ment. The authors reasoned that for employees of foreign-­invested firms, POS may
­represent social and career opportunities that extend beyond national borders and shift
their attention away from local problems. This may be a psychological coping
­mechanism that does not align with the reality of opportunities to actually leave the
country, but it is a factor that the HRM function can consider when responding particu-
larly to local employees in the case of domestic terrorism.

Organizational Response
Empirical literature on HRM responses to terrorism at the organizational level is
scarce. While an organization may have an inherent interest in reducing or managing
external risk and threats, such as terrorism, devising appropriate responses to these
144   Bader and Reade

threats is a complex challenge (Oetzel & Getz, 2011). Next, we outline key responses at
the organizational level, from which we will derive the theoretical perspectives for
HRM as a function.
To help employees reduce stress, appropriate coping methods are essential. For
instance, in the context of domestic terrorism, Tatar and Amram (2007) investigated
strategies of coping with constant exposure to terrorism by Israeli adolescents. While
this study is not in a work context, it reveals two important insights that are relevant for
MNEs: (1) there are gender differences in coping such that men make more use of
nonproductive coping strategies compared to women and (2) individuals rarely seek
professional help. Another study, by Beutell et al. (2017), developed a model of coping in
terrorism-­endangered countries. While the study is aimed at the individual level, the
prescriptions can be easily transferred to the organizational level. For instance, for each
phase of the assignment, different coping mechanisms are described, such as proactive
coping during predeparture training and problem-­focused coping during assignment.
Moreover, they highlight that coping demands resources that organizations can provide,
at least to a certain extent.
Other research on the organizational response can be clustered around the role of
perceived organizational support, stemming from and building on organizational support
theory. As noted, POS has been found to help ameliorate the effects of terrorism on
employee attitudes and to increase employee commitment of local employees in a context
of domestic terrorism (Reade & Lee, 2012). Since POS was also found to increase positive
work attitudes of expatriates in terrorism-­endangered settings (Bader, 2015), we conclude
that providing support to the workforce, such as effective leadership, plays a critical role in
managing employee response to terrorism and is an essential organizational response.
Another organizational step for addressing individual responses to terrorism was
presented by Posthuma, Ramsey, Flores, Maertz, and Ahmed (2017). They developed a con-
ceptual framework showing how certain HRM practices may be helpful to increase expatri-
ates’ adjustment. While differentiating for the pre- and postdeparture phase is advisable,
Posthuma et al. (2017) also stress that continuous communication between HR and the
expatriate is essential. Establishing and maintaining such communication is not only useful
in terms of showing support but also ensures the capacity to communicate appropriately
with expatriates during or in the aftermath of an attack. Technology, especially satellite
phones, is helpful for maintaining communication even when regular communication
channels (mobile phone networks, landline phones) are disturbed or unavailable.

Toward a Theory of Human Resource

Management Terrorism Response

Having outlined key characteristics of terrorism and categories of MNE employees,

together with the literature on individual and organizational responses to terrorism, we
now integrate these literatures and present a framework that we consider the backbone
 The Context of Terrorism for Managing People   145

(PCNs and TCNs)

Expatriates
Coordinated Global response
domestic response
MNE employees affected

Level of
terrorism
Local employees
(HCNs)

Purely Coordinated
domestic response global response

Domestic International
Dimension of terrorism

Figure 7.1. Human resource management terrorism-­response grid. HCNs, home country

nationals; MNE, multinational enterprise; PCNs, parent country nationals; TCNs, third country
nationals.

of our HRM terrorism-­response theory. Figure 7.1 illustrates four generic HRM terrorism
responses in a two-­dimensional framework, accounting for the dimension of terrorism
and category of MNE employees affected. Level of terrorism is also depicted.
The four HRM terrorism responses are derived from theories applied in previous
work and are the basis for future empirical testing. Responses are generated from the
characteristics shaped by the two dimensions, that is, type of terrorism and MNE
employees affected, along with level of terrorism. We suggest that our propositions will
apply regardless of the specific country/nation-­state context.

Purely Domestic Response

Domestic terrorism affects local employees (HCNs) in a personal way since they are
members of the community that is affected by ongoing violent conflict (e.g., Messarra &
Karkoulian, 2008; Reade & Lee, 2012). We posit that in the case of domestic terrorism,
local employees (HCNs) are more likely to be affected by the terrorism than expatriates
(PCNs and TCNs) located in that country. Because of their embeddedness in the com-
munity, HCNs are personally involved in the social context and may therefore be direct
targets of terrorists.
Much of the conflict in the world in the early twenty-­first century is intergroup con-
flict within nation-­states, which can involve terrorism. An organizational response to
domestic terrorism of an intergroup nature, such as ethnic-­based terrorism, would be
to follow the prescriptions of contact theory. These might include ensuring diversity in
teams and workgroups and promoting social functions where employees and their
146   Bader and Reade

families can meet and get to know each other on a personal basis (Lee & Reade, 2015).
It  is crucial that the MNE not let intergroup conflict manifest within the company
because it could result, for instance, in the conflicting parties sabotaging each other’s
work (Reade & McKenna, 2007). An effective HRM response in such circumstances
might include devising an in-­house conflict management system drawing on indigenous,
consensual conflict management traditions (Reade & McKenna, 2007; 2013), which are
historically found in many societies in Africa, Asia, and Latin America (e.g., Merry, 1992;
Uwazie, 2011).
Perceived organizational support, as noted earlier, has been found to help ameliorate
the effects of terrorism on local employee attitudes in the context of domestic terrorism
(Reade & Lee, 2012). In highly polarized societal contexts, perceived organizational sup-
port would necessarily include leadership styles and HRM practices that bridge differ-
ences and fulfill socioemotional needs (Reade & Lee, 2020). This suggests that HRM
plays a critical role in managing employee response to terrorism in a domestic context.
In addition to providing support for employees through POS and integrating employees
though positive contact experiences, engaging employees in collaborative problem solv-
ing and innovation has been proposed to build better interpersonal relations and
enhance employee well-­being in contexts of domestic intergroup violence and terrorism
(Lee & Reade, 2015; Reade, 2015).
Regardless of the nature of domestic terrorism, the HRM response needs to be tai-
lored to the specific situation and level of terrorism in a given host country. The higher
the level of terrorism, the greater the attention needed by HRM to devise an appropriate
response. Therefore, we suggest:

Proposition 1:  If the dimension of terrorism is domestic and the employees

affected are host country nationals, the MNE should opt for a purely domestic
response.

Coordinated Domestic Response

Domestic terrorism, while mainly targeting the local population (Messarra &
Karkoulian, 2008), can affect expatriates as well, both PCNs and TCNs. For instance,
expatriates, while not being direct targets, may accidentally be in the line of fire during a
bomb blast at a market. Therefore, the MNE needs to consistently check on the specific
situation in the host country. If the level of domestic terrorism is high, such as a high
frequency of terrorist attacks, the MNE needs to take action and respond accordingly.
Based on organizational support theory, employees personify their organization and
feel supported by the organization if it credibly demonstrates care about their well-­being
(Eisenberger et al., 1986). A company can demonstrate this by having contingency plans
that take into consideration the needs of expatriates in the context of domestic terror-
ism. This entails a coordinated response involving the HRM functions at both the sub-
sidiary and the headquarters levels of the MNE. It involves coordinating between all
 The Context of Terrorism for Managing People   147

units in the host country, since expatriates may be located in different units throughout
the host country affected by domestic terrorism.
Czinkota, Knight, Liesch, and Steen (2005) highlight the value of contingency vari-
ables. While they focused on international terrorism, it is highly relevant in the context
of domestic terrorism as well. An appropriate response for an MNE could be to define
several contingency steps for a potential escalation of domestic terrorism that could
start from heightened security and protection to an eventual plan to leave the country.
This includes detailed scenario planning for the actual physical evacuation if airports
are shut down or borders closed. Domestic terrorism may involve shifts of power with
unpredictable outcomes. Consequently, an MNE needs to coordinate their activities in
the host country with those in headquarters to ensure the safety of expatriates.
Therefore, we argue:

Proposition 2:  If the dimension of terrorism is domestic and the employees affected
are expatriates (PCNs and TCNs), the MNE should opt for a coordinated domestic
response.

Coordinated Global Response

International terrorism generally targets Westerners, their way of life, and their busi-
nesses (Bader et al.,  2017). However, HCNs who work for a Western MNC may be
viewed by terrorist organizations as “allying with the enemy.” Those working for and
with a foreign organization, particularly a Western MNE, may be in the line of fire, par-
ticularly if the business is attacked or bombed. In contrast to expatriates, who may live in
guarded compounds and, in case of an attack, have the support of their home country’s
diplomatic mission (Bader & Schuster, 2015), local employees are generally on their own
in their private lives. Even if the company increases the security protection for their local
employees, their (extended) families and friends may still be in danger simply by asso-
ciation. There is also the possibility that local employees (and expatriates) can be kid-
napped and pressured to reveal sensitive information about the MNE.
In such circumstances, the MNE should coordinate its global response activities
closely with the given host country and across subsidiaries in different countries. The
specific situation and level of terrorism should be taken into account. If the level is high,
such as high frequency of attacks, the MNE may want to pare down its local organiza-
tion to a small group of core HCN employees to maintain basic operations. This may
mean giving other local employees time off or redeploying them temporarily to other
subsidiaries on short-­term assignment. The HRM function might also make use of
various alternative forms of international assignments, such as short-­term rotational
assignments and even hiring “nonemployees” or peripheral workers as part of its inter-
national HRM strategy (Collings & Isichei, 2017). Bringing in TCNs from a number of
subsidiaries, for instance, would help to preserve the benefits of diverse teams of local
employees and expatriates (Caligiuri, 2000).
148   Bader and Reade

Constant coordination is necessary between headquarters, the host country subsidiary,

and other subsidiaries within the MNE global network. Lessons learned from other
­subsidiaries in different countries that have experienced terrorism might be leveraged
and applied here (Suder et al., 2017). Therefore, we suggest:

Proposition 3:  If the dimension of terrorism is international and the employees

affected are HCNs, the MNE should opt for a coordinated global response.

Global Response
As noted, international terrorism generally targets Western businesses and persons.
Expatriates from Western countries, or non-­Western expatriates affiliated with Western
MNEs, may be targeted by terrorist groups such as al-­Qaeda or ISIS. While some coun-
tries may be more likely to be affected by international terrorism than others, recent his-
tory has shown that attacks can happen anywhere in the world, at any time. That is
because terrorist cells emerge throughout the world and their plans are typically clan-
destine until the day they are executed or the cell is raided by the police or military.
Further, international terrorism is a ubiquitous phenomenon that does not affect coun-
tries evenly. For instance, countries may differ in the level of terrorism experienced. The
globally ubiquitous and unpredictable nature of international terrorism renders an
HRM response quite challenging.
Governments and law enforcement collaborate globally to fight international terror-
ism, constantly exchanging relevant information. Such collaboration on a global basis
could provide a model for MNEs to engage in some form of “intelligence” gathering,
using their subsidiaries to collect information relevant to the HRM function. Relatedly,
Suder and colleagues (2017) have proposed that MNEs can utilize knowledge from their
subsidiaries located in terrorist-­affected areas to enhance MNE system-­wide organiza-
tional learning regarding the HRM response to terrorist threat. They suggest that learn-
ing gained through debriefing, exit interviews, and documentation of expatriate
experience with terrorist threat can be leveraged across units in the MNE. Accordingly,
an MNE should plan and choose its HRM responses on a global scale and align all
­subsidiaries in a headquarters-­driven global response.
Perhaps the biggest HRM challenge in responding globally is the unpredictability of
attack combined with a psychological contagion effect. The World Economic Forum
(2017) survey states that terrorism events are high in likelihood and impact, yet they are
extremely unpredictable regarding country, city, and timing (Institute for Economics
and Peace, 2017). Moreover, while the actual odds of a particular individual becoming
the victim of an attack are extremely low, individuals perceive some risks as being much
higher than others, even when those risks are against all statistical odds (Freudenburg,
1996). Consequently, fear and stress may affect an MNEs’ entire expatriate workforce,
and their families, in the aftermath of a large attack, regardless of where the expatriate is
located. Bader and Schuster (2015, p. 72) found, for instance, that “expatriates in
 The Context of Terrorism for Managing People   149

terrorism-­endangered countries [had] to manage the stress of distant family members

who hear media reports about terrorist activities” in a given region because of the occur-
rence of a contagion effect. While the expatriates were not directly affected by an attack,
their social network partners heard rumors and were concerned, transferring these con-
cerns to the expatriates. In other words, the fact that expatriates anywhere in the world
become the direct target of international terrorism may also cause such a contagion
effect on other expatriates.
Because terrorist attacks on Western businesses and affiliated persons can occur any-
where in the world, contingency plans for a global response need to consider both devel-
oped and less-­developed country contexts. In country contexts with well-­developed
infrastructure, contingency planning can rely on the existence of multiple roadways, air-
ports, and other means of transporting expatriates to safe havens. By contrast, countries
with less-­developed infrastructure will have fewer roads and perhaps only one interna-
tional airport, so contingency planning to get expatriates out of the country may be
more problematic, similar to the case of expatriates caught in situations of domestic ter-
rorism. Because of these complexities, it is important to adjust the response along a well-
crafted, globally comprehensive contingency plan. At the same time, the MNE should
let all expatriates know that such a plan exists, which can again be considered a form of
POS (Bader, 2015). Additionally, instead of just reacting after an event, the response
needs to cover all phases, pre-, during, and post-attack. Moreover, it also should cover
all phases of the assignment process (Beutell et al., 2017). With regard to the level of ter-
rorism, there can be a fine-­tuning; however, the general contingency planning needs to
be applied worldwide and in the form of a global response. We therefore argue:

Proposition 4:  If the dimension of terrorism is international and the employees

affected are expatriates (PCNs and TCNs), the MNE should opt for a global
response.

Discussion

We have presented a framework that integrates the characteristics of terrorism

(dimension and level), categories of MNC employees affected, and the range of litera-
ture on individual and organizational responses to terrorism. From this we have derived
four HRM responses on an organizational level. By doing so, our model integrates and
extends several perspectives on how terrorism research has been conducted in IB and
HRM research. We demonstrate how a variety of theoretical angles can be woven into a
unifying framework at the organizational level in what we consider the foundation of
our HRM terrorism-­response theory. In the following, we discuss how these contribu-
tions pave the way for future research and propose an agenda that offers ideas on how to
extend our theoretical framework. We conclude with a discussion of the practical
implications of our model.
150   Bader and Reade

Implications for Future Research

First, and foremost, our theoretical framework needs to be empirically tested. For
instance, the differentiation between dimension of terrorism and people affected allows
us to also run group comparisons to find out if responses indeed differ, as argued in
Figure 7.1. Moreover, while most terrorism-­related research takes place at the individual
level, we call for more research at the organizational level. An example for such research
could be drawing on the work of Harvey (1993), extending his original survey to include
the HRM practices we outlined to be an appropriate response.
Second, research could link the generic HRM responses of our terrorism-­response
theory with perceptions by individuals. For instance, while we argue for a coordinated
domestic response when expatriates are affected in a country suffering from domestic
terrorism, empirical research could investigate whether the levels of support provided
by the MNE are perceived as sufficient and satisfying by the expatriate. Moreover,
empirical research could test the success of company support to cope with terrorism and
then relate individual outcomes to corporate success.
Third, especially with regard to the abundance of cross-­sectional research in this field,
future research should engage in tackling new topics in longitudinal research settings.
Doing so would allow us to further investigate causal relationships and control for the
variation of terrorism over time. For instance, it is very likely that people surveyed
answer differently shortly after a terrorist attack, since they may be more emotionally
affected (Messarra & Karkoulian, 2008). In addition, when HRM responses are not fully
developed, longitudinal research could follow up on the change in HRM responses over
time and connect it to objective data on actual terrorist attacks to see whether MNEs
react appropriately.
Finally, we encourage additional conceptual and empirical research that helps
scholars to fully understand the nature of business in a specific setting, such as in terrorism-
endangered countries. Terrorism, as a characteristic of the macro context, is an impor-
tant factor and the impact of this characteristic on employees and HRM is not fully
understood. While there are indeed more studies dealing with this important topic
now (e.g., Bader et al.,  2017; Dickmann, Parry, & Keshavjee,  2017; Gannon &
Paraskevas, 2017; Harvey et al., 2017), they are still quite broad and diverse in their
theoretical approach. We therefore hope that our HRM terrorism-­response theory may
provide a theoretical umbrella that could serve as the basis for future research avenues.

Practical Implications
While our theoretical framework was developed as a basis for empirical testing, it has
practical implications. Our framework provides a guide for HRM practitioners to assess
their contingency plans, if any, with our recommendations according to four generic
scenarios. This allows HRM practitioners to either develop or refine their responses to
terrorism in light of the dimension and level of terrorism and MNE employee category,
 The Context of Terrorism for Managing People   151

that is, expatriate or local employee. While MNCs are most likely to be aware of the
number of people, expatriates and local employees alike, employed in each subsidiary, a
useful next step would be visualizing this on a map, coloring countries based on the lev-
els of terrorism and cross-­mapping this with employee categories across subsidiaries.
Also, with regard to findings on gender differences (Tatar & Amram, 2007), especially
concerning support in coping mechanisms, MNEs could adjust their responses by
developing gender-­specific solutions. Finally, our chapter highlighted the manifold
emotional and psychological processes that terrorism evokes in individuals. Therefore,
instead of purely relying on standard HRM procedures, we recommend MNEs to
include the advice of medical doctors and psychologists when specifying HRM
responses, since they are trained to help in dire circumstances. This can also be applied
in the repatriation phase following international assignments in hostile environments,
since repatriation success is an important factor for MNEs (Breitenmoser & Bader, 2016;
Breitenmoser, Bader, & Berg, 2018).
In conclusion, more attention needs to be paid to both the theoretical development
and the practical application of HRM responses to terrorism (Pinto, Bader, & Schuster,
2017; Reade & Lee, 2012). Ultimately, it is people who run the day-­to-­day operations of
the MNC, and their emotional responses to terrorism, including stress and fear, need to
be met with an appropriate HRM response to ensure employee well-­being and to better
support organizational goals.

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 section 2

R E GIONA L A N D
C U LT U R A L
C LUS T E R S
 chapter 8

Hum a n R esou rce

M a nagem en t i n the
A ngl o -Sa xon
Cou n tr ies

Geoffrey Wood and Chris Brewster

The liberal market/Anglo-­Saxon countries are just about the only example of a category
that both the cultural theories and the different strands of comparative institutional
theories agree on. Generally speaking (there are many uncertainties and unclear
boundaries in both sets of theories), most of the same countries are included in the
Anglo-­Saxon category by all the cultural theorists. Culturally, the term Anglo-­Saxon
countries covers the United States of America (USA), the United Kingdom, Ireland
and three of the ­former dominions: Canada, Australia, and New Zealand, and, in some
instances, South Africa as well. The cultural theorists, even if they have not been able to
agree on all the dimensions of culture, and even if the measures are inconsistent
(Avloniti & Filippaios, 2014), are perhaps more at one in this category than in most of
the other categories: THese countries are characterized by low power distance, high
individualism, and low uncertainty avoidance.
Institutionally, the liberal market (Anglo-­Saxon) model started with Adam Smith
and was developed by the Chicago school of economics into neo-­liberalism. These
theories draw from (though the messages were not restricted to) the United States of
America predominantly, though it is assumed that the other Anglo-­Saxon economies
would be similar, reflecting shared legal origins (common law) and specific political
systems (first-­past-­the-­post in most instances) (Wood,  2011). These Anglo-­Saxon
economies, or “the English-­speaking model” of capitalism (Albert,  1991), have also
sometimes been referred to as the “stock market capitalist” countries (Dore, 2000) or
“compartmentalised capitalist” countries (Whitley, 1999). In the comparative capitalisms
(Jackson & Deeg, 2008) wing of the institutional literature, these countries are now
generally termed (Amable 2003; Hall & Soskice, 2001) the liberal market economies
160   Wood and Brewster

(LMEs). As with the cultural school, the boundaries of the term and exactly which
countries are in or out of the category are somewhat uncertain: In some formulations, for
example, Israel is included as an LME (Soskice, 2005), and in others, Estonia is included
(Feldmann, 2006). The Anglo-­Saxon countries are generally characterized by powerful pri-
vate property and business rights, lesser rights for other stakeholders, and a reduced role for
government, with commensurate suspicion of government involvement and taxation and a
feeling that they should be reduced. Competition is depicted as an unalloyed good, although
both the USA and the UK economies have increasingly been associated with powerful
oligopolies (e.g., in high-­tech, online retailing, and outsourced state functions).
Both cultural theories and institutional theories, then, see these countries as a distinct
category, and although human resource management (HRM) is not central to these con-
cepts, both imply similar approaches to management in general and HRM in particular.
This is of particular salience because both management and HRM are fundamentally
“American” concepts. Although a case can always be made for prior analyses, the popular-
ization of the terminology, the original theories of management and of HRM, and most of
the research and much of current thinking in these areas come from the United States of
America (Kaufman, 2007). Most of the largest management consultancies have their head-
quarters there or draw their inspiration from there. Our academic teaching follows US
models and our scholars try hard to publish in the top journals based in the United States.
The US-­based Academy of Management is the premiere association for academic scholars
of management. The popularity of “human resource management” began in the United
States of America with the publishing of two books with that term in their title (Beer,
Spector, Lawrence, Quinn Mills, & Walton, 1984; Fombrun, Tichy, & Devanna, 1984) and
spread rapidly. The diffusion of such ideas has been likened to the influence of the Gulf
Stream: “drifting in from the USA and hitting the UK first” (DeFidelto & Slater, 2001, p. 281)
and then spreading across Europe and to the rest of the world.
Although the universal diffusion of the LME model has been much predicted, the
process of convergence has proven uneven, not only because of the revival of the coordi-
nated markets, but also because the open-­ended political crisis in the United Kingdom
and the United States has taken much of the gloss off this model (Cumming, Wood, &
Zahra, 2020). The fact that most notions in HRM stem from the USA is undeniable.
There have, however, been debates about how cohesive and consistent the Anglo-­Saxon
category is and precisely how the implications for HRM are manifested in each country.
In this chapter, we explore these issues, mainly through analyses using evidence from
the Cranet surveys.

The Institutional Perspective

We focus on the institutional perspective (see Chapter 3 for more details), partly because
we believe that the elements and measures of institutions in relation to HRM are better
articulated and more consistent, and partly because managements have more scope to
 Human Resource Management in the Anglo-Saxon Countries   161

operate against the cultural norms when they wish. Managers can, for example, recruit a
workforce that is culturally nontypical of the country as a whole; it is more difficult to
avoid the impact on HRM of the national education system, taxation, health system, or
labor market (Vaiman & Brewster, 2015). Again, comprehensive institutional accounts
acknowledge the role of culture as one of many institutional dimensions (Donzé &
Smith, 2018). We also believe that the cultural theories (see Chapter 2 for more details)
have more trouble explaining the continual changes that occur in HRM. However, given
the similarities of the cultural and institutional literatures in regard to the Anglo-­Saxon
countries, we suggest that there may be similarity in some of the core messages if we had
adopted the cultural perspective.
In the landmark Varieties of Capitalism volume, Hall and Soskice (2001) argued that
the mature economies could be divided into LMEs and coordinated market economies
(CMEs), based on shared institutional features and associated firm-­level practices. Each
system is coherent and consistent enough to create real wealth on a sustained basis. The
CMEs consist of the Rhineland economies, the Scandinavian social democracies, and
Japan. The LMEs and CMEs are defined by complementarity and system coordination,
with institutional subsystems (such as those governing capital, product, and labor markets)
reinforcing each other and shaping systemic evolution (Hancké, Rhodes, & Thatcher, 2007).
Other systems will include inconsistent or emergent institutional features that would
necessarily be less efficient than either of the two proven mature archetypes (Hall &
Gingerich, 2004; Hancké et al., 2007). It has been argued that denser regulatory frame-
works and relationships do not always conform to a standardized pattern and that,
therefore, the CME category manifestly contains several quite different types of economy
(Amable, 2003; Whitley, 2007). However, the same critique has more rarely been made
of the LME category (Brewster, Wood, & Brookes, 2006; Konzelmann, Fovargue-­Davies, &
Schnyder, 2012; Lane & Wood, 2009). The LME category is broadly accepted, though
using different terminology, by, for example, both Amable and Whitley, who otherwise
deny the coherence of the CME category. There is obviously, however, room to explore
HRM within the Anglo-­Saxon/LME group of countries and the nature and extent of
diversity. So, the questions driving this chapter are: What are the key characteristics
of the Anglo-­Saxon category of countries? How do they relate to HRM?, And to what
extent is this category coherent?

The Anglo-­S axon Countries and Human

Resource Management

Liberal market economies are characterized by a focus on owners and shareholders,

by pervasive competition, with a focus on short-­term financial results, and by a limited
role for the state. Hall and Soskice (2001, p. 25) argue that a defining feature of LMEs
is weaker interlinking relations and ties between key stakeholders and fluid, more
162   Wood and Brewster

“objective”—and, hence, readily substitutable—relations between key actors; relations

are about arms-­length transactions, rather than the denser ties encountered in CMEs.
The ideal type Anglo-­Saxon/LME nation provides institutional support for owners and
shareholders. While the fact that the shareholder is dominant in all legal cases in the
United States may be a myth (Stout, 2012), it is a widely accepted myth and one with
real power. The ideal type bans anticompetitive groups and collaborative behavior by
corporations or collaborative behavior between governments and corporations. There
are, indeed, in the Anglo-­Saxon countries laws against such anticompetitive linkages
(Wood, 2016); yet, as already noted, a persistent feature of these countries (most nota-
bly the United States and the United Kingdom) is of large oligopolies and, indeed, the
latter have become more prominent in recent years.
Ideal type LMEs are focused on short-­term financial results. It is manifestly the
case that the power of the stock market and the ever-­shorter focus of its attention
(from yearly reporting to quarterly or even monthly reporting) is now widespread in
the USA and the United Kingdom, at least (Baines & Hager, 2020). And the limita-
tions of the role of the state in American politics have become increasingly apparent:
Each election brings further promises of low taxes and tax cuts for corporations;
state employment remains an internationally comparatively low percentage of total
employment; state provision of welfare, education, and health is niggardly in relation
to the wealth of the country; wealth disparity is particularly high and public social
spending is low (Hein, Meloni, & Tridico,  2019). Politics have been increasingly
influenced by large corporate donations and funders of opaque origin; nonmarket
strategies have become increasingly de rigeur for some sectors, most notably oil
and  gas (Brown,  2018). Similar tendencies are visible in the United Kingdom and
Australia. In other words, despite being associated with free markets, there are many
features in LMEs that suggest a move away from pure market liberalism (corporations
reliant on state patronage, “oligopolization,” etc.); it may be that such economies
are actually veering toward greater statism, albeit not in the comforting form of the
welfare variety often predicted by proponents of double movement theories (Wood &
Wright, 2015).
Although the early literature on comparative capitalisms highlighted the path-
dependent nature of national economies, it is evident that LMEs have become increasingly
extreme. Many accounts have suggested that all economies are liberalizing, so that while
CMEs have become more LME-­esque (cf. Streeck & Elsässer, 2016), the LMEs have
become even more so, with the result that the same distance lies between these types of
economy. However, it is not just LMEs that have veered in unexpected directions; in some
CME settings, it has been proven possible to fend off (e.g., Japan) or partially tame (e.g.,
Germany) activist investors (Buchanan, Chai, & Deakin,  2018; Haberly,  2014). Again,
reforms in some areas have made for a strengthening of the existing model in others, such
as vocational training (Thelen, 2019). This raises the question as to what really defines
national models and what this means for employees and the practice of HRM. More spe-
cifically for us here, it raises the question of how these characteristics of the Anglo-­Saxon
liberal market economies impact HRM.
 Human Resource Management in the Anglo-Saxon Countries   163

The preeminence of owner/shareholder rights is usually visualized as a zero-­sum

game, so that such rights are matched by very limited job rights for employees and for
their trade unions. In fact, in the United States, employees have few rights beyond health
and safety and antidiscrimination regulations. Employers are free to agree, or impose,
any contract they wish on employees, as long as they do not infringe on health and safety
and antidiscrimination laws. The minimum employment contract requirements in the
CMEs in relation to such issues as the information that the employer must provide to
the employee, restrictions on hours of work, required holidays, maternity or paternity
leave, notice periods on dismissal, or trade union rights, are simply nonexistent in
the USA.
The importance of competition applies both outside and inside the organization. If
existing staff compete for renewal of insecure contracts, high turnover makes for active
and highly competitive labor markets (Shapiro, 2019). Yet, once again, there are limits.
Proponents of market liberalism are often silent or hostile to the movement of a core
resource—labor—across national boundaries (McNulty & Brewster,  2019; Mulvey &
Davidson,  2019). This does not mean that this helps uphold decent work, because
migrants may be forced into ever more precarious labor and forced to rely on human
traffickers, gangmasters, or their ilk.
In the Anglo-­Saxon countries, the inside and the outside of the organization are con-
nected by a fluid labor market where employers can take in the labor capacity they need
from the external labor market (by recruiting unemployed workers or by “poaching”
people working for other organizations) and can dump surplus labor back there. In the
United States, the archetypical LME, most employees can be dismissed “on the spot.” In
the other LME states, there are more legal restrictions, procedures that must be taken,
especially in the case of larger numbers of dismissals, and a time delay (or often a mone-
tary payment to compensate for it) that must be observed—but there are few situations
where the employer cannot eliminate employees fairly quickly and no social expecta-
tions that they would feel constrained once they had made the decision. This perhaps
precludes the categorization of Estonia as an LME; not only is the labor market relatively
inflexible, but also there are strong expectations against employers acting in such a
manner, given the risks of destabilizing the polity in a small country.
Inside the organization, the relationship between employers and trade unions is seen
as a zero-­sum game and is also competitive—what one gets, the other cannot have.
Unionization rates are well below those of the Nordic states, collective bargaining is
decentralized and becoming more so, and coverage is uneven (Hall & Soskice, 2001).
Even here, there are important variations, with Canadian unionization rates (at 26 per-
cent) being more than twice that of the USA (10 percent); perhaps more important,
union rights are relatively strong under the law in the former country, which has trans-
lated into relatively stable union membership rates and collective bargaining coverage
over the years (Organisation for Economic Co-­operation and Development, 2020).
Although industrial conflict in LMEs has been relatively low in recent years (Amable,
2003), again with the notable exception of Canada (Organisation for Economic
Co-­operation and Development, 2020), the Anglo-­Saxon countries have seen relatively
164   Wood and Brewster

high levels of stress-­related illnesses (Van de Voorde, Paauwe, & Van Veldhoven, 2012),
a  phenomenon particularly pronounced in, for example, the United States. Public
expenditures on labor market programs are low for developed countries (Amable, 2003;
Hall & Soskice, 2001) but, as noted, “well developed and liquid” labor markets (at least
for nationals) encourage high mobility between employers, with capital being allocated
via impersonal market competition (Whitley, 1999, p. 61).
LME short-­termism also impacts HRM. Research using data from CRANET con-
firms that this means that firm-­specific human capital development is likely to be con-
strained (Goergen, Brewster, & Wood,  2009; Goergen, Brewster, Wood, &
Wilkinson, 2012), and relatively high job turnover rates (Croucher, Wood, Brewster, &
Brookes, 2012; Goergen, Brewster, & Wood, 2013) mean that emerging knowledge and
capabilities are, at least theoretically, efficiently distributed across an economy
(Thelen, 2001).
Other research based on CRANET has shown that the Anglo-­Saxon countries use
the widest range of recruitment and selection methods (Wood, Brewster, Demirbag,
& Brookes, 2014); have more (though still limited) use of share option schemes, but
less use of profit sharing (Croucher, Brookes, Wood, & Brewster,  2010; Pendleton,
Poutsma, Brewster, & Van Ommeren, 2002; Poutsma, Ligthart, Veersma, 2006); and
make less use of formal systems of communication with employees (Brewster,
Brookes, Johnson, & Wood,  2014; Brewster, Brookes, Croucher, & Wood,  2007;
Brewster, Wood, Croucher, & Brookes, 2007). While an initial look at training might
suggest that LMEs invest more in their people, a closer look reveals rather a different
picture: Training spend in LMEs is ­typically quite high, but duration of training is
rather low, reflecting the fact that much training is of the basic induction variety
necessitated by high staff turnover rates (Goergen et al., 2012). Again, LMEs are more
likely to downsize and eliminate employees even in response to quite modest external
challenges; in contrast, in CMEs, there is a greater emphasis on alternatives to redun-
dancies, for example, “parking” labor through adjusting the working week (Goergen
et al., 2013).
Finally, here, the impact of the comparatively limited role of the state in HRM is clear.
Public-­sector employment is lower than in other states. The New Public Management
initiatives (Christensen & Lægreid, 2016, Leisink & Knies, 2018) downgrade the role of
the state as an exemplar employer in favor of efficiency and an aping of private-­sector
practice. The state provides fewer services to assist the relationship between employer
and employee representatives and fewer services to help potential employees enter the
labor market. While many people work for firms providing outsourced public services,
a key feature of that business model has been the offering of inferior terms and condi-
tions of service.
Whitley, who acknowledges his theory of business systems as a form of comparative
capitalisms theory but, unlike some others, pays rather more attention to what goes on
within the organization, has summarized the impact of these systemic differences within
the organization as relating to interdependence and delegation (Whitley, 1999). Both
work in specific ways in the Anglo-­Saxon countries. Interdependence, the extent
 Human Resource Management in the Anglo-Saxon Countries   165

and depth of the relationship between employer and employee, will be less, reflected in
shorter-­term employment, “efficient” external markets, and ease of transition or change
for the employer. Delegation will be reflected in employee voice, which, in the United
States, for example, is entirely at the employer’s discretion. As is apparent, the ideal
type fits the United States rather well. What about the other Anglo-­Saxon countries
(see Table 8.1)?

Differences within the Anglo-­S axon

category

Although many commentators discuss the Anglo-­Saxon/LME category as if it were a

monolith, other voices have been raised critiquing the notion (Konzelmann et al., 2012;
Stévenot, Buery, Brewster, & Wood,  2018). There are significant differences between
these countries.
While the nation-­state remains an important level of analysis, it can be argued that
the literature on comparative capitalisms is limited in the notice it takes of variations in
state capabilities among and between the mature societies (cf. Walker, Brewster, &
Wood,  2014). There are important spatial and social variations in state capabilities
(Jessop,  2011), so that economies such as Australia and New Zealand with relatively
small domestic markets are assumed to operate similarly to the vast market of the USA.
Equally, the US dollar’s (albeit increasingly contested) status as a reserve currency allows
for far greater leeway in monetary policy than would be possible in the case of the
smaller LMEs.
In the Anglo-­Saxon states, the role of the state is by no means consistent, even within
one country. For example, in northeastern England, successive governments have been
willing to tolerate and sustain more active regional development support (Hudson, 2006);
meanwhile, the US high-­technology sector depends heavily on regional government
support and defense spending spillovers (Weiss, 2010). Highly competitive regionally
based industrial clusters, such as Silicon Valley, are supported via a good pool of
graduates with generic tertiary skills, high job mobility allowing for the diffusion
of ideas within and across organizations, and a well-­developed venture capital sector
(Whitley, 2010). For employees, the risk of organizational failure is offset through
the availability of many similar firms in the region: THere is an incentive to invest in
sector-­relevant skills.
Dore (2008, p. 782) argues that much of the comparative capitalisms literature has
taken more account of abstract institutions and behavioral patterns than of the real
world: In the Anglo-­Saxon LMEs, much change has been brought about through
“hands-­on evangelists,” active fund managers, rather than traditional institutional
investors (Stévenot et al.,  2018). Such norm entrepreneurs flout traditional ways of
behaving and, if they are successful, they will be copied until the change becomes general.
Table 8.1.  Country comparisons
  Size (square Population Gross domestic product Health (rankings: spenda/
kilometers) (million) USD$ per head Urbanization (%) Electoral system quality)

USA 9,833,517 329.3 59,800 82.3 Majoritarian 1/37

United Kingdom 243,610 65.1 44,300 83.7 Majoritarian 13/18
Canada 9,984,670 35.9 48,400 81.4 Majoritarian 12/30
Australia 7,741,220 23.5 50,400 86 Transferable vote 19/32
Ireland 70,273 5.1 73,200 63.4 Indirect elections 11/19
New Zealand 268,838 4.9 39,000 86.7 Mixed 15/41

a
Spend out of thirty-­five countries in the Organisation for Economic Co-­operation and Development; quality out of one hundred countries.
Sources. CIA World Factbook; Health Care Rankings; Organisation for Economic Co-­operation and Development.
 Human Resource Management in the Anglo-Saxon Countries   167

Note, in this context, that the role of active fund managers—and the increased emphasis
on speculative investment, rather than sustainable consumer banking—is a process that
is more pronounced in the USA and the United Kingdom than in the other Anglo-­Saxon
countries (Konzelmann et al., 2012; Stévenot et al., 2018). During the global financial cri-
sis immediately following 2008, New Zealand and Canada experienced far fewer prob-
lems with their banking sectors, as a result of more conservative banking models.
Another result, and perhaps a more long-­term one, is that in those Anglo-­Saxon coun-
tries with more emphasis on shareholder value management, the United States and the
United Kingdom, ties to and relationships with labor are more tenuous (Boyer, 2010,
p. 349). Other variations in financial systems, with a significant difference between the
United States and the United Kingdom on one side and, for example, the antipodean
Anglo-­Saxon countries on the other, include the proportion of bonds in the portfolios of
institutional investors, the role and development of venture capital, and stock market
capitalization (Amable, 2003, p. 147).
It seems that the global economic crises that began in 2008 may have reinforced
rather than eroded diversity within national archetypes. New institutional practices
derive from heterogeneous activity on a spatially dispersed basis (Djelic & Quack, 2010).
The process of change involves some decoupling, creating ambiguity and heterogeneity
(Boyer, 2010). Defenders of the status quo may veto changes, so that within one country
there may be sustained periods of institutional layering and drift (Thelen, 2010). Within
both the USA and the United Kingdom, the financial crisis has indeed led both to
demands for better regulation and to strong counter-­pressures to maintain the dysfunc-
tionalities of the status quo. Pressures toward and against change are likely to make for
at least partial institutional redesign, again reinforcing both difference and drift
(Hopner, 2005). Systems develop and hybridize in the face of all manner of disorganiz-
ing forces. For new arrangements to become embedded, there must be significant politi-
cal support; the alternative is disorganized marketization. This would suggest that
organized capitalism is a highly political process (Streeck,  2005) which, in turn, is
reflected in the differences between Australia and New Zealand on the one hand and the
United States and the United Kingdom on the other. Boyer (2010, pp. 351–352) argues
that in the latter countries, when unemployment is rising and unions are generally weak
it has proven very difficult to promote anti-­crisis programs aimed at the nonfinancial
sector: Where it has proved necessary to save banks, it has meant saving bankers and
their ideologies.
Certain LMEs are relatively statist in some parts of their economies; in addition to the
areas noted already, there are strong public/private synergies. For example, in the USA,
the large military/industrial complex helps to maintain the competitiveness of civilian
sectors within high technology and aerospace; the same could be said of the connec-
tions between public universities and pharma. As an example of the blurring of interests
between state and market, we note the reluctance of the Federal Aviation Authority to
intervene in the case of safety failings of the Boeing Max 737 program until the evidence
proved overwhelming. There is a tight coupling between many areas of national security–
related programs, ranging from “homeland security” to prisons, and governmental
168   Wood and Brewster

support, with closed procurement systems (Weiss, 2010). Indeed, whereas in the United
States active industrial policy may be politically demonized and is used as a label with
which to attack competitors in other countries, it has become acceptable if it is phrased
in security terms. This includes protection for private contractors and for governmental
agencies taking on private-­sector characteristics, an example being the CIA acting as an
“angel” investor in security-­related projects (Lemieux,  2018). As other examples, the
biotech and pharmaceutical industries are dependent on research conducted in the
state university sector and by private not-­for-­profit universities and the publicly
funded science laboratories of some charities. Federal agencies have played an impor-
tant role in imposing direction, by a variety of less apparent means such as federal
innovation programs or public/private partnerships (Weiss, 2010). One effect of this
process has been the appearance of new regional labor market institutions, including
sectoral partnerships and regional training consortia (Appelbaum, Berhardt, Murname, &
Weinberg, 2005). The reality is that even in the United States a large range of state
credits and subsidies are granted to financiers and innovators (in, for example, Silicon
Valley), but not to households or normal employers (Boyer, 2010). So, we may note
significant differences within the LME camp, particularly between LMEs where the
military/industrial complex and related security industries are highly developed and
politically powerful (the USA, the United Kingdom) and those where it is less so
(Australia, Canada, Ireland, and New Zealand).
It might be argued, therefore, that on these grounds alone the USA and the United
Kingdom are distinct from other Anglo-­Saxon states because of their highly developed
military/industrial and high-­technology sectors. They are also unlike the others in rela-
tion to the extreme development of their financial services sector and the extent to
which “too big to fail” players have been able to secure open-­ended bailouts (Davila &
Walther, 2019). There is more diversity between the state-­supported and non-­supported
sectors in the United States and the United Kingdom. This diversity is reflected in HRM
terms in the extreme bifurcation in the USA between relatively “good” jobs (high-­paid,
with interesting work, good working conditions, and forward prospects), generally in
high technology–related industries, and a great mass of usually unskilled, poorly paid
jobs with no security of tenure in “sunset industries” such as traditional manufacturing
and elsewhere (Wright & Dwyer, 2006). It has been argued that a similar process is at
work in the United Kingdom (Yoon & Chung, 2016). More broadly speaking, the United
States and the United Kingdom remain significantly more unequal in relation to wealth
and income distributions than Canada and New Zealand (and even more so, Ireland),
with Australia somewhere in between (Organisation for Economic Co-­operation and
Development, 2020).
Finally, there are also crucial differences in electoral systems (Pagano & Volpin, 2005).
The “classic” first-­past-­the-­post systems found in the United States and the United
Kingdom tend to favor conservative parties that more strongly promote property owner
rights; this is different from the (various forms of) more proportional systems found in
the other Anglo-­Saxon countries. The reason for the different outcomes of electoral sys-
tems is that elections under first-­past-­the-­post are typically decided by ideologically
 Human Resource Management in the Anglo-Saxon Countries   169

committed voters in a relatively small number of marginal seats (Pagano & Volpin, 2005).
Such voters can be swayed by expensive electoral campaigning, which favors moneyed
interests. While the USA and the United Kingdom both have almost classic traditional
first-­past-­the-­post systems, Ireland (and, intriguingly, Northern Ireland, a region of the
United Kingdom) has a “single transferable vote” proportional representation system.
So does Australia, although that country also has compulsory voting. New Zealand uses
the “mixed member” proportional system. Both these latter systems impart a greater
degree of proportionality. While Canada may be closer to the first-­past-­the-­post ideal,
the power of the provinces and especially the situation of francophone Quebec forces
Canadian politicians to devote more attention to coalition building, which has had the
effect of diluting the interests of major property owners. However, the extent to which
oil and gas interests have captured the political agendas in the plains provinces has
greatly worsened political divisions and forced national governments to direct more
and more largesse to suit that industry, in the hope of placating provincial resentment
(Adkin, 2016). Yet, unlike the United States and the United Kingdom, there are strong
anti-­gerrymandering measures in place in Canada; the business of drawing constitu-
ency boundaries is out of the hands of the politicians (MacLeod, 2019). These more pro-
portional electoral systems promote coalition building and hence make it difficult to
sustain measures aimed at weakening the power of key stakeholder groupings, such as
organized labor (see Pagano & Volpin, 2005).
There is also much diversity within the Anglo-­Saxon states in relation to social
­protection. The figures from the USA are distorted by high levels of spending on
healthcare and by similarly great distinctions in terms of access thereto (Amable, 2003).
The World Health Organization notes that the United States is easily the number one
spender per capita on healthcare around the world, with their system costing four
times as much as the next most expensive system (Switzerland), but the World Health
Organization ranks the quality of healthcare available there as the seventy-­second
best in the world. Nor is this difference confined to healthcare. Australia, for example,
although ranking well below the United Kingdom in general healthcare, is quite dif-
ferent from the United Kingdom in relation to expenditure on the elderly (Harris &
Sharma, 2018). These differences impact the relative desirability of certain jobs, the
importance of security of tenure, how people approach retirement, and the relative
efficacy of antidiscrimination legislation. Other differences relate to education sys-
tems and include the relative regulation of the university sector: THe United States, to
take that example again, is characterized by particularly wide variations in curricula
and quality (Amable, 2003).
How are these differences reflected in HRM? We identify, as an instance, differences
in the labor movement and collective bargaining and the related legislative frameworks.
Hancké et al. (2007) argue that labor relations is a key dimension defining systems;
this includes the extent of centralization of bargaining and security of tenure (Hall &
Soskice, 2001; Whitley, 1999). Although the labor movement in the Anglo-­Saxon coun-
tries—arguably its original home—is undeniably weaker than, say, the labor movement
in the Nordic countries, Canadian unions, as we have seen, are much stronger and
170   Wood and Brewster

bargaining is more widespread than is the case in the United States. New Zealand has
had a history of comprehensive centralized wage setting, even if this has been followed
by rapid union decline (Barry, 2018).
Since the turn of the century both Australia and New Zealand have experimented
with radical labor market deregulation, which, if not at least partially reversed, would
have brought these states closer in line with the USA. However, not only was there mixed
evidence that such reforms resulted in performance gains (Barry, 2018), but also they
proved so deeply unpopular as, in both cases, to bring about a change in government. In
reaction, New Zealand enacted electoral reform to avoid untrammeled power by a sin-
gle ruling party; however, Australia has gradually drifted to right-­wing populism.
Norms determine what constitutes acceptable social inequality (Hicks,  2003): THe
United States, in recent years, has been willing to accept greater inequality than the
other Anglo-­Saxon states. In turn, higher inequality is associated with the entanglement
of wealth and income concentration (Hicks, 2003, p. 286). It could be argued that while
there may be quite high tolerances of inequality, declining incomes and increased inse-
curity may be associated with political blowback; recent work links the diffusion of
hard-­line HRM policies with the rise of the populist right in the United States and the
United Kingdom (Cumming et al., 2020).

Variations between the Anglo-­S axon

Nations in Human Resource Management

We have built our discussion on the comparative capitalisms debates, but we do not sug-
gest that the relevant literature there does not see institutions as flexible and subject to
periodic renegotiation (Hancké et al., 2007). Change can, of course, take place in the
overall institutional architecture without undermining core complementarities (Hall &
Gingerich, 2004). Thelen (2010, p. 102), for example, argues that changes in labor poli-
tics in different national settings are more a case of “re-­equiliberisation” than conver-
gence toward any particular model. So, while bargaining coverage may shift, systemic
fundamentals stay the same.
Overall, the Anglo-­Saxon countries share not just a (form of the) language, but also
an approach to their economies and therefore to their HRM that is distinct in important
ways from the approaches found even in other rich countries. This is not a monolithic
bloc, however. Arguably, the United States of America is clearly different from the other
countries, importantly in the way HRM is conducted. The United Kingdom is the
Anglo-­Saxon country with the most similar approach—to date, it has remained differ-
ent partly because of the constraints of membership of the European Union. As we write,
that is coming to an end, for some time at least. It will be interesting to see how far HRM
institutions and practices change as a result.
 Human Resource Management in the Anglo-Saxon Countries   171

Conclusion

In the end, much of the literature on comparative capitalisms was primarily concerned
with identifying and explaining the viability and persistence of coordinated markets
(Wood & Allen,  2020). In this context, the LME model was seen as something of a
benchmark (even if not necessarily a desirable one), with countries drifting toward or
away from this model. However, there are two limitations to these assumptions. The first
is that what goes on in the Anglo-­Saxon countries is somewhat conflated with what a
country run on ideologically pure neo-­liberal lines should look like. This fails to take
account of the extent to which the two largest LMEs are often very far from this ideal.
This would include the predominance of oligopolies in core areas of economic activity
(sometimes sustained by politicians), the increasing prominence of nonmarket strate-
gies in key sectors (e.g., oil and gas), the existence of large areas of economic activity
in spaces that are neither state nor market (e.g., military/industrial and penal com-
plexes; outsourced state services), and “blank check” bailouts. Internal diversity in the
Anglo-­Saxon category in part reflects variations in these areas; these states vary sub-
stantially in relation to institutions. If first-­past-­the-­post electoral systems help define
property owner supremacy, then Ireland and New Zealand clearly have more com-
mon ground with CMEs. Again, Canada and Australia have important differences
(anti-­gerrymandering in the case of the former and single transferable vote in the case of
the latter) from the US and UK electoral systems. Another example is substantial varia-
tion in education systems. The school system in Ireland, Canada, and New Zealand is
much more equal than that in the United Kingdom, and even more so when compared
to the USA: Great inequalities in literacy and numeracy in the United States (and, to an
extent, in the United Kingdom) have long-­term implications for individual workers and
firms and, eventually, for HRM. Further, union rights vary considerably, with the United
States and Canada being at opposite poles. This raises the question as to what really
defines an Anglo-­Saxon LME and which institutional features exert particular effects at
what point in time.
Third, there is the issue as to how permeable the boundaries of the LME camp are.
During the years of the neo-­corporatist experiment, Ireland was seen as becoming more
CME-­like; the abandonment of this might suggest a reversion to the LME model, and,
indeed, like the United Kingdom and the United States, Ireland is quite heavily finan-
cialized. However, it is more equal than other LMEs and has a proportional electoral
system, encouraging coalition building.
Finally, there is the issue of systemic change; all Anglo-­Saxon states are very different
from what they were in the 1980s, and not all change has been in the direction of greater
marketization. Indeed, there are strong statist and nonmarket tendencies in the United
States and the United Kingdom, albeit often pathological and designed to actively support
and sustain the interests of an increasingly emboldened oligarchic class. This highlights
the extent to which, even among those most committed to neo-­liberalism, there are
172   Wood and Brewster

boundaries with regard to how far this ideology will translate into practice. Again, if a
feature of the Anglo-­Saxon states is shareholder primacy, this does raise the issue of
whether it is a necessary feature of market liberalism or simply one possible dimension;
both the USA and the United Kingdom functioned quite well (and, indeed, better) prior
to the deregulation of financial markets in the 1980s. More broadly speaking, it high-
lights the extent to which in no variety of capitalism are institutions perfectly coupled.
Undeniably, systemic features may coexist and support each other, but, by the same
measure, broad institutional regimes can seemingly take on or jettison features widely
seen as defining—yet retain many broad characteristics.
There is clear evidence that these comparative capitalisms have significant implica-
tions for HRM and that, therefore, HRM in the Anglo-­Saxon LME states is different
from HRM in other states. It is also apparent that the leading ideas in HRM have tended
to originate in these states and then, at least in terms of the rhetoric, been adopted by
other states; these are important differences. It is interesting to note that it is not the
HRM policies that differ between the Anglo-­Saxon states and others so much as the
underlying institutional base.

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 chapter 9

H um a n R e sou rce
M a nagem en t i n th e
Ger m a n ic Con text

Benjamin P. Krebs, Bernhard A. Wach,
Marius C. Wehner, Astrid Reichel,
Wolfgang Mayrhofer, Anna Sender,
Bruno Staffelbach, and Paul Ligthart

In this chapter, we examine the similarities and differences in the strategic integration of
human resource management (HRM) and developmental HRM practices within the
European Germanic cluster (henceforth referred to as the Germanic cluster) as defined
by the Global Leadership and Organizational Behavior Effectiveness (GLOBE) research
program (Gupta & Hanges, 2004, p. 191). It comprises Germany, Austria, Switzerland,
and the Netherlands. Although both formal institutions, such as laws and regulations,
and informal cultural values and norms matter for HRM, formal institutions are consid-
ered to follow national culture (Brewster, 1993) and are less stable across time than culture
(cf. Licht, Goldschmidt, & Schwartz, 2007) (see Chapter 3 for a discussion on institutional
theory). In the typology of Hall and Soskice (2001), the Germanic cluster countries are
altogether classified as coordinated market economies (CMEs). However, a more recent
study by Schneider and Paunescu (2012) demonstrates that Switzerland and the
Netherlands underwent institutional changes between 1990 and 2005 and argues that
they should be classified as liberal market economies (LMEs) and LME-­like economies,
respectively. Hence, despite the cultural homogeneity (Gupta & Hanges, 2004, p. 191),
there might be a divergence within the Germanic cluster that results in differences in the
HRM policies and practices used within this cluster.
We focus on the strategic integration of HRM and developmental HRM practices that
address the increasing competition for skilled labor, which have become increasingly
important for organizational growth and performance in recent years (PwC, 2014).
Strategic integration of HRM denotes the involvement of HRM in managerial
178   Krebs et al.

­ ecision-­making, the broad purpose of which is to leverage organizational outcomes by

d
means of managing human resources (Guest, 1990; Vernon & Brewster, 2013). The stra-
tegic integration of HRM has been shown to increase HRM performance (Teo &
Rodwell, 2007), organizational performance (Bennett, Ketchen, & Schultz, 1998), and
shareholder value (Becker, Huselid, Pickus, & Spratt,  1997). Moreover, the degree to
which HRM is strategically integrated serves as an indicator of both the strategic rele-
vance attached to human resources and the potential of HRM to leverage human capital
resources in a way that generates competitive advantage by means of preventing imita-
tion (Coff,  1997). In addition to strategic integration, organizations’ developmental
HRM practices—that is, practices related to the development and retention of skilled
employees—play an increasingly important role in terms of competitive advantage.
Specifically, demographic changes in developed countries drive up the average age of
organizations’ workforces and decrease the size of the labor force, thus intensifying the
competition for skilled labor (Bieling, Stock, & Dorozalla, 2015). Since organizations
that are responsive to environmental changes in their use of HRM policies and prac-
tices should achieve higher performance (cf. Wei & Lau, 2008), we investigate HRM
practices related to the development and retention of skilled employees.
Importantly, in addition to examining the similarities and differences of the strate-
gic integration of HRM and developmental HRM practices in the Germanic Europe
cluster, we use the United States and the United Kingdom as benchmarks.
Organizations based in the United States tend to adopt innovative HRM practices and
policies earlier than organizations in other countries and, therefore, have previously
served as a benchmark for strategic HRM (Brewster, 2004). This phenomenon is not
restricted to the United States, but may be attributed to the entire Anglo cluster
(GLOBE, 2016a) or the Anglo-Saxon business system (Whitley, 1999) in general (see
Chapter 8 for a discussion of Anglo-­Saxon HRM). As an illustration, Ferner and
Quintanilla (1998) refer to the “Anglo-­Saxonisation” of or­gan­i­za­tions as a convergence
toward behaviors typical of highly internationalized British or US-­American multina-
tional companies. The most prominent and significant development with respect to
the strategic integration of HRM since the early days of the strategic HRM movement
in the 1980s originates from the human resource (HR) business partner model devel-
oped by Ulrich (1997). This model was initially promoted in the United States and the
United Kingdom (Caldwell, 2001, 2003) and spread to or­gan­i­za­tions in the Germanic
cluster thereafter. Given this time lag, the strategic integration of HRM is an impor-
tant starting point for examining the status quo of approaches to HRM in the
Germanic cluster.
We also expect quite different HRM practices related to personnel development
between organizations from the Germanic cluster compared to the Anglo cluster.
According to the GLOBE study, the Germanic societies stand out with respect to
future orientation in relation to societal cultural practices when compared with
other cultural clusters. Consequently, organizations in the Germanic cluster should
place a comparably high emphasis on planning and investing for the future, such
 Human Resource Management in the Germanic Context   179

as investments in personnel development. Therefore, we expect differences in the

arrangement of these developmental HRM practices within the Germanic cluster
resulting from institutional and (minor) cultural differences, such as differences in
employment protection legislation (Organisation for Economic Co-­operation and
Development, 2018e).
We base our analyses on recent data from the Cranet survey conducted in 2014/15
(Reichel, Farndale, & Sender, 2017). Analyses are restricted to organizations with at least
one hundred employees to ensure comparability across countries (Steinmetz, Schwens,
Wehner, & Kabst, 2011). A notable exception is Switzerland, for which the most recent
data (data collection took place in 2014 for the most recent survey round) were only
available for organizations with at least two hundred employees.1

The Cultural Context of the

Germanic Cluster

The GLOBE researchers group Germany, Austria, Switzerland, and the Netherlands
into the Germanic cluster (Gupta & Hanges, 2004, p. 191). Clustering was based on
previous empirical studies (e.g., Ronen & Shenkar, 1985), common language, geogra-
phy, religion, historical accounts (Gupta & Hanges, 2004, p. 183), and statistical tests
of the empirical validity of the clustering based on GLOBE data (Gupta &
Hanges,  2004, p.  189). With respect to societal cultural practices (“as is”), the
Germanic cluster can be characterized as scoring relatively high on performance
orientation, assertiveness, future orientation, and uncertainty avoidance (for
­
­definitions of the GLOBE cultural dimensions, see Table 9.1). This profile reflects the
technocratic orientation of Germanic societies (Gupta & Hanges, 2004, p. 199) and
indicates an emphasis on competitiveness, rewarding performance, planning
and investing for the future, rules and procedures to reduce uncertainty, and more
assertive relationships with others (GLOBE, 2016b). On the contrary, the Germanic
societies score relatively low on humane orientation, institutional collectivism, and
in-group collectivism, suggesting limited cohesiveness within organizations,
­limited  collective distribution of resources, as well as limited pro-­social behaviors
such as ­caring and ­altruism  (GLOBE,  2016b). With respect to power distance and
gender egalitarianism, scores for the Germanic cluster are in  the mid-­
­ range
­compared to other clusters (Gupta & Hanges, 2004, p. 193), but are rather high at

1  The standard sampling frame for data collection in Cranet is based on organizations with at least
two hundred employees. However, if it is more appropriate for the structure of organizations within
a country, network representatives are allowed to collect data on organizations with a minimum of one
hundred employees instead (Tregaskis, Mahoney, & Atterbury, 2004).
180   Krebs et al.

Table 9.1.  Culture construct definitions

Cultural dimension Construct definition

Power distance The degree to which members of a collective expect power to be distributed
equally
Uncertainty The extent to which a society, organization, or group relies on social norms, rules,
avoidance and procedures to alleviate unpredictability of future events
Assertiveness The degree to which individuals are assertive, confrontational, and aggressive in
their relationships with others
Institutional The degree to which organizational and societal institutional practices encourage
collectivism and reward collective distribution of resources and collective action
In-­group The degree to which individuals express pride, loyalty, and cohesiveness in their
collectivism organizations or families
Future The extent to which individuals engage in future-­oriented behaviors such as
orientation delaying gratification, planning, and investing in the future
Gender The degree to which a collective minimizes gender inequality
egalitarianism
Humane The degree to which a collective encourages and rewards individuals for being fair,
orientation altruistic, generous, caring, and kind to others
Performance The degree to which a collective encourages and rewards group members for
orientation performance improvement and excellence

an absolute level (GLOBE,  2016b). Hence, authority, power differentials, status privi-

leges, and social inequality as well as male dominance and gender inequality tend to be
accepted and endorsed within the Germanic societies.
As with all clusters and societies, societal cultural values (“should be”) differ
­significantly from actual societal cultural practices (“as is”) in the Germanic Europe
societies. Societies in the Germanic cluster show the strongest desire to be (more)
gender equal among all clusters and also desire to be (more) performance ori-
ented  and humane oriented (GLOBE, 2016b). Conversely, the Germanic Europe
societies desire less power distance, assertiveness, and uncertainty avoidance
(GLOBE,  2016b).
Despite these commonalities in cultural respect, Figure 9.1 shows that there is varia-
tion within the Germanic cluster for all cultural dimensions with respect to practices
(“as is”) with the exception of assertiveness. For example, the Germanic Europe societ-
ies differ in the degree of enacted cohesiveness in organizations (i.e., in-­group collec-
tivism). The extremes are Austria with relatively high, and the Netherlands with
relatively low, in-group collectivism. Moreover, Switzerland and the Netherlands stand
out with respect to higher future orientation. Switzerland also has a high degree of per-
formance orientation, which is likely to influence the HRM practices used in Swiss
organizations.
 Human Resource Management in the Germanic Context   181

1
Assertiveness Institutional In-group Future Gender Humane Performance
collectivism collectivism orientation egalitarianism orientation orientation

Austria Germany Switzerland Netherlands

Figure 9.1.  Societal cultural practices scores (“as is”) according to the Global Leadership and
Organizational Behavior Effectiveness study. from House, Hanges, Javidan, Dorfman, and Gupta
(2004); response bias-­corrected scores.

The Economic, Institutional, and

Demographic Context of the
Germanic Cluster

Typical for continental Europe is a corporate governance system structured as a dual

board or two-­tier system. The board of directors has executive powers and manages the
company, but it is also accountable to a supervisory board, which focuses on the devel-
opment of the business strategy. The shareholders usually elect the supervisory board.
The economies of the Germanic cluster are highly export oriented. In 2018, exported
goods and services contributed to 47 percent of the GDP in Germany, 54 percent in
Austria, 65 percent in Switzerland, and 83 percent in the Netherlands (World Bank, 2019).
While the economy of Germany is characterized by a large manufacturing sector, the
economies of Austria, Switzerland, and the Netherlands are dominated by services. All
Germanic cluster countries have been originally classified as CMEs by Hall and Soskice
(2001), but more recent cluster analyses for 2005 by Schneider and Paunescu (2012) sug-
gest that the economies of Switzerland and the Netherlands shifted toward the LME
type. The Germanic cluster countries differ significantly with respect to the share of
employees covered by collective bargaining. While almost all employees in Austria are
covered by collective bargaining, about 80 percent are covered in the Netherlands,
somewhat more than half of employees are covered in Germany, and slightly less than
182   Krebs et al.

half of employees are covered in Switzerland. All Germanic countries benefit from a
well-­established dual system of vocational education and training (VET), but differ sig-
nificantly in the share of people between the ages of twenty-­five and thirty-­four who
have completed tertiary education. The four countries are among the top twenty in the
Global Talent Competitiveness Index (INSEAD,  2018), which ranks countries with
respect to their ability to attract, develop, and retain global talent. Nevertheless, the
ranks differ significantly between countries (Switzerland first, Netherlands ninth,
Austria eighteenth, and Germany nineteenth). Aging populations and, correspond-
ingly, workforces pose challenges for the whole Germanic cluster.
In the following sections, each country within the Germanic cluster will be presented
in detail with respect to the country’s economic, institutional, and demographic con-
text. Table 9.2 summarizes the similarities and dissimilarities that emerged from this
investigation.

Austria’s Economic Context: Governance and Business Structure

Austria is a well-­developed market economy closely tied to other European Union econ-
omies (especially Germany and Eastern Europe) with large service, sound industrial,
and small, but highly productive, agricultural sectors. Similar to Germany, Austria is
classified as a CME (Hall & Soskice, 2001). Most of the companies operating in the coun-
try (about 330,000 in Austria) are small and mid-­sized enterprises (SMEs): 99.7 percent
of all companies employ fewer than 250 employees, and 37 percent are one-­person com-
panies (Bundesministerium für Wissenschaft,  2016). External corporate financing is
dominated by debt in the form of long-­term bank loans, while equity and venture capital
play a minor role (Task Force of the Monetary Policy Committee,  2013). Although
potential entrepreneurs face a highly restrictive legal environment, entrepreneurial
activity in Austria is above the European average (World Economic Forum, 2016). This
might be partly a result of political initiatives and support programs offered by public
organizations, such as the chamber of commerce, in which membership is obligatory for
every company, independent of size. Within the Germanic cluster, however, Austria
scores slightly higher (ranked fourteenth) than Germany (ranked fifteenth), but lower
than the Netherlands (ranked eleventh) and Switzerland (ranked second) on the 2018
Global Entrepreneurship Index (Global Entrepreneurship and Development Institute,
2018). The Global Entrepreneurship Index reflects entrepreneurial attitudes, abilities,
and aspirations of national populations, but also the institutional and economic infra-
structure (Global Entrepreneurship and Development Institute, 2018).

Austria’s Institutional Context: Employment Legislation

and Collective Bargaining
The chamber of commerce is one of the main actors in the so-­called social partnership
model. Collective bargaining is integrated in this comprehensive system of economic
and social cooperation that is an important manifestation of the consensus politics con-
sidered the backbone of Austria’s recovery and economic success after World War II.
Membership of employers and employees in their respective collective bodies in the
 Human Resource Management in the Germanic Context   183

Table 9.2.  Similarities and dissimilarities among the Germanic cluster countries
Similarities Dissimilarities

Economic context: Originally altogether CH excels in terms of orientation toward

Governance and classified as CMEs entrepreneurship and entrepreneurial
business structure Highly export-­oriented infrastructure, as well as attractiveness for
economies global talent (NL takes a middle position
Economies dominated by between CH and AUT/GER)
SMEs NL and CH on the move to being recognized as
Dual board or two-­tier LMEs
system of corporate Swiss large companies more frequently under
governance family control
Economies of AUT, CH, and Large manufacturing sector in GER
NL dominated by services
Institutional context: Collective labor agreements High collective bargaining coverage in AUT and
Employment prevalent in AUT, GER, the NL, slightly above 50% covered in GER,
legislation and and the NL slightly less in CH
collective System of codetermination Very liberal employment regulations in CH
bargaining eminent in AUT and GER In the NL, employment protection decreased
continuously over the past decades
Institutional context: Primarily tax-­funded free Enrollment in tertiary education higher in the
General education public school system in NL and CH
and VET all four countries System of dual VET highly recognized in CH
Dual system of VET attractive such that relatively few HRM professionals
alternative to tertiary and directors have tertiary education
education
Demographic context: Fertility rates below Net migration in AUT particularly high
Growing, but aging replacement rate compared to population size
population Positive net migration
But migration does not
offset the trend of
depopulation and aging
populations/workforces

Note: AUT, Austria; CH, Switzerland; CME, coordinated market economy; GER, Germany; HRM, human
resource management; LME, liberal market economy; NL, the Netherlands; SME, small and mid-­sized
enterprises; VET, vocational education and training.

Chambers of Commerce, Labour and Agriculture is obligatory. Ninety-eight percent of

all employees are covered by collective bargaining agreements at the industry level
(Organisation for Economic Co-­operation and Development, 2018a) because their
employers are all (because of mandatory membership) represented by the chamber
of commerce, which negotiates on the employer side. The Österreichischer
Gewerkschaftsbund, the largest Austrian trade union, takes on collective bargaining on
the employees’ side. Union membership is voluntary and reaches 27 percent of all wage
and salary earners (Organisation for Economic ­Co-­operation and Development, 2018f),
184   Krebs et al.

although the Österreichischer Gewerkschaftsbund is negotiating on behalf of all

employees in the respective industry and although the chamber of labor, in which
all employed Austrians are members, offers many services, including legal represen-
tation in the labor courts. The main premise behind the social partnership system is
that basic aims of economic and social policy can be better realized through coop-
eration between key actors than by confrontation (Gerlich, Grande, & Müller, 1988).
Accordingly, working days lost as a result of strikes are very rare in Austria (e.g.,
two days per one thousand employees on average between 2006 and 2014)
(Wirtschafts- und Sozialwissenschaftliches Institut, 2017). Although the social part-
nership model as a highly developed form of corporatism is informal and based on
voluntary participation of the respective groups, it still is embedded into (and
enabled by) a tight net of employment laws and regulations. The level of employ-
ment protection is rather high. Indicators from the Organization for Economic
Co-operation and Development (OECD) measuring the strictness of ­regulation on
dismissals rank Austria twelfth among the thirty-five OECD countries concerning
protection of permanent workers against individual and collective dismissals
(OECD, 2018e).

Austria’s Institutional Context: General Education and Vocational

Education and Training
Austria has a free and public school and university system that is tax funded.
Only about 10 percent of primary and secondary education institutions are private.
For tertiary education, numbers are even lower—the state practically holds the
monopoly for university education. Of the USD$17,555 spent per student per year
in 2015, only 6.2 percent is private spending (ranks fifth lowest in OECD) (OECD,
2019b,  2019d). Despite no tuition fees for university and other measures taken
against social segregation in tertiary education—which actually led to a massive
increase in tertiary education enrollment—in 2018 still only 40.5 percent of people
between the ages of twenty-­five and thirty-­four had completed tertiary education;
the OECD mean is 44.5 percent (OECD,  2019c). This rather low percentage is
partly the result of a well-­developed VET system offering good career opportunities
for graduates of VET colleges (five years of higher education preparing for univer-
sity plus VET diploma) and schools (three years VET diploma) and for people
­having completed apprenticeships. Vocational training is well structured and a dual
system integrates school-­based theoretical and firm-­based practice learning. The
social partners are involved in VET policy design and delivery. Numbers from 2008
show that around 80 percent of each cohort enters a VET pathway after finishing
compulsory education, and about half of these take up an apprenticeship (Hoeckel,
2010). Comparably high completion rates in upper secondary education and rather
smooth transitions from VET to first employment leave Austria with relatively
low  youth unemployment rates  (9.8 percent in 2017; OECD mean, 11.9 percent;
OECD, 2018g).
 Human Resource Management in the Germanic Context   185

Austria’s Demographic Context: Growing, but Aging Population

Austria’s crude birth rate was 1.53 in 2015. Similar to Germany, this was the highest rate
since 1980, but still it does not reach the replacement level of approximately two children
per woman. Nevertheless, Austria’s population has been constantly growing since the
end of World War II, currently reaching 8.7 million. The growth in the past decades can
be attributed first and foremost to a positive net migration, which has been quite sub-
stantial in recent years (e.g., about 65,000 in 2016 and about 113,000 in 2015) when
judged against the relatively small population size of 8.5 million in 2014 (Statistik
Austria,  2018). About 22 percent of people living in Austria have a first- or second-
generation foreign background. Qualification levels and language skills vary greatly
among migrants (Austrian Embassy Washington, 2018). Employment market partici-
pation overall is fair to middling in this heterogeneous group, with an unemployment
rate more than double that among Austrians (Wiedenhofer-­Galik & Fasching, 2015).
Despite immigration, the Austrian population is aging. The percentage of people over
the age of sixty-­five rose from 15.4 percent in 2000 to 18.5 percent in 2016 (Statistik
Austria,  2018). While Austria’s overall employment rate is high and well above the
OECD mean, in the age group between fifty-­five and sixty-­four it only reaches 51 per-
cent; this is mostly because of the statutory retirement age for women (sixty years) but
also because of a low factual retirement age (fifty-­nine years), whereby measures to
decrease early retirements have been successful in recent years (Gumprecht,  2017;
OECD, 2018c).

Germany’s Economic Context: Governance and Business Structure

The German economy is characterized by a large fraction of SMEs (Institut für
Mittelstandsforschung Bonn, 2016). In 2014, 82 percent of companies were classified as
micro enterprises (0–9 employees and up to 2 Mio. Euro sales), 15 percent as small
enterprises (10–49 employees and up to 10 Mio. Euro sales), 3 percent as medium-
sized enterprises (40–249 employees and up to 50 Mio. Euro sales), and only 1 percent as
large enterprises with more than 249 employees or more than 50 Mio. Euro sales
(Statistisches Bundesamt, 2017, p. 521). However, 67 percent of sales are accounted for by
large enterprises and large enterprises also employ 39 percent of the total labor force—
nevertheless, the largest part of the labor force is employed by SMEs (Statistisches
Bundesamt, 2017, p. 521). The SMEs typically have fewer resources available to employ
HRM professionals or to even have a formally institutionalized HRM department
(Cardon & Stevens, 2004). The availability of HRM specialists can be assumed to have
significant consequences for the role of HRM with respect to strategy development
and execution.
While the legal environment has traditionally been rather restrictive with respect to
starting up a business, reforms—most notably, a reform of the minimal capital required
to start up a company with limited liability (“GmbH”)—have meanwhile resulted in a
reasonable ranking for Germany in the 2018 Global Entrepreneurship Index. According
186   Krebs et al.

to this index, Germany (ranked fifteenth) scores slightly lower than Austria (ranked
fourteenth) (Global Entrepreneurship and Development Institute, 2018). However, the
start-­up rate has been constantly declining since 2002 (Metzger, 2017) because of high
labor demand by established enterprises (a pull factor for entrepreneurial activity) rela-
tive to the positive trend in economic growth (a push factor for entrepreneurial activ-
ity). Nevertheless, this trend led to a decline in necessity-­driven start-­ups relative to
opportunity-­driven start-­ups (Metzger, 2017).
The German economy is furthermore characterized by a large manufacturing ­sector
based on gross value added (Destatis, 2018) and by a bank-­based system of corporate
governance in which firms are financed mainly through long-­term bank credits,
whereas financing through equity plays a minor role (Streeck, 1997). Ultimate owner-
ship by a single financial institution (Hausbank) has been shown to be associated with
lower rates of productivity growth, independent of a firm’s exposure to product market
competition (Januszewski, Köke, & Winter, 2002). This indicates that German private-
sector organizations, particularly SMEs, are somewhat buffered from competition, at
least in the short run (cf. Randlesome, 1994). This has consequences for HRM, since
competitive intensity is commonly assumed to be positively related to “management
quality” (Bloom, Genakos, Sadun, & Van Reenen, 2012).

Germany’s Institutional Context: Employment Legislation

and Collective Bargaining
Firms in Germany have a “narrower scope of choice in regard to personnel management
than in the US” (Pieper, 1990, p. 82) because of a high degree of employment protection.
Based on the OECD indicators on employment protection legislation for 2013, Germany
lies between Austria and the Netherlands with regard to protection of permanent work-
ers against individual and collective dismissals and with regard to the regulation on
temporary forms of employment, but is most restrictive (together with Switzerland)
with regard to the specific requirements for collective dismissal (OECD, 2018e). Since
the introduction of the Mindestlohngesetz in January 2015, German firms must pay a
minimum hourly wage of 8.50 Euro (8.84 Euro since January 1, 2017) to their workers, in
conjunction with mandatory documentation of working hours by employees. However,
critics argue that this seemingly restrictive employment law may be sidestepped by
employers because of a lack of control to prevent violations of the Mindestlohngesetz
(Pusch & Seifert, 2017).
Collective bargaining, which takes place at either the industry or the firm level,
as  well as codetermination through works councils, additionally contributes to
managers perceiving labor as a quasi-­fixed production factor, which incentivizes
them to heavily invest in the skills of workers (Streeck, 1997, p. 241). The German
system of codetermination necessitates that employers maintain positive relations
with works councils, whose power and legal rights translate into comparably large
personnel departments (Brewster, Brookes, & Gollan, 2015). Although trade union
density in  Germany has declined from 24.6 percent in 2000 to 17 percent in
2016 (OECD, 2018f), still more than half of the employees in Germany (56 percent)
 Human Resource Management in the Germanic Context   187

were covered by c­ ollective bargaining in 2016 (OECD,  2018a). The percentage of

employees within a firm that is covered by collective bargaining may vary between
0 and 100 percent, but when employees in a firm are covered by collective bargain-
ing, typically the majority of employees are covered (Fitzenberger, Kohn, &
Lembcke, 2013, p. 171).

Germany’s Institutional Context: General Education and Vocational

Education and Training
Germany has a free public school and university system that is tax funded. Private
spending on tertiary education is rather low. Of the USD$17,036 spent per student in
2015, only 15.3 percent is private spending (OECD, 2019b, 2019d). The German dual
system of VET combines school-based theoretical with firm-­based practice learning
and is generally considered an important contributor to the competitive strength of
the (large) German manufacturing sector (cf. Thelen,  2007, p. 247). The system
focuses on occupational skills that are port­a­ble across firms and hence stands out
from the “general skills” system of the LMEs (Hall & Soskice, 2001) and the “seg-
mentalist,” firm-­ specific skills system to be found, for example, in Japan
(Thelen, 2007, p. 247).
However, Deissinger (2015) points toward critical challenges for the system and
notes that the vocational training landscape is changing in Germany: THe total num-
bers of apprenticeships declined steadily between 2008 and 2012, reflecting demo-
graphic change as well as the educational expansion in Germany. However, despite
steadily growing numbers of young people acquiring a higher education, the dual
system of VET still seems to be an attractive alternative to tertiary education
(Deissinger, 2015, p. 558). Moreover, Germany’s share of twenty-­five-­to thirty-­four-
year-­olds who had completed tertiary education in 2018 (32.3 percent) still ranks
at  the lower end of the OECD spectrum (the OECD mean is 44.5 percent)
(OECD, 2019c).

Germany’s Demographic Context: Aging and Shrinking Labor Force

The fertility rate of Germany recently rose to 1.5 after approximately four decades of
rates below this threshold (Destatis,  2013). However, this fertility rate still falls well
below the replacement rate, which has severe consequences for the economy in relation
to an aging and shrinking labor force (Bujard, 2015). The influx of migrants in recent
years has been substantial, yielding a positive net migration from 2010 on, with a peak
of 1.1 million in 2015 and still 500,000 and 400,000 in 2016 and 2017, respectively
(Destatis, 2019). However, fertile female cohorts have been largely underrepresented
among Syrian migrants, which constitute the largest group of migrants moving to
Germany, such that the resulting moderate net effect on fertility rates in Germany will
not be sufficient to prevent the depopulation and, hence, aging of the German popula-
tion (Newsham & Rowe, 2019). In particular, the shrinking labor force will have to be
counterbalanced by technical progress and capital input to maintain current levels of
GDP, while the consequences of an aging workforce are ambiguous with regard to
188   Krebs et al.

individual and organizational performance consequences (Bujard,  2015, pp. 147).

However, we can expect intensified investments in the training and development of an
increasingly older workforce in the time ahead.

The Swiss Context: Political Structure and Critical Contextual Aspects

for HRM
Switzerland comprises twenty-­six cantons in four language parts: German-, French-,
Italian-, and Rhaetian-­speaking, with the German-­speaking part being most populated.
Like the Netherlands, Switzerland has been originally classified as a CME (Hall &
Soskice, 2001), but more recent cluster analyses classify it as an LME (Schneider &
Paunescu, 2012). We identify the following aspects as critical: (1) the international orien-
tation of firms, (2) weak external pressures on corporate management, (3) heterogeneity
in terms of regulations, in the cultural environment as well as the labor market, (4) the
dual system of VET, and (5) the minor role of collective bargaining.

Switzerland’s Economic Context: Governance and Business Structure

First, Switzerland is an export-­oriented country with a positive current account balance
(OECD, 2018b). However, Swiss-based companies not only export goods and services
(with services contributing most to gross value added; Bundesamt für Statistik, 2017),
but also capital. Consequently, Switzerland is ranked eighth worldwide in terms of for-
eign direct investment outflows and Swiss-­based companies employ close to two mil-
lion people outside Switzerland (State Secretariat for Economic Affairs, 2016). Given the
international orientation of Swiss-­based companies, Switzerland relies heavily on both
homegrown talents and those from abroad. Consequently, acquiring talent is the num-
ber three priority for HRM professionals in Switzerland (Winkler, 2018), which is also
reflected in Switzerland taking first place in the 2018 Global Talent Competitiveness
Index (INSEAD, 2018). As a result, individuals in top positions and in HRM often have
an international background and a strong international orientation. For example, 45
percent of executive board members in 2017 in the largest Swiss private organizations
are not themselves Swiss (Guido Schilling AG, 2017). Moreover, Switzerland ranks sec-
ond in the world (after the United States) and highest among the Germanic cluster
countries in the 2018 Global Entrepreneurship Index, which reflects entrepreneurial
attitudes, abilities, and aspirations of national populations, but also the institutional and
economic infrastructure (Global Entrepreneurship and Development Institute, 2018).
Second, compared to Austria or Germany, Swiss large companies are more
frequently under family control (La Porta, Lopez-­
­ De-­ Silanes, & Shleifer,  1999).
Specifically, the share of family firms in Switzerland is estimated at 88.4 percent (Frey,
Halter, Zellweger, & Klein, 2004). Additionally, Swiss banks, as creditors and share-
holders of some companies (Ruigrok, Peck, & Keller,  2006), traditionally play an
important role in corporate governance. And, Swiss pension funds act as passive inves-
tors with overall large stocks of assets but only small shares in individual firms. As a
 Human Resource Management in the Germanic Context   189

result, external pressures on corporate management in Switzerland can be considered

relatively weak (Ruigrok et al., 2006).
Third, the Swiss political system (Linder & Vatter,  2001) and cultural diversity
(House, Hanges, Javidan, Dorfman, & Gupta, 2004) have two implications for HRM.
Specifically, Switzerland is often considered a model case of political integration, con-
sensus democracy, and multinational federalism (Kriesi & Trechsel, 2008). The inte-
grative culture is also observed in Swiss HRM and governance with a relatively high
level of integration and inclusion of minorities (e.g., cultural, regional, national).
Additionally, because of the heterogeneity of the Swiss population, differences in HRM
across regions and industries exist. Although some legal provisions operate on the fed-
eral level (e.g., unemployment protection; Federal Department of Home Affairs, 2017),
because of the federalist political system, Swiss cantons enjoy substantial autonomy, for
example, in relation to tax matters (Feld, Kirchgässner, & Schaltegger, 2004) or family
allowances (Federal Department of Home Affairs, 2017). Additionally, research indi-
cates that the German- and French-­speaking regions differ significantly in relation to
culture (House et al., 2004). Moreover, although Switzerland belongs to the group of
countries with low unemployment rates (OECD, 2018d), in 2017 unemployment was
substantially lower in the German- (2.8 percent) than in the French- and Italian-
speaking parts (4.2 percent) (State Secretariat for Economic Affairs, 2018). In addition
to between-canton variability in industrial relations, substantial differences between
industries exist. Collective labor agreements, concluded between employers or their
associations and workers’ associations, for example, regulate the notice of termination
of individual contracts of employment, which go beyond generally liberal regulations
stipulated in the Code of Obligations (International Labour Organization, 2007). The
heterogeneity of the Swiss population as well as that of the economic and legal environ-
ment shape the HRM function in organizations (Gerhart & Fang, 2005; Sender, Arnold,
& Staffelbach, 2017) and result in some differences in the HRM approach across regions
and industries.

Switzerland’s Institutional Context: Employment Legislation

and Collective Bargaining
Fourth, the strategic integration of HRM in Switzerland may be additionally challeng-
ing because of the minor role of collective bargaining in Switzerland. Statistics from
the OECD indicate that the percentage of employees covered by collective bargaining
is 49.2  percent in Switzerland, compared to, for example, 98 percent in Austria
(OECD, 2018a). Thus, collective bargaining plays a less significant role in Switzerland
than in other countries in the Germanic cluster. Similarly, the statistics on strike days
indicate that Switzerland belongs to the group of countries with the lowest number of
strike days (Federal Statistical Office,  2017). Importantly, unlike the German
Mitbestimmungsgesetz, the Swiss regulatory environment does not automatically
require a representation of employees in the supervisory board of larger companies.
190   Krebs et al.

Switzerland’s Institutional Context: General Education and Vocational

Education and Training
Fifth, Swiss HRM is shaped by the existence of a dual system of VET (Trampusch,
2010). Specifically, because of this dual system, HRM professionals in Switzerland
are relatively often educated within this system and do not hold a university degree.
Specifically, Cranet data indicate that 61 percent of HRM directors have a university
degree compared to 92 percent in the United States or 82 percent in the United
Kingdom. Although this educational system may have benefits for the labor market,
it results in a lower percentage of individuals with a university degree than in other
countries. Given that appropriate education may be an important prerequisite for the
strategic integration of HRM (Cohen,  2015; Farndale & Brewster,  2005;
Langbert,  2005), a lack of higher education may undermine the role of the HRM
director in organizations. However, in 2018, 51.2 percent of Swiss citizens between
the ages of twenty-­five and thirty-­four had completed tertiary education, which is
significantly more than in Germany (32.3 percent) and Austria (40.5 percent), but
comparable to the Netherlands (47.6 percent) (OECD, 2019c)—that is, countries in
which the dual system of VET also plays a prominent role. In Switzerland, primary
and secondary education are publicly funded. Private schools exist and about 5 per-
cent of pupils complete their primary and secondary education at private schools
(State Secretariat for Education and Research, 2006). As in most European countries,
public schools dominate higher education; there are no nationally recognized private
universities (State Secretariat for Education and Research, 2006).

Switzerland’s Demographic Context: Aging and Shrinking Labor Force

Switzerland’s aging population will pose challenges to the Swiss economy in the com-
ing decades. Since as far back as 1970, the birth rates in Switzerland have been too low
to ensure replacement of generations (Federal Statistical Office, 2018). The fertility
rate in 2016 was 1.5, with 2.1 necessary for generational replacement. One-­fifth of the
population is currently at least sixty-­five years old. Migration has slightly reduced the
aging of the Swiss population since the 1980s, but migration cannot offset the general
trend. In Switzerland, the statutory retirement age is sixty-­five for men and sixty-­four
for women.

The Netherland’s Economic Context: Governance and Business Structure

The Dutch economy can be characterized primarily as a service economy (Hitzert,
Langenberg, & Notten, 2017), with a strong focus on trade, business and financial ser-
vices, and health and social care services. In 2016, the service industry took up more
than 81 percent of the labor force (Centraal Bureau voor de Statistiek, 2020) and contrib-
uted 78 percent in gross value added to the Dutch economy (Van Bui, van Dalen, &
Notten, 2017). In terms of production, the relatively small manufacturing industry is
one of the largest sectors in the Dutch economy, particularly when the related sectors
 Human Resource Management in the Germanic Context   191

(e.g., contractors, suppliers) are included. Dutch manufacturing industry is mostly con-
centrated in the food, chemicals, machine, and electronics sectors. Like Germany and
Austria, which can still be considered CMEs, the Netherlands have also been initially
classified as a CME (Hall & Soskice, 2001), but the economy has been subject to liberal-
ization from 1990 onwards.
Both the manufacturing industry and the service sectors (particularly trading,
transportation, and logistics) have a strong focus on export; in 2018, exports of goods
and services contributed 83 percent to the GDP of the Netherlands (World Bank, 2019).
Most of the exporting (approximately 80 percent, Centraal Bureau voor de Statistiek,
2015) is done by multinational companies operated by a foreign or indigenous head-
quarters. Although the number of multinationals is low (2 percent, approximately
equally divided between foreign and domestic multinationals), the multinational
­companies take care of almost 20 percent of the approximately ten million jobs in the
Netherlands (Centraal Bureau voor de Statistiek,  2015). Nevertheless, much of the
employment is found in SMEs, of which most are family-­owned companies (Centraal
Bureau voor de Statistiek,  2017a). With respect to entrepreneurial activity, the total
number of new start-­ups in the Netherlands has returned to pre-crisis levels (Centraal
Bureau voor de Statistiek, 2018b). The Netherlands also score comparably high on the
2018 Global Entrepreneurship Index (e.g., higher than Austria and Germany) (Global
Entrepreneurship and Development Institute, 2018).
The level of employment in the Dutch labor force has shown continuous growth
in recent years, facilitated by a steady economic growth of GDP (up to 3.2 percent in 2017,
Centraal Bureau voor de Statistiek, 2018a). In 2017, the unemployment level decreased to
436,000 people (4.8 percent of the labor force) (Centraal Bureau voor de Statistiek, 2017b).

The Netherland’s Institutional Context: Employment Legislation

and Collective Bargaining
Industrial relations in the Netherlands are still characterized by the so-­called polder-
model (Keune, 2016), a tripartite system whereby trade unions, employers’ associations,
and government seek consensus regarding social and economic policies. Representatives
of unions and employers’ associations, like the VNO-­NCW and the MKB-­Nederland,
meet on a regular basis in the Social and Economic Council, together with the in­de­
pend­ent expert appointed by the national government. The Social and Economic
Council not only advises the Dutch government and parliament but also is involved
in  enforcing (labor) laws, supervising conduct in mergers, and promoting business/
consumer self-­regulation (see Social and Economic Council, 2018).
Much of the employment contract is determined by collective labor agreements at the
industry or the company level. Labor agreements involve work conditions, such as
(minimum) wages, social plan (e.g., in case of downsizing), holiday entitlements, and
working conditions (such as health and safety) (see Netherlands Enterprise Agency, 2018).
If an agreement has been reached by the unions and employers’ associations, the collec-
tive labor agreement can be declared binding by the Ministry of Social Affairs and
192   Krebs et al.

Employment. The vast majority of the Dutch workforce (78.6 percent, OECD, 2018a) is
covered by a collective labor agreement.
Although trade unions play a major role in collective bargaining, only 17.3 per-
cent (OECD, 2018f) of employees are actually union members. If elected by employ-
ees, unions also represent employees in the company’s works council, among other
elected employee representatives. A works council is mandatory for companies
having more than fifty employees. At the collective level, the cohesiveness of the
poldermodel is threatened by the shrinking base of the traditional unions in compa-
nies and in specific industries (e.g., information and communications technology,
financial services), by further fragmentation of the labor market (increase in flexi-
ble work arrangements, payrolling, and contracting), by conflicting interests
between small/medium and large-­scale enterprises (Keune, 2016), and by market
liberalization policies of the national government since the 1990s (see
Stellinga, 2012).
Since 1990, the Dutch level of employment protection (individual and collective dis-
missals) has decreased (OECD, 2018e). The liberalization of the Dutch labor market has
decreased the proportion of employees with a permanent employment contract rela-
tively more in the Netherlands than in other European countries (Centraal
Planbureau, 2016). This proportion has decreased from 73.1 percent in 2003 to 61.4 per-
cent in 2016 (Ministerie van Sociale Zaken en Werkgelegenheid, 2017).

The Netherland’s Institutional Context: General Education and

Vocational Education and Training
Private and public schools as well as universities are financed by the local and
national government (tax funded). After finishing primary school, children at the
age of twelve years must choose between a prevocational secondary education or a
senior general/preuniversity secondary education. At the age of sixteen, prevoca-
tional education is continued at the level of secondary vocational education. The
regional education centers also provide courses, training, and apprenticeships (leer-
banen) for adults. In the Netherlands, a comparably large share of people aged
twenty-five to thirty-­four had completed tertiary education in 2018 (47.6 percent),
according to the OECD (2018f). However, referring to the population of twenty-five-
to sixty-­four-­year-­olds, the proportion of citizens with tertiary education is around
average compared to the OECD mean, standing at 38.3 percent in 2018 (OECD,
2019a).

The Netherland’s Demographic Context: Growing Population Resulting

from Migration
In 2017, the Dutch population increased by 100,000 to 17.1 million inhabitants (Centraal
Bureau voor de Statistiek, 2017c). Migration contributed most to the growth of the
population, while the natural growth (births minus deaths) actually almost halved since
 Human Resource Management in the Germanic Context   193

the early 2000s (Centraal Bureau voor de Statistiek, 2017c). Because of the postwar baby
boom, the percentage of people over sixty-­five years old increased to approximately
17 percent of the Dutch population (Centraal Bureau voor de Statistiek, 2017c). In the
same year, Dutch women had on average 1.77 children. Because the life expectancy of
babies born in the period 2013–16 is estimated at 81.5 years, the government will increase
the retirement age to sixty-­seven years and three months in 2022 (sixty-­six years in 2018)
(Centraal Bureau voor de Statistiek, 2017c).

Human Resource Management and

Strategic Integration—on Becoming
a Strategic Partner

More than two decades ago, Dave Ulrich’s seminal work (1997) on the HR business part-
ner model fundamentally influenced the HRM function in becoming a strategic busi-
ness partner of top management and line management. Ulrich claimed that the HRM
function needs to be involved in the strategic and operational decision-­making of the
upper echelons to generate added value and, in turn, increase the competitiveness of
organizations (Barney & Wright, 1998). The model is probably the most cited model in
the literature on HRM roles (Kuipers & Giurge, 2017).
The HR business partner model was originally promoted and disseminated in the
United States and the United Kingdom (Caldwell, 2003). The dissemination to conti-
nental Europe started at a later time. The diffusion of the HR business partner model
was likely impeded by learning effects and adjustment costs. Line managers might be
reluctant to implement the model because of the extra effort required to establish new
processes. For instance, chief executive officers might suspect more time-­consuming
and costly managerial decision processes if the HRM function is involved in these pro-
cesses (Brandl & Pohler, 2010). Similarly, line managers might fear a loss of decision-
making authority (e.g., in recruiting key personnel) for the HRM function. Conversely,
HR managers are reluctant to fill the various roles of the HR business partner model
because of a potential loss of identity (Caldwell & Storey, 2007) or an insufficient antici-
pation of line managers’ needs (Francis & Keegan, 2006).
Besides these frictions, reluctance to adopt the HR business partner model might
also be associated with both the cultural context and institutional differences. For
example, the codetermination structure in the Austrian and German economies
(Wächter & Müller-Camen, 2002) supersedes some of the HR business partner roles.
Therefore, we still expect to see cross-­national differences in the use of the HR business
partner model between the pioneering Anglo-­Saxon countries and the “follower”
countries in Germanic Europe.
194   Krebs et al.

Strategic Orientation and Strategic Integration of Human

Resource Management
To evaluate the status of the strategic integration of HRM in the Germanic cluster, we
adopted three commonly used indicators from previous research (Brewster, Larsen, &
Mayrhofer, 1997; Budhwar, 2000; Dany, Guedri, & Hatt, 2008). They are the presence of
a written HRM strategy, HRM representation at the top management level, and the stage
at which the most senior HR manager is involved in business strategy development.
For a partnership between HRM and line management (i.e., strategic integration) to
be successful, the most senior HR manager should be represented at the top manage-
ment level (Wehner, Kabst, Meifert, & Cunz, 2012). Figure 9.2 illustrates that only 49 and
48 percent, respectively, of surveyed organizations in Austria and Germany have an
HRM representative at the top management level. Moreover, HRM representation at the
top management level has not changed substantially between 2004/5 and 2014/15 in
Germany and Austria; rather, we observe a decreasing trend in Germany (2004/5,
56 percent; 2009/10, 50 percent; 2016, 48 percent). Switzerland and the Netherlands have
a tradition of comparably high prevalence of HRM representation in the top manage-
ment team. For the Netherlands, we observe an increasing trend, with the percentage of
or­gan­i­za­tions with HRM representation in the top management team increasing from
62 percent in 2004/5 to 71 percent in 2014/15. Currently, the situation in the Netherlands
and Switzerland is similar to that in the United Kingdom and the United States, with
two-­thirds of organizations having HRM represented in the top management team. The
major difference is that UK and US organizations have gained substantially from 2004/5
to 2014/15 in the institutionalization of HRM’s strategic role in this respect—in 2004/5,
less than half of HRM representatives were part of the top management team.

90
79
80 74
71 69 71
70 66 64 64
60 56 55
49 48
50

40

30

20

10

0
Austria Germany Switzerland The Netherlands United States United Kingdom

Written human resource management strategy exists Human resource representative part of top management team

Figure 9.2.  Strategic institutionalization of human resources in 2014/15 (percentage). Data

from Cranet (2014/15); own calculations.
 Human Resource Management in the Germanic Context   195

Another major pillar of the strategic integration of HRM relates to the presence of a
written HRM strategy. While most organizations have a written business strategy
(Germanic cluster, 86 percent; United Kingdom and United States, 85 percent),
between-­country heterogeneity with respect to the presence of a written HRM strategy
is large, as depicted in Figure 9.2. In Austria and Germany, a comparably low percentage
of organizations has a written HRM strategy (56 and 55 percent, respectively). Swiss
organizations excel in this respect, with almost three-­quarters of organizations (74 per-
cent) having a written HRM strategy. This finding indicates that HRM plays a compara-
bly prominent role in Switzerland, most likely because of the high labor costs that
necessitate a more efficient use of human resources to produce goods and services
compared to other developed countries with lower labor costs. In addition, the interna-
tional orientation of Swiss-­based companies makes attracting and retaining talented
individuals an important factor for organizational success. The percentage of organiza-
tions in the Netherlands with a written HRM strategy (64 percent) is comparable to that
in the United States (64 percent) and the United Kingdom (71 percent). In summary, a
written HRM strategy is common in the Netherlands, Switzerland, and the Anglo-Saxon
countries, but less common in Germany and Austria.
From a theoretical point of view, translating a businesses’ overall strategy into an
HRM strategy is important in two respects. First, the HRM strategy is based on the over-
all business strategy (Dyer & Reeves,  1995) and has a signaling function within the
or­gan­i­za­tion, namely, that HRM is an important driver of gaining competitive advan-
tage over competitors. Second, an HRM strategy aligned with the overall business strat-
egy informs decisions related to HRM practices and policies such that the actions taken
by HR managers and professionals contribute to (measurable) organizational outcomes,
which, in turn, increase the reputation of the HRM function within the organization
(Boxall & Purcell, 2003).
These two aspects might explain why we found that the most senior HR manager is
involved in the development of a businesses’ strategy at an earlier stage if a written HRM
strategy exists and if the most senior HR manager has a place on the board of directors.
More specifically, an ordinary least squares regression of a variable reflecting whether
the most senior HR manager has been involved in the development of the business strat-
egy right from the outset (3), through subsequent consultation (2), on implementation
(1), or not at all (0) on dummy variables reflecting the presence of a written HRM
strategy (β = 0.43, p < .01) and whether HRM is represented in the top management
team (β = 0.81, p < .01) yielded significantly positive coefficients. These findings apply
for a sample of organizations from Germany, Austria, Switzerland, the United Kingdom,
and the United States (N = 900). We used cluster-­robust standard errors to account for
the nesting of observations in countries and controlled for the log number of employees,
the presence of an HRM department, ownership type, country, and main market.2

2  Please note that data for the involvement of the most senior HR manager in the development of
the business strategy were not available for organizations from the Netherlands.
196   Krebs et al.

Using the same sample of organizations and the same set of control variables, we also
tested whether these two associations vary in strength across countries by specifying
two models with according interaction terms with country dummies and one of the two
predictors at a time. The strength of the association between involvement in strategy
development and the presence of an HRM strategy was found to vary between countries—
compared to Austria (reference category; β = 0.30, p < .01), the effect was equally strong
in the United Kingdom (βinteraction = 0.04, ns) and the United States (βinteraction = 0.1, ns), but
significantly stronger in Germany (βinteraction = 0.34, p < .01) and Switzerland (βinteraction =
0.26, p < .01). The strength of the association between involvement in strategy development
and HRM representation in the top management team also varied between countries—
compared to Austria (reference category; β = 0.85, p < .001), the effect was equally strong
in the United Kingdom (βinteraction = –0.04, ns), but significantly stronger in Switzerland
(βinteraction = 0.41, p < .001) and significantly weaker in Germany (βinteraction = –0.20, p < .01)
and the United States (βinteraction = –0.30, p < .001). Adding the (negative) second-­order
regression coefficients of the interaction terms for Germany and the United States to
the (positive) first-­order regression coefficients, however, showed that each effect is
still positive.

Brief Discussion of Strategic Integration of Human Resource

Management in Germanic Europe
To sum up the state of strategic integration of HRM in the Germanic cluster, we found
that it is less developed in organizations in Germany and Austria compared to the
other countries in the Germanic cluster. Moreover, we observe that the central indica-
tors of the institutionalization of HRM have not changed since 2004/5 in Germany
and Austria, indicating a divergence between Germany and Austria on the one hand
and between Switzerland and the Netherlands on the other hand with regard to the stra-
tegic role of HRM. Switzerland traditionally emphasizes strategic HRM, paralleling the
country’s high-­performance orientation according to GLOBE (see Figure 9.1), while the
situation in the Netherlands has converged toward the level of strategic integration of
HRM of the Anglo-­Saxon countries. A possible explanation for the divergence of strate-
gic integration could be the codetermination by works councils in Germany (Wächter &
Müller-Camen, 2002), which supersedes some of the HR business partner roles and
thereby reduces the need to strategically integrate HRM.
To increase the acceptance of HRM, it could be fruitful to recruit managers for senior
HRM positions with prior experience from other organizational functions. Cross-
functional work experience might be helpful in better anticipating and understanding
the needs of line management, such that “outsiders” might conform more closely to the
competencies required by the HR business partner role (Caldwell, 2008, 2010; Wright,
McMahan, McCormick, & Sherman, 1998). Interestingly, a large number of HR manag-
ers who have previously held positions outside the HRM function is characteristic of
Austria and Germany (see Figure 9.3). This could be explained by the lower levels of
 Human Resource Management in the Germanic Context   197

United Kingdom 14

United States 23

The Netherlands 20

Switzerland 18

Germany 29

Austria 37

0 10 20 30 40 50 60 70 80 90 100

Figure 9.3.  Professional background of the most senior human resource manager in 2014/15
(percent who previously held positions outside human resources). Data from Cranet Germany,
(2014/15); own calculations.

professionalization of HRM in both countries. In Germany, the two major professional

associations—the Deutsche Gesellschaft für Personalführung (German Association for
Human Resource Management) and the Bundesverband der Personalmanager
(German Federal Association of Human Resources Managers)—focus on networking
and knowledge exchange rather than being a body for qualification, standardization,
lifelong learning, and lobbying. Moreover, findings from bivariate chi-­square tests for
each country indicate that only in Austria is the likelihood of the most senior HR man-
ager being part of the top management team higher for “outsiders” (68.75 percent) than
for “insiders.” This finding might be explained by occupational gender segregation: In
Austria, board members are predominantly recruited from within the organization
(Ebner & Grüner,  2014). While women are disproportionately represented at the
­position of the head of the HRM department compared to other departments, from
which rank board members might be recruited, it is still relatively uncommon for
women to be assigned to the board in Austria (Ebner & Grüner, 2014)—relative to male
candidates from outside the HR department.

Developmental Human Resource

Management Practices

As noted in the section on country-­specific aspects, Germany, in particular, faces a con-

tinuously aging and shrinking workforce because of fertility rates well below the replace-
ment rate (cf. Bujard, 2015). It is not therefore surprising that German HR managers most
frequently rated shortages of qualified labor (33 percent) and demographic changes
(28  percent) among their top three challenges for HRM in the next few years, from
198   Krebs et al.

2014/15 on. Only 9 percent rated digitalization as one of their top three HR challenges.
However, many German HR managers look into the near future with confidence: 47 per-
cent of respondents agreed to a (very) high extent that their firm’s HRM is well prepared
to face demographic change.

Career Development Practices

Shortages in labor supply are particularly severe for the recruitment of highly qualified
employees. Indeed, most German organizations (61 percent), which we take here as an
exemplary case within the Germanic cluster, state that they engage in activities designed
to attract, develop, deploy, and retain talented employees, therewith responding to the
need for actively managing highly qualified employees in times of demographic change.3
Of those organizations, 75 percent build on high-­potential programs for career develop-
ment, but also frequently use special tasks (97 percent), networking (90 percent), coach-
ing (88 percent), and mentoring (81 percent) for career development. Organizations that
engage in activities designed to attract, develop, deploy, and retain talented employees,
indicating a systematic approach toward managing highly qualified employees, use
these practices significantly more often than organizations which state that they do not
systematically manage talented employees (according to bivariate chi-­square tests).4

High-­Potential Schemes
High-­p otential schemes for career development are at the core of leadership devel-
opment (cf. Finkelstein, Costanza, & Goodwin, 2018). Longitudinal cross-­country
analyses (see Figure 9.4) show that the use of high-­p otential schemes increased in
the Germanic cluster countries (and in the United Kingdom) between 2005 and
2010, following the proclamation of the so-­called war for talent by Chambers,
Foulon, Handfield-­Jones, Hankin, and Michaels (1998). In the United States, the
use of high-­p otential schemes rose at a later point in time—from 30 percent in
2005 and 28 percent in 2010 to 48 percent in 2016. As depicted in Figure 9.4, high-
potential schemes still are not common in the United States in comparison to the
Germanic cluster. Although we observe that organizations from the United States
might well serve as a benchmark with regard to the strategic integration of HRM,
US organizations appear to be followers when it comes to the management of high-
potential employees.

3  When not stated otherwise, Cranet data from 2015/16 have been used for the analyses reported in
this section of the chapter.
4  High-­potential schemes: 75 versus 37 percent among organizations that do not use a systematic
approach to managing talented employees, χ²(1) = 36.29, p < .001; special tasks: 97 versus 81 percent,
χ²(1) = 19.58, p < .001; networking: 90 versus 64 percent, χ²(1) = 27.35, p < .001; coaching: 88 versus
74 percent, χ²(1) = 8.54, p < .01; mentoring: 81 versus 62 percent, χ²(1) = 11.77, p < .01.
 Human Resource Management in the Germanic Context   199

100
90
80 74
71
68
70 65
60 60 59
57
60 53
52 52
47 48
50 44
41
40
30 28 29
30
20
10
0
2005 2010 2015 2005 2010 2015 2005 2010 2015 2005 2010 2015 2005 2010 2015 2005 2010 2015

Austria Germany Switzerland The Netherlands United States United Kingdom

Figure 9.4.  Use of high-­potential schemes for career development (percentage). Cranet data
from 2004/5, 2009/10, and 2014/15; own calculations.
Source: Adapted from Javidan, House, and Dorfman (2004, p. 30).

Performance Appraisal Systems

Performance appraisal systems are central to the retention of high-­performing
employees, whose probability of turnover has been shown to depend on the strength
of the pay–performance link (Trevor, Gerhart, & Boudreau, 1997). Since past perfor-
mance is still the best readily available predictor for future performance (cf. Schmidt &
Hunter, 1998, p. 268), performance evaluations play an important role in identify-
ing  high-­potential employees (see, e.g., Dries, Vantilborgh, & Pepermans,  2012).
Therefore, performance appraisal systems are an important feature of firms’ HRM
systems when it comes to the development and retention of highly qualified employ-
ees. With regard to the prevalence of performance appraisal systems, Germany and
Austria stand out from their Germanic counterparts, the Netherlands, and
Switzerland, which more closely resemble the United Kingdom and the United States
in this regard. As an example, for managers, 89 percent of Dutch and 96 percent of
Swiss organizations have a performance appraisal system in place, compared to
64 percent of Austrian and 71 percent of German or­gan­i­za­tions. Performance appraisal
systems in general and performance-­based rewards in particular are more in line
with the individualistic or “entrepreneurialist” culture of the Anglo-­Saxon countries
and Switzerland, while the Netherlands fall somewhere between these two extremes.
Besides these cross-­country differences, it is important to note that we observe that
organizations, as of 2014/2015, do not differentiate much between employee groups
with respect to the use of performance appraisals. In Germany, for example, the per-
centage of organizations using performance appraisal systems for managers, professionals,
200   Krebs et al.

and clerical or manual workers ranges between 69 and 72 percent. This range is largest
across the examined countries for Austrian organizations (64 percent for managers vs.
51 percent for workers).
In the Germanic cluster, a uniformly high percentage of organizations use perfor-
mance appraisals to inform the analysis of training and development needs (greater
than 86 percent) and career move decisions (greater than 80 percent). These findings
indicate that most firms in the Germanic cluster follow a systematic approach toward
career development, integrating insights from performance evaluations to inform deci-
sions related to the development and deployment of employees.

Conclusion

The countries within the Germanic cluster show similarities, but also differences in their
formal institutions, such as laws and regulations, and informal cultural values and
norms that influence the strategic integration of HRM and developmental HRM prac-
tices. Although Austria, Germany, Switzerland, and the Netherlands belong to the same
cultural cluster, Switzerland and the Netherlands show meaningful differences in in-
group collectivism, future orientation, and performance orientation in comparison to
Austria and Germany. Similarly, drawing on varieties of capitalism theory, Switzerland
and the Netherlands are less clearly CMEs than originally suggested by Hall and Soskice
(2001), but have become more liberal. Hence, the strategic integration of HRM in
Switzerland and the Netherlands is similar to the progressive benchmark cases of the
United States and the United Kingdom (i.e., LMEs), whereas Germany and Austria lag
behind their Germanic Europe counterparts. Twenty years after the initial dissemina-
tion of the HR business partner model, we can rule out that learning effects still inhibit
the diffusion of the strategic integration of HRM. Therefore, we must acknowledge that
persistent differences in institutional context and path dependence may ultimately pre-
vent German and Austrian firms from “catching up” with respect to the strategic inte-
gration of HRM. In particular, the system of codetermination in Austria and Germany
may explain the differences in the strategic integration of HRM because the role of
works councils partially supersedes the strategic integration of HRM. Future research
should explore the time-­invariant barriers to the strategic integration of HRM in these
countries in more detail. For example, researchers could examine whether structural
differences in organizational characteristics or institutional factors better explain
Germany’s and Austria’s inertia.
While there seem to be more differences than similarities in the strategic integration
of HRM within the Germanic cluster, the same countries have more in common when it
comes to developmental HRM practices. For example, a high percentage of or­gan­i­za­
tions in Germanic Europe use performance appraisals to inform the analysis of training
and development needs and career move decisions. Similarly, the prevalence of
­high-­potential schemes for career development increased from 2005 onwards among
 Human Resource Management in the Germanic Context   201

or­gan­i­za­tions within this cluster and even beyond the level of prevalence in the United
States. Thus, similarities in culture (e.g., assertiveness, institutional collectivism, gender
egalitarianism, and humane orientation) as well as common external factors such as
labor shortages, high export orientation, and high international orientation seem to
influence the awareness of and the need for sophisticated developmental HRM practices
in the Germanic cluster. Moreover, similarities in language and the educational system
facilitate the mobility of employees within the Germanic cluster. Thus, organizations in
Austria, Germany, Switzerland, and the Netherlands face strong competition in the
labor market from their competitors within the same country and among the other
countries of the Germanic cluster, which ultimately spurs a professionalization of devel-
opmental HRM practices.

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 chapter 10

H um a n R e sou rce
M a nagem en t i n th e
Nor dic Con text

Frans Bévort and Arney Einarsdottir

The Nordic countries may be seen as extreme cases of what has been termed coordinated
economies (Farndale, Brewster, & Poutsma, 2014; Goergen, Brewster, Wood, & Wilkinson,
2012; Hall & Soskice, 2001; and see Chapter 2). A coordinated economy is a market econ-
omy in which there are comprehensive regulatory limits to the market, as opposed to a
liberal economy, where only basic institutions rein in or direct the functioning of a free
market. Hence, in practice, the Nordic countries, that is, Denmark, Finland, Iceland,
Norway, and Sweden, all show some of the highest levels of taxation, income redistri-
bution, public spending (averaging approximately 50 percent of the gross domestic
product [GDP]: Finland, 54 percent, to Iceland, 42 percent, Organisation for Economic
Co-­operation and Development, 2019a), publicly operated free healthcare provision,
and educational services. Labor markets are characterized by high levels of union mem-
bership (Organisation for Economic Co-­operation and Development,  2019b), even
higher coverage of collective agreements (Organisation for Economic Co-­operation
and Development, 2019c), and a high levels of women’s participation (Organisation for
Economic Co-­operation and Development, 2019d). At the same time, income levels
are relatively high (Eurostat,  2019; Organisation for Economic Co-­operation and
Development, 2016) and the countries are very competitive economies, relying, in
particular, on their ability to sell their different types of goods and services in the
global market.
Human resource management practices in the Nordic countries have been characterized
as “soft” and collaborative, rather than “hard” and calculative in prior studies (Gooderham,
Nordhaug, & Ringdal, 1999; Lindeberg, Månson, & Larsen, 2013). The relatively strong
trade unions, strong state agencies, and well-­developed welfare systems resolve many
tasks that HRM would have to take responsibility for and solve in less regulated econo-
mies. This raises an important question about the status and professionalism of HRM in
210   Bévort and Einarsdottir

the Nordic countries. For instance, how do organizations make compensation-­related

decisions, and what communication tools do they use? It also raises the question of
whether the culture for collaboration, as well as the norm of equality, is reflected in the
status of HRM and how this translates into the practices used in the Nordic context.
In this chapter, we review HRM in the Nordic countries, the diffusion of HRM prac-
tices, and their contextual translation. First, we review the Nordic social model and
HRM ideology, along with the historical antecedents to HRM. Then we will draw on
data from the Cranet survey to highlight commonalities and differences characterizing
HRM practices in Denmark, Finland, Iceland, Norway, and Sweden and compare the
results to other societies. Furthermore, we discuss the limits of the claim that the Nordic
countries form a cluster with very similar attributes in relation to HRM by examining
some of the characteristics and differences for each country. Finally, we discuss the ben-
efits of doing comparative research, in the context of the Nordic countries, and what
kind of knowledge this yields.

The Nordic Social Model and the Human

Resource Management Ideology

The Nordic social model has been defined as distinct from that in most other countries
and regions of the world. Esping-­Andersen (1990) categorized developed countries’
welfare systems as being of three types: liberal regimes (the Anglo-­Saxon countries),
conservative regimes (the Continental and Mediterranean countries), and social demo-
cratic regimes (the Nordic countries). In this chapter, we will not describe the other
models but focus instead on what characterizes the Nordic model. Sapir (2006), study-
ing European Union countries, developed a two-­by-­two matrix in which one axis is
equity and the other is efficiency and claimed that Sweden, Finland, and Denmark (with
the Netherlands) are in the quadrant with high equity and high efficiency, that is, a
relatively small span in relation to citizen income but efficient economies.
The Nordic countries have many historical, social, and political properties in com-
mon, and while the Scandinavian countries (Lindeberg et al., 2013) of Denmark, Norway,
and Sweden may be even more similar to each other, there is still strong evidence for a
social model that has developed in parallel in the Nordic countries. This is placed firmly
within what Esping-­Andersen (1990) called the “social democratic regime” and what
Sapir (2006) said offers efficiency and more equity. This is because of a social model that
combines a high level of social and employment security (unemployment benefits, uni-
versal free healthcare, free admission to most education and active labor market policies)
with a favorable climate for business and production (efficient public administration,
high-­quality labor, strong infrastructure, and competitive taxation). All five countries
compete in the world markets, with a high proportion of GDP stemming from exports
(Organisation for Economic Co-­operation and Development, 2016).
 Human Resource Management in the Nordic Context   211

The underlying structure of the Nordic welfare state is the social democratic compro-
mise between labor and capital. That is, by accepting and institutionalizing the basic
interests of business on the one hand and workers on the other, the Nordic countries
have developed a unique social model. The Economist (“The Nordic Countries,” 2013)
called this the next supermodel and politicians from Europe (e.g., the French president
Emmanuel Macron) and the United States (e.g., former presidential candidate Bernie
Sanders) use one or more Nordic countries as examples of desirable models of society.
The socioeconomic comparison in Table 10.1 indicates a greater equality in the distri-
bution of incomes in the Nordic countries and a collaborative labor market, matched
with high levels of wealth and competitiveness on the world markets. Iceland, Norway,
Sweden, and Finland take the top four places in the Global Gender Gap Index (World
Economic Forum 2019), with Denmark fourteenth. The high levels of labor market par-
ticipation and female labor market participation support this view. The Nordic welfare
and child-­care policy model, with subsidized day care, has, among other things, contrib-
uted to gender equality and high female labor force participation (Eydal &
Rostgaard, 2011). The labor markets are also characterized by a high level of union mem-
bership and collective agreement coverage. Relatively low proportions of the workforce
are characterized as low income, average wages are high, and the Gini equality measure
indicates high equality in all Nordic countries. Furthermore, GDP per capita is high and
export value in proportion to GDP is also relatively high. However, there are differences
in relation to unemployment rates: THese rates are relatively high in Finland and
Sweden, but low in Iceland. Neo-­liberal critics would say that a country like the United
States still performs better as a job and wealth creator, but the view that coordinated
economies are underperformers is not supported. Another discussion is whether these
numbers are actually covering one social model or whether the differences between
the Nordic countries are too great to warrant such a conclusion (Gooderham, Navrbjerg,
Olsen, & Steen, 2015). We will revisit that issue later.
For now, the interesting question is how such a social context has influenced the dif-
fusion and development of Nordic HRM. Gooderham et al. (1999) identify two kinds of
HRM—calculative and the collaborative—and conclude that HRM in Denmark and
Norway are of the latter kind. The first relates to a hard approach to HRM, where all
HRM activities are calculated in relation to their contribution to business strategy and
organizational objectives. Employees are seen as individual resources, like any other
resource (Gooderham et al., 1999, p. 510). Collaborative HRM is a soft model, which
regards staff as active partners and emphasizes investments in development activities as
important for a broader long-­term relationship with the workforce. Additionally, such a
model is supposed to create an altogether different relationship with trade unions,
which are less likely to oppose this kind of HRM (Gooderham et al., 1999, p. 511). It is
this collaborative HRM that covers all five Nordic countries to some degree, as we will
substantiate.
The compromise in the social democratic model stretches back to before the intro-
duction of modern HRM in the Nordic countries in the 1980s. Human resource man-
agement is characterized by the relative strength of the trade unions, a general climate of
Table 10.1.  Socioeconomic comparison between the Nordic Countries, the United Kingdom, and the United States
Country/OECD figures United Kingdom United States Denmark Finland Iceland Norway Sweden OECD

1. Unemployment (%) 4.0 3.9 5.0 7.4 2.7 4.2 6.3 5.3
2. Labor market participation (%) 78.3 73.6 79.4 78.0 87.3 78.0 82.9 72.4
3. Female labor market participation (%) 73.6 68.2 76.6 76.3 84.5 75.5 81.2 64.6
4. Union membership/density (%) 25.4 10.8 65.4 64.5 80.5 52.5 66.8 n/a
5. Collective agreement coverage (%) 26.3 12.0 84.0 89.3 90.0 67.0 90.0 32.2
6. Low-­income proportion of workforce (Eurostat 2019) 21.26 n/a 8.61 5.28 7.54 8.29 2.64 n/a
7. Average wages (USD$ PPPa 2018) 44,770 63,093 55,253 44,111 66,504 50,956 44,196 44,591
8. Gini-­quotient—equality measurea 0.357 0.390 0.261 0.266 0.255 0.262 0.282 n/a
9. GDP USD per capita (2018) 39,626 54,708 46,650 40,631 47,852 60,814 46,336 39,658
10. Exports value in proportion to GDP (%) 28 15 54 36 48 35 43 n/a

Note: Data retrieved from Eurostat and the Organisation for Economic Co-­operation and Development. GDP, gross domestic product; Organisation for Economic
Co-­operation and Development; PPP, purchasing power parity.
Sources: Organisation for Economic Co-­operation and Development (2016, 2019b, 2019c, 2019d, 2019e, 2019f, 2019g, 2019h, 2019i); Eurostat (2019).
a
The lower the more equal.
 Human Resource Management in the Nordic Context   213

compromise and mutual trust between employers and employees, and an influential
role for the state in relation to welfare issues (healthcare, pension, education, etc.). The
Nordic welfare state is therefore a significant contextual factor in defining collaborative
HRM (Gooderham et al., 1999). The role of unions and the state raises the question of
whether the status and professionalism of HRM may be different, either weaker or
stronger, in such a welfare context and whether this context restricts the ability of
HRM to use compensation strategically to attract, motivate, and retain employees.
Furthermore, the significant trade union presence, equality, and collaboration also
bring into question whether employee relations and communication may be different,
perhaps restricted by trade unions, in this context.
In the next section, we take a closer look at the differences between the five individual
Nordic countries as contexts for HRM.

The Individual Nordic Countries

Do the Nordic countries represent one model in terms of labor market and HRM
practices (Gooderham et al., 2015)? We analyze specific social and labor market aspects
distinguishing each Nordic country as a social context for HRM.

Denmark
In 2010, exports made up 50 percent of the GDP in Denmark (see Table 10.1). Trade
with neighboring Germany (15 percent) and Sweden (12 percent) is most important.
Consisting of islands and a peninsula, Denmark has a strong tradition of maritime
transportation and recently overtook the United States as the fifth largest shipping
nation in the world (Ministry of Industry, Business and Financial Affairs, 2019). The
cooperative movement with large groups of independent farmers having joint owner-
ship of a large proportion of the agroindustrial complex remains a strong social and
political force.
In 1899, the first general agreement, the Hovedaftalen, was established between
employers’ associations and trade unions. The agreement defined two basic principles
that have secured a more or less constructive collaborative climate in Danish industrial
relations ever since. The first main principle is the managers’ “right to manage and direct
work” and the other is the employees’ “right to organise and the right to take industrial
action,” both principles within certain limits as defined by the agreement.
Most aspects of the labor market are regulated by centralized or local agreements
between trade unions and employer associations. While this system has recently been
challenged by falling levels of union membership and new kinds of employment rela-
tionships, it remains by far the dominant employment relations practice in the Danish
labor market. What is sometimes called the “Danish model” was legitimized by a
214   Bévort and Einarsdottir

tandem of political reforms spearheaded by the Social Democratic and Social Liberal
movements, establishing the modern welfare state and a very high level of independent
problem solving and decentralized agreements between the labor market social partners—
unions and employers associations—nationally and locally.
In Denmark, HRM is founded on an institutionalized culture of cooperation and
(relative) trust. There was no revolution, but there was the creation of sustainable
reforms based on a consensus regarding the general institutional framework. One
highly publicized outcome for HRM practice has been dubbed the “flexicurity” model
(Madsen,  2004) (see Figure  10.1). A quarter of all employees switch jobs every year
(Statistics Denmark,  2019), while employees simultaneously report a high level of
employment security. Employers have a high degree of flexibility in relation to hiring
and firing of employees, while employees are guaranteed high levels of income security
(via unemployment benefits, etc.) and “employability” in terms of reskilling and
training options and support.
This arrangement is made possible by mutual trust and understanding between the
labor market parties. It makes staffing decisions less complicated, especially in an indus-
trial relations climate in which trade unions are powerful.
Another feature of Danish HRM is the role of the line manager. This is also a prevalent
feature of other Nordic countries, such as Sweden and Norway (Lindeberg et al., 2013).
According to Cranet data from 2008–10, the three Scandinavian countries leave greater
responsibility for HRM decisions to line managers, while other countries tend to rely on
the HRM function. The explanation probably lies in the relatively small company size in
Denmark, which also may affect the lower representation of the HRM function on the
board of directors (Lindeberg et al., 2013). The Danish model is based on two-, three-, or
four-­year general agreements, which are then specified through ongoing negotiations
locally between organizations and local union representatives. The system is driven by
employers’ need for flexibility and workers who have sufficient negotiating power to
make better deals locally than centrally. The effect is a highly collaborative model in
which both workers and employers are interested in finding viable solutions that make
companies grow and sustain a high level of pay. As a result, managers and shop stewards
strike deals at the workplace level that make the wheels turn in the interest of most
parties involved.
So, three characteristics of the Danish version of the Nordic welfare state (the culture
of cooperation, the flexicurity model, and the role of line managers) define limits and
starting points for HRM. The flexible labor market model is probably the most contro-
versial. The unions have accepted an “income-­security and employability” rather than a
“job security” strategy, which is the case in the other Nordic countries (and most other
coordinated market economies). Gooderham et al. (2015, p. 171) write, “So in this regard
Denmark is ‘different from that of the other Nordic countries’: that is, in regard to this
particular issue Denmark has LME (liberal market economy) traits.”
In Denmark, as the data from the 2014 Cranet survey show (Bévort, Larsen,
Christensen, & Hjalager,  2014), HRM has become still more professionalized and
entrenched, even after the financial crisis in 2008. Interestingly, the Danish collaborative
 Human Resource Management in the Nordic Context   215

High level of flexibility

Easy access to hiring and firing

High level of income security High level of employment security

Unemployment benefits, etc. Reskilling, training, job programs, etc.
(e.g., Free universal health
and educational provisions)

Figure 10.1.  The “golden triangle” of flexicurity (Madsen, 2004).

trust-­based labor market model seems to stand the test of time, and in many ways the
future role of HRM in Denmark will continue to be as a steward of the legacy of the
collaborative tradition (Bévort, Pedersen, & Sundbo, 1992), while developing the means
to harness the potential and avoid the pitfalls of the new world of work.

Finland
Finland’s population is 5.5 million. Although cultural studies such as Global Leadership
and Organizational Behavior Effectiveness (House, Hanges, Javidan, Dorfman, & Gupta,
2004) have shown Finland to exhibit similar cultural attributes to its Scandinavian
neighbors, Finland is distinctive in its Finno-­Ugric ethnic and linguistic background
and was a Grand Duchy in the Tsarist Russian Empire. After the empire’s collapse in 1917,
Finland gained its independence. However, Finland remained a relatively poor, agrarian
society. Even in the 1950s, 46 percent of Finnish workers worked in agriculture and only
a third of the population lived in urban areas. During the 1960s, around two hundred
thousand Finns left the country in search of work in neighboring Sweden.
Since the latter half of the twentieth century, Finland has developed into a modern,
high-­tech knowledge economy, supported by a well-­coordinated social market economic
model (Evans, Smale, & Björkman, 2018). From an HRM perspective, one can attribute
a significant part of this economic success story to formal education. In 1972–77, the
educational system was reformed, seeking to ensure, from playschool upward, the right
to access high-­quality education. Finland regularly comes out first or second in world
comparisons of education (United Nations Educational, Scientific, and Cultural
Organization, 2000).
Having succeeded in building a strong manufacturing base around its core forest and
information and communications technology sectors, the Finnish economy also started
to attract global attention with the meteoric rise of Nokia, which quickly became a
216   Bévort and Einarsdottir

significant proportion of the Finnish economy (Kelly, 2013). Nokia became a synonym

for superior management in Finland (Laamanen, Lamberg, & Vaara, 2016). Over the
past fifteen years, economic development has seen Finnish companies develop new jobs
in high-­tech manufacturing and services, attracting a growing number of people to the
cities. Both the success of Nokia and Finland’s recovery from the “fall” of Nokia in the
form of new national champions (e.g., Rovio, Supercell) can be seen as evidence of how
the main mechanisms of the Finnish industrial relations system are designed to support
economic development. One way to understand the cornerstones of the Finnish labor
market and industrial relations (in comparison to the other Nordic countries) is to
consider what lies behind this.
As with the other Nordic countries, one of the hallmarks of the modern-­day Finnish
system is strong egalitarian values. In Finland, egalitarian-­driven labor market policies
are reflected in many ways (e.g., education, progressive taxation), but not least in
ensuring internal openness and equal opportunity. Finland also performs especially
well in relation to education, with performance differences between schools among the
smallest in the world (Sahlberg, 2015). Finland is furthermore ranked number one in
the world for social mobility and leadership opportunities for women (Lanvin &
Monteiro, 2019).
Another cornerstone is unionization and national collective bargaining. Finland
(as well as Sweden) has a greater proportion of organizations that recognize unions for
collective bargaining (100 percent) and more joint consultative committees/works
councils (over 90 percent) (see Table 10.5 later in the chapter). Finland ranks highly for
active labor market policies (thirteenth) and labor–employer cooperation (twentieth),
but ranks low in terms of flexibility: ease of hiring (seventy-­sixth) and redundancy
(eighty-­fifth) (Lanvin & Monteiro, 2019). The greatest differences between the Nordic
countries seem to be found in the area of labor market flexibility. Finland (and Sweden)
has a less flexible market compared to Norway, Iceland, and Denmark.
After a difficult recession, a period of austerity in Finland has placed much emphasis
on economic performance and productivity, which in turn has highlighted the unions’
stronghold in key sectors of the economy. Against the background of strained relations
between unions and employers, the government has made significant efforts in recent
years to get employers and unions to agree on measures to cut unit labor costs and
strengthen competitiveness.
Government responses to these challenges have also come in the form of “innova-
tions” that may see Finland take a somewhat different path to its Nordic counterparts.
For instance, Finland has just completed trials with basic income and different kinds of
so-­called activation modes. The approaches so far seem to combine Nordic elements
(e.g., borrowing from the Danish flexicurity model), but also more distinctive ele-
ments that would not suggest a simple convergence.
Egalitarian values instilled from a young age and embedded throughout Finnish
socioeconomic policy have been coming up against one of the latest HRM trends in the
form of exclusive talent management (Sumelius, Smale, & Yamao, 2019). This results in
Finnish organizations using practices to identify and develop high-­potential leaders,
 Human Resource Management in the Nordic Context   217

without communicating this to them explicitly (Björkman, Ehrnrooth, Mäkelä, Smale, &
Sumelius, 2013). Anecdotal evidence suggests that this kind of caution (or nervousness)
toward utilizing such practices is somewhat unique to Finland and is more cultural than
institutional in origin.
The HRM profession in Finland continues its steady path toward professionalization
and institutionalization, with membership of the one main professional association
(HENRY, 2019) having increased steadily over time. The HRM board membership has
increased also (currently 78 percent, well above the global average, see Table 10.2),
indicating a trend toward higher HRM status.

Iceland
Iceland has a population of about 350,000 people and a labor market of about 200,000
(Statistics Iceland, 2019). The largest export industries are tourism, fisheries, and alumi-
num. Hydropower generation, agriculture, and manufacturing, including high-­tech
manufacturing, are also important parts of the economy (Statistics Iceland, 2018). The
economy has high levels of free trade, government intervention, and social welfare.
Iceland undertook extensive free market reforms in the 1990s, producing strong eco-
nomic growth, but the country and its labor markets are still subject to high volatility
because of their small scale.
Limited restrictions regarding employer and employee relations existed until the first
labor union, Dagsbrún, established in 1906, demanded restricting the workday to ten
hours in 1910, which they gained in 1913 (Hersir & Sigursveinsson, 2006). A demand for
a forty-­hour work week was started by the unions in 1930, but not achieved until 1971
(Act on 40 Hour Work Week, 1971). These laws are still active. European Union directives
increasingly affect the Icelandic labor market, alongside collective union agreements.
There is exceptionally high union density, partly impacted by the priority clauses in
union contracts, stipulating that employers hire union members. In effect, this translates
into employees automatically becoming union members on being hired. The unions
have now started to demand a reduction in the working week from forty hours to
thirty-five to thirty-­six hours in their collective agreements.
Icelandic labor legislation is built on the Danish model, and in 1938 the first compre-
hensive labor market legislation was passed. It sets out rules on industrial disputes,
collective agreements, shop stewards, strikes, and more (Blöndal,  2019, p. 26). As in
Denmark, many aspects of the labor market are governed by centralized or local agree-
ments between trade unions and employers’ associations. However, the Icelandic labor
market has more strikes than most other European countries, reflecting continuing
labor market conflicts over pay and conditions, now more in the public sector than in
the private sector (Jonsson, 2014).
Iceland is ranked twelfth of thirty countries on strictness of employment protection
by the Organisation for Economic Co-­operation and Development (OECD) (Venn,
2009), below the OECD average. Overall, Iceland is considered high on most indicators
218   Bévort and Einarsdottir

of flexibility (Olafsdottir, 2010). Wages are primarily determined by collective agreements

between unions and employers’ organizations, but there is no statutory minimum
wage. The provisions of collective agreements are automatically applied as a baseline
to all employees, whether unionized or not (Friberg, Arnholtz, Eldring, Hansen, &
Thorarins,  2014). For professionals, basic pay is increasingly determined through
individual contracts, made either on top of a collective bargaining contract or as
replacements (Einarsdottir, Olafsdottir, & Bjarnadottir, 2015) (see also Table 10.3).
The Icelandic labor market (see Table 10.1) is characterized by very high union density
and bargaining coverage rates (Friberg et al., 2014), very low unemployment rates, high
labor force participation, and, at above 80 percent, one of the highest women’s labor
participation rates in the OECD (Organisation for Economic Co-­operation and
Development, 2017). Dual earners/career households are the norm.
Gender equality has increasingly been addressed by laws in Iceland. In 2000, organi-
zations were required to develop a gender equality strategy, either stand-­alone or as part
of their HRM strategy, though not all organizations fulfill this legal requirement even
now (Einarsdottir et al., 2015). Despite being repeatedly ranked at the top of the list
for gender equality in the Global Gender Gap Index (World Economic Forum, 2019),
the gender wage gap is persistent and was 7.6 percent (after controlling for work hours,
job title, age, tenure, and education) in 2015 (Snaevarr, 2015). The latest laws on this came
into effect in 2018 and require organizations to acquire an equal wage certification by a
third party. This is intended to certify that the value of jobs and the process of wage
determination are gender neutral. Overall, there is an increased focus on requiring
meas­ur­a­ble proof by the employer (Einarsdottir, Olafsdottir, & Nesaule, 2018).
Even though the collaborative and egalitarian spirit of the Nordic counterparts may
seem apparent in many respects in Iceland, some have concluded that the labor market
may be more adversarial, reflected in a labor market rife with conflict and strikes
(Jonsson, 2014). Current and future challenges revolve around immigrants, temporary
employment, and self-­employment. A growing number of immigrants, rising from
2.6 percent of the labor market in 2000 to 8.9 percent in 2018, call for specific attention
to their integration in the labor market (Olafsdottir, Stefansson, & Einarsdottir, 2019).
This more recent development, along with automation and the uncertain future of work,
call also for increased attention to diversity management and expanding the concept of
equality from gender to other minority groups, within organizations, and in HRM
policy provisions.

Norway
The population of Norway is 5.3 million. The Norwegian economy was traditionally
based on local farming communities, but by 2018 agriculture accounted for less than
5 percent of the economy (Statistics Norway, 2019). Norway has a small, open economy
with a free market and generally low trade barriers. A significant share of the Norwegian
economy consists of service industries, including wholesale and retail trade, banking,
 Human Resource Management in the Nordic Context   219

insurance, engineering, communications, and transport and public services. Norway’s

petroleum era started in the 1960s, and the exploration and production of petroleum
resources on the Norwegian continental shelf have had a major impact on the
Norwegian economy (Regjeringen, 2013). In 2019, the oil industry accounted for 14 per-
cent of GDP and 37 percent of total exports (Norsk Petroleum, n.d.).
Norwegian working life is characterized by close collaboration between labor unions,
employer organizations, and the state, often referred to as the tripartite cooperation or
the cooperation model. The main agreement (Hovedavtalen), which constitutes one
component of this model, was established between the labor union and the employers’
association in 1935. This acts as a cornerstone in Norwegian working life and states “the
rules of game”—placing regulatory, normative, and cognitive pressures on what actors
can and cannot do (Gooderham et al., 2015). Another important historical background
to the organization of Norwegian working life was the collaborative project between
employers, labor unions, and researchers in the 1960s (Thorsrud & Emery,  1970) to
develop democracy in the workplace based around participation. This collaborative
project served as a basis for the Working Environment Act (Act on Respecting Workers’
Protection, 1977), which contains provisions on the duties and rights of employers and
employees.
Like the other Nordic countries, the Norwegian labor market has undergone pro-
found structural changes since the middle of the 1990’s. Although the oil-­based econ-
omy of Norway meant the financial crisis hit Norway to a lesser extent than the other
Nordic countries (S. K. Andersen, Ibsen, Nergaard, & Sauramo, 2015), there has been a
decline in the manufacturing sector and an increase in the service sector. From 1990 to
2010, employment grew sharply both in public and in private services. In 2014, 8.5 per-
cent of employment was in manufacturing and 35.4 percent, a European high, was in the
public sector (Dølvik, Fløtten, Hippe, & Jordfald, 2015). These changes in labor market
composition have led to major changes in union membership composition and employ-
ers’ associations. Like other Nordic countries, Norway ranks among the most gender-
equal societies.
More than half of Norwegian workers are union members (52.1 percent), less than in
the other Nordic countries (see Table  10.1). Unlike Denmark, Finland, and Sweden
(until the early 2000s), unemployment insurance was not administered through labor
unions (Nergaard & Stokke,  2007). After changing this practice, union density fell
sharply in Denmark, Finland, and Sweden—making the numbers for the Nordic coun-
tries converge. Nevertheless, almost 100 percent of public-­sector employees in Norway
are covered by collective agreements (as in Denmark and Sweden), with about 58 per-
cent coverage in the private sector (Nergaard & Stokke, 2007). The Norwegian collective
bargaining system is less centralized than the Danish and Swedish systems
(S. K. Andersen et al., 2015). In terms of wage regulations, Norway is a mixed model
compared to the more autonomous collective-­agreement models in Denmark and
Sweden (Alsos & Eldring, 2008).
Employment contracts are mainly regulated through legislation. The Working
Environment Act (Act on Respecting Working Environment, 2005) states that the main
220   Bévort and Einarsdottir

principle is open-­ended employment contracts. Norway exhibits relatively strict rules

on individual dismissals from both permanent and temporary work, whereas the legis-
lation governing collective dismissals, associated with economic downturns, is more
lenient (Organisation for Economic Co-­operation and Development, 2013). There have
been few changes to employment protection legislation since the turn of the century,
with the exception of the liberalization of employment agencies (in 2000) and temporary
work (in 2015).
Although labor market systems in the Nordic countries share similarities, a study
comparing multinational companies in Denmark and Norway shows differences that
can be tied to the development of flexicurity in Denmark (Gooderham et al., 2015). For
instance, regulations governing employment relations in Norway are more stringent
than in Denmark. Furthermore, indirect participation is regulated in labor law and col-
lective agreements in Norway, whereas it is governed on the basis of broad agreements
in Denmark. Thus, regulations concerning staffing issues and wage bargaining seem to
give employers somewhat less latitude in Norway than in the other Nordic countries.
Human resource management practices in Norwegian companies have been char-
acterized as soft (Olsen, Gooderham, & Døving,  2017). Participation—including
informing employees about strategic plans and the economic situation of the compa-
nies—remains widespread (see Table 10.7 later in the chapter). Over this period, the
HRM department has gained a strategic position in the private sector as HRM direc-
tors are increasingly part of the top management team. By contrast, in public-­sector
companies, the tendency is the opposite, indicating a divergent pattern in private and
public companies. Last, the HRM departments take a somewhat more active role in
recruitment and competence development; however, this role is still divided between
line managers and the HRM department.

Sweden
Sweden is the largest of the Nordic countries, with a population of 9.6 million citizens
and a GDP of USD$560 billion in 2019, making it the twenty-­sixth largest economy in
the OECD (Organisation for Economic Co-­operation and Development, 2019a). The
country is an influential regional power in Northern Europe and, with a long tradition
of mining and trade, Sweden was industrialized earlier than the other Nordic countries.
Historically, Sweden has a long tradition of consensus-­driven agreements between
political institutions, employer organizations, and the trade unions (T.  Andersen &
Hällsten, 2016).
One of the most important agreements between employer organizations and the
trade unions dates back to 1938: the Salt Lake Agreement (Saltsjöbadsavtalet). The pur-
pose of the agreement was to establish a power balance between employers and trade
unions. One prerequisite was a high degree of memberships, of the trade union and
the employers’ organizations. This agreement is the foundation for the Swedish
model, as a compromise between liberal market interests and social democratic values
 Human Resource Management in the Nordic Context   221

(Schön, 2007). One important note is that all parties acknowledged that the agreement
contributed to the creation of the welfare state, and the government could therefore
accept a transfer of the responsibility for agreements and collective bargaining to the
parties themselves. In the 1970s, labor laws were passed that still comprise the basic
elements of the labor market, even though minor conflicts sometimes occur between
employer organizations and trade unions.
Sweden has been considered to have one of the least gendered labor markets in the
world (Charles & Grusky, 2004). Over the decades, Sweden has received many labor
market migrants, especially from Finland and former Yugoslavia (Knights & Omanovic,
2016). They were seen as a prerequisite for establishing the Swedish welfare state. Many
migrants, however, are employed in low-­wage and insecure employment (Knights &
Omanovic, 2016), in line with classic migration theories where migrants are recruited
to perform jobs in the lower sections of the labor market (Massey & Arango, 1998;
Piore, 1979). Consequently, labor markets in Sweden are polarized because ethnic
minorities do not compete on equal terms with majority populations (Heath &
Cheung,  2007). This challenges Swedish employers and Swedish society to find
­different solutions.
The history and institutional setting of Sweden contributes to establishing collabora-
tive HRM (Gooderham et al., 1999) and the way HRM is carried out in organizations
(T. Andersen & Hällsten, 2016). Codetermination and the devolution of HRM responsi-
bilities to line managers are examples of the micro setting in Sweden aiming for high
commitment and good working conditions (T. Andersen & Hällsten, 2016; Brewster &
Larsen, 2000; Hällsten & Tengblad, 2006). Results from the most recent Cranet survey
clearly show Sweden’s strength in relation to the status of the HRM specialists, as it
stands out in this regard from its Nordic counterparts, with the largest proportion of
organizations with an existing HRM department, HRM on the board, and HRM heads
recruited based on their HRM competency. One explanation is that Sweden has a very
high degree of academically educated HRM professionals (85 percent), in line with the
establishment of a university degree in HRM and labor relations in the 1980s (Hällsten,
Peixoto, & Wikhamn, 2017).
In line with the more individual-­based working culture, Sweden is also influenced
by Anglo-­Saxon and US-­based management models (see Chapter 8 for a discussion of
the Anglo-­Saxon model). In HRM, the Ulrich model (the three-­legged stool) has domi-
nated HRM practice between 2000 and 2020 (Boglind, Hällstén, & Thilander, 2011, 2013).
The Ulrich model for organizing HRM departments in large organizations has been
adapted to the local context (Boglind et al., 2011). However, research shows significant
challenges in implementing these liberal market rationalistic and cost-­efficient models
to the Swedish consensus-­driven and relation-­oriented working life (Boglind et al.,
2019). The low hierarchical distance between managers and employees and the focus on
developing employees in the organization, in line with soft or collaborative HRM
(Gooderham et al., 1999), also explains why Sweden ranks highly on employees’ com-
munications to managers and team briefings (see Table 10.8 later in the chapter). In
practice, employees in Sweden expect to take responsibility not only for their daily work,
222   Bévort and Einarsdottir

but also for developing team-­ based work practices and their own competencies
(Lindeberg et al., 2013). Managers in Sweden expect to support and coach their employ-
ees while focusing on the overall development of the organization. Treating employees
at the workplace as active and creative actors, not as passive doers, should pay off
(Gustavsen, 2012), not only for individual working conditions, but also for the employer
brand and business results.
The HRM functions have in many Swedish organizations striven to become strategic
and value creating. This includes HRM’s involvement in the work environment and
occupational health and safety management (Schmidt, Sjöström, & Strehlenert, 2019).
Swedish employers are responsible for the work environment and must create safe
workplaces through cooperation with employees and safety representatives. However,
research indicates that after the HRM transformation already discussed, HRM has
increased their involvement in and influence over health and safety management issues.
In sum, Sweden has a unique welfare model, which must be seen in a historical and
institutional context. To a large extent, the model has contributed to the developments
of Swedish society so far. However, political changes in Sweden and different aspects of
migration, technological developments, and global competitiveness will challenge the
Swedish model in the future.
In the next section, Cranet data from the five Nordic countries are used alongside
global averages to reflect on whether the countries can still be considered collaborative
rather than calculative and to discuss similarities and differences in the ways HRM is
practiced in three HRM domains: HRM status in corporate management, compensation,
and communication.

Human Resource Management

Differences and Similarities in the
Nordic Countries

To analyze strengths, weaknesses, similarities, and differences in HRM practices

between the five Nordic countries, we use data from the 2014/15 Cranet survey. Results
from Denmark, Finland, Iceland, Norway, and Sweden are compared against the 6,045
participating organizations in a total of thirty-­five countries around the world.

Human Resource Management Status, Role,

and Professionalism
Various HRM practices and activities can be used as proxies or indicators of general
commitment to, and professional strength of, HRM in organizations. Frequently used
indicators are existence of an HRM department, HRM having a seat on the executive
 Human Resource Management in the Nordic Context   223

board, existence of a written HRM strategy, whether heads of HRM are hired for their
knowledge and expertise in HRM, and whether the HRM director participates from the
outset in the development of business strategy (Farndale, 2005; Farndale & Sanders,
2017; Ulrich & Brockbank, 2005; Ulrich, Younger, Brockbank, & Ulrich, 2013).
The results in Table 10.2 show the overall greatest strength in Sweden (i.e., Sweden
scores above the world average for all indicators). Organizations in Iceland, Finland,
and Denmark have a lower rate of HRM department existence than the world average
and Norway has a slightly lower one again. The results presented in Table 10.3 suggest
that size matters in this area because organizations in all five Nordic countries are on
average smaller than in the total Cranet sample. Furthermore, a significant correlation
exists, albeit weak (r =.05, p = < .001), between organizational size and the existence of
HRM departments.
The HRM department is more likely to have a seat on the top management team, the
rate being above the average for the total sample in all five Nordic countries, indicating a
common characteristic and a Nordic strength. The rate is highest in Sweden and lowest
in Iceland. Relatively high proportions of organizations in the Nordic countries have
a  written HRM strategy, with the highest proportion in Iceland and the lowest in
Denmark. Comparing recruitment of HRM directors from within the HRM depart-
ment, from HRM specialists from outside the organization, or from nonpersonnel or
HRM specialists from outside or inside the organization, a certain weakness can be seen
in the Nordic countries, except for Sweden. These results indicate that HRM expertise
may not be valued enough when it comes to hiring the top HRM executive in organiza-
tions in Denmark, Finland, and Iceland. However, HRM expertise seems to be more
valued and better utilized in the Nordic countries than elsewhere, since the specialists
are consulted at the outset of business strategy development. However, some differences
exist between the Nordic countries in this regard, as the rate of involvement is highest
in  Norway and Iceland (about 69 percent) but about 13 percentage points lower in
Denmark (56 percent), though still above the global average.

Compensation and Incentives

Because union participation is high overall in the Nordic countries (see Table 10.1), it is
not surprising to see the extensive usage of national/industry-­wide determination of
basic pay, at or above the Cranet average (37.1 percent), in all countries except Norway
(see Table 10.3). The results indicate that in Norway the determination may be more at
the company/division level and at the establishment/site level.
In all the Nordic countries, organizations also use individual-­level pay (even more
extensively than the global average). It is used, however, most extensively in Sweden. This
indicates that Nordic organizations rely, to a great extent, on national/industry-wide
basic pay determined in collective bargaining, supplemented by company/division-
level pay and the extensive use of individual-­level pay, probably to attract highly quali-
fied individuals or to reward for performance (see Table 10.3).
Table 10.2.  Mean organizational size and indicators of human resource management status and professionalism
N (org.) Mean sizea SDb Existing HRM HRM on Written HRM Recruitment HRM Involvement in development
department (%) board (%) strategy (%) head—specialist (%)c of business strategy (%)d

Denmark 206 1,247 203 83.0 71.4 71.8 57.8 56.0

Finland 180 1,415 180 82.2 78.0 79.6 50.3 63.4
Iceland 117 290 117 67.5 69.1 89.9 60.3 69.0
Norway 196 915 196 89.8 69.4 73.0 N/A 69.3
Sweden 283 1,717 280 95.4 89.0 81.3 81.3 65.8
Global 6,045 2,769 6,656 90.6 63.5 67.9 67.9 50.8

Note: HRM, human resource management.

a
Mean number of employees.
b
Standard deviation.
c
Recruitment of HRM head, from HRM department or specialists outside the organization.
d
Involvement of human resources from the outset of development of the business strategy.
Table 10.3.  Determination of basic pay for professionals—rate of method usage
National/industry-­wide basic Regional collective Company/division-­level Establishment/site-­level Individual-­level
pay (%) bargaining (%) pay (%) pay (%) pay (%)

Denmark 52.2 14.6 21.9 24.2 53.9

Finland 69.6 7.3 62.5 24.1 46.8
Iceland 77.6 57.3 37.2 10.7 59.8
Norway 33.1 16.6 55.2 26.4 66.3
Sweden 66.7 10.5 41.1 22.1 74.0
Global average 37.1 15.9 43.7 25.5 45.5
226   Bévort and Einarsdottir

Table 10.4 analyzes variable pay options. Overall, organizations in the Nordic coun-
tries seem to use variable pay to a lesser extent than organizations around the world.
This applies to all the Nordic countries regarding ownership-­related pay (share schemes,
profit sharing, and stock options) for professionals, except for Norway, which makes
more use of share schemes than their Nordic counterparts and organizations around the
world (though still not on a large scale). Bonuses based on individual and team goals are
also used to a lesser extent in Nordic organizations than the global average, but Finnish
and Norwegian organizations are more average users of bonuses based on organiza-
tional goals. Only Finland uses nonmonetary incentives as much as the global average,
and Danish and Norwegian organizations use flexible benefits as much as the global
average. Both Finnish and Swedish organizations use individual performance-­related
pay extensively, above the global average. The trend seems to be one of multilevel bar-
gaining when determining basic pay, including the individual level.

Employee Relations and Communication

Starting with the trade union influence on employee relations, the results in Table 10.5
show that in the majority of organizations in the Nordic countries, more than 50 percent
of employees belong to trade unions, while the international average is 31.3 percent.
However, the rate of employee membership in Norwegian organizations is much lower
than among their Nordic counterparts.
Despite the high membership rate, in Denmark, Finland, Iceland, and Norway less than
50 percent of respondents perceive strong (great or very great) influence of trade unions
on the organizations’ HRM practices, even though this is well above the global average
(25.4 percent). The greatest influence is perceived in Sweden and the lowest in Denmark.
It is not surprising that a very large proportion of organizations in Finland and Sweden do
so. Joint consultative committees or work  councils are also used extensively in all the
Nordic countries, apart from Iceland (35.2 percent).
Table 10.6 shows that the methods used to communicate to employees differ in the
Nordic countries compared to the global average. There is extensive communication
with employees through union representatives and work councils, except for Iceland,
where these two means of communication are rarely used.
Information sharing through formal briefings about business strategy, financial per-
formance, and the organization of work is more extensive in the Nordic countries than
around the world (Table 10.7). This applies to all three groups of employees—managers,
professionals, and clericals/manuals—and all three subjects. The greatest difference, when
compared to the global averages, can be seen in the extensive information sharing about
financial performance and use of top-­down communication and information sharing
even to the lowest level of employees. Organizations in Finland stand out, with the most
information sharing to all three employee groups when compared to the other Nordic
countries. The most striking difference can be seen in the extensive information sharing
about financial performance to the lowest level of employees in Finland (91.7 percent).
Table 10.4.  Use of various types of variable pay and incentives for professionals
Ownership-­related pay Bonuses based on . . . Nonmonetary incentives Performance

  Share Profit Stock Individual Team Organizational Nonmonetary Flexible Individual performance-
schemes (%) sharing (%) options (%) goals (%) goals (%) goals (%) incentives (%) benefits (%) related pay (%)

Denmark 7.3 6.7 4.5 33.7 21.3 24.2 31.5 29.8 36.5
Finland 6.7 10.9 2.3 36.6 27.8 35.4 42.0 16.1 62.1
Iceland 1.9 7.6 1.9 23.5 19.4 16.3 27.9 10.3 21.3
Norway 14.7 14.7 4.3 25.2 16.0 35.6 16.0 33.7 36.8
Sweden 7.3 10.3 2.7 15.7 14.2 16.9 34.1 22.6 54.0
Global average 9.3 18.9 6.7 46.1 30.4 36.0 42.8 29.9 47.6
228   Bévort and Einarsdottir

Table 10.5.  Union membership, influence, recognition, and use of work councils
  Proportion where Proportion where Proportion that Existence of joint
more than 50% of unions influence recognizes unions consultative
employees are to a great or very for collective committee/work
members of Union (%) great extent (%) bargaining (%) councils (%)

Denmark 76.4 35.4 86.4 82.5

Finland 81.2 37.9 100.0 95.1
Iceland 98.1 42.2 94.5 35.2
Norway 52.3 46.9 83.3 75.3
Sweden 82.3 51.8 100.0 91.4
Global average 31.3 25.4 68.5 52.6

When it comes to methods used for bottom-­up communication from employees

(Table 10.8), the Nordic countries, except for Iceland, communicate more extensively
through union representatives and work councils. Furthermore, Nordic organizations
(including those in Iceland) use regular workforce meetings to a greater extent than
their worldwide counterparts. Team briefings are also used extensively in Norway and
Sweden, but to a lesser extent in Iceland and Denmark. Nordic organizations do not use
suggestion schemes extensively to facilitate bottom-­up communication, but rely to a
greater extent than their worldwide counterparts on attitude surveys among employees
to listen to employee voice.

Discussion—What Can We Learn from

Studying Human Resource Management
in a Nordic Context?

In the comparisons of the Cranet data, two observations distinguish HRM practices in
the Nordic countries from the average of the participating countries in the Cranet sur-
vey. First, the high union membership level and coverage of collective agreements are
reflected in a number of HRM practices, such as pay determination for professionals
and employee communications (top-­down as well as bottom-­up). Second, despite the
smaller company size of participants in the Nordic sample, a high proportion of HRM
functions are represented in the top management team and involved in developing busi-
ness strategy, indicating that the collaborative climate in the Nordic countries does not
affect the status and professionalization of HRM in a negative way.
Furthermore, our five contextual portraits of the Nordic countries confirm the initial
notion of a deep commonality in culture, rooted in the way the countries have histori-
cally developed. Deep-­seated egalitarian and collaborative values, and a tradition of
Table 10.6.  Top-­down communication to employees
  Direct to senior Through immediate Through union Through work Through regular workforce Team Electronic
managers (%) superior (%) representatives (%) councils (%) meetings (%) briefings (%) communication (%)

Denmark 76.0 84.0 28.6 43.4 63.4 54.9 84.6

Finland 86.3 90.7 28.6 47.3 74.7 67.6 95.6
Iceland 82.4 81.3 3.8 1.0 69.4 50.0 75.9
Norway 65.6 86.9 32.5 37.5 58.1 50.0 91.9
Sweden 65.8 94.7 27.0 41.7 83.4 81.0 79.5
Global average 70.0 81.4 17.7 19.0 49.7 54.4 74.3
Table 10.7.  Formal top-­down information sharing to different employee groups
  Managers formally briefed Professionals formally briefed about Clericals/manuals formally briefed

  Business Financial Organization Business Financial Organization Business Financial Organization

strategy (%) performance (%) of work (%) strategy (%) performance (%) of work (%) strategy (%) performance (%) of work (%)

Denmark 100.0 99.4 99.4 89.4 82.3 88.2 69.4 65.5 68.4
Finland 91.7 97.2 89.0 88.2 72.6 92.3 83.6 91.7 91.4
Iceland 88.7 97.1 83.0 66.3 77.5 79.2 54.8 54.8 73.6
Norway 99.4 96.9 94.4 86.3 77.5 80.0 75.6 70.6 73.8
Sweden 96.8 97.5 93.7 69.3 72.1 74.9 67.8 71.7 77.0
Global average 87.9 86.7 84.6 59.6 55.2 72.5 44.4 42.8 65.9
Table 10.8.  Bottom-­up communication from employees—to a great or very great extent
  Direct to Through Through union Through Through regular Through Through Through Through electronic
senior immediate representatives (%) work workforce team suggestion employee/attitude communication (%)
managers (%) superior (%) councils (%) meetings (%) briefings (%) schemes (%) surveys (%)

Denmark 37.7 74.3 41.7 40.0 45.1 37.7 9.7 43.4 39.4
Finland 36.3 77.8 41.8 31.3 53.3 47.8 7.8 59.1 56.9
Iceland 62.9 81.3 1.9 2.8 50.0 36.4 10.5 38.7 49.1
Norway 57.5 92.5 78.8 55.0 50.0 52.5 13.1 51.3 48.1
Sweden 45.9 89.0 61.3 48.0 63.7 66.7 13.1 60.4 38.7
Global average 39.9 76.1 22.3 19.5 37.5 43.2 21.5 37.3 46.8
232   Bévort and Einarsdottir

legitimating the organization of interests in civil society institutions, have created five
pluralistic, but also corporatist, societies where the state, employers, and employees
(and other interest groups) together create tightly knit, coordinated economies. The
kind of harmony of interests that HRM sometimes assumes at the company level is in
various ways strived for at the societal level. And while the Nordic countries are coordi-
nated market economies, they are at the same time heavily exposed to world markets
(see Table 10.1). This creates a paradox of coordination versus dynamism, because coor-
dination in these countries historically has included a focus on flexible and dynamic
markets. One example is the Danish flexicurity model, which has created a labor market
that is as flexible as the one in the United Kingdom, without breaking the social contract
between unions, employers, and the state (and which Finland has recently been inspired
by, as we highlighted previously). While the lack of job protection in flexicurity is con-
troversial, the kind of compromise it represents is typical of the kind of pragmatism
found in the Nordic countries.
The countries have established these compromises differently and that affects the way
labor markets are organized. For example, Iceland is much smaller than the four other
countries, and despite its high union density and extensive use of collective agreements,
individual contracts are used extensively to supplement collective agreements for pro-
fessionals, whereas works councils are not used as much as in the other Nordic coun-
tries. Finland and Sweden have a more centralized tradition of negotiations and
tripartite arrangements, while Denmark has a decentralized labor market regime, in
which the state has a less prominent role. In Norway, the state has a stronger role in, for
instance, job security legislation. Nevertheless, we contend that these compromises rep-
resent the same balancing of interests that broadly supports high levels of social security,
income equality, and welfare, while at the same time actively supporting private indus-
try and economic growth.
Overall, in relation to “talent competitiveness,” defined as a country’s ability to attract,
develop, and retain the human capital that contributes to its productivity (Lanvin &
Evans,  2017), the Nordic countries rank highly: In the world in the Global Talent
Competitiveness Index (Lanvin & Monteiro, 2019), Iceland ranks first, Norway second,
Finland third, Sweden fourth, and Denmark thirteenth.
In the Nordic countries, HRM is welcomed provided it can interact with the logic of
the social model. That is, for many employee groups, HRM has to be carried out in col-
laboration with shop stewards and union representatives, as well as work councils, and
the constraints of elaborate and extensive local and general agreements have to be taken
into account. HRM also has to manage labor market arrangements and social legislation
that affect the organization. HRM representatives will, in this social context and as part
of management, sometimes experience adversarial relations with employees. However,
in other situations they will be a central part of the collaborative model that is the key
feature of the Nordic societies.
Strategic HRM (Ulrich & Brockbank, 2005) has, nevertheless, had an impact in the
Nordic countries. Arguably, the relative success of “strategic HRM” in the Nordic coun-
tries is a microrepresentation of the coordination–dynamism paradox mentioned
 Human Resource Management in the Nordic Context   233

­ reviously. The Nordic model needs competitive dynamism to create growth to support
p
the welfare state. One can therefore argue that strategic HRM is now accepted in the
Nordic countries as part of the effort to sustain the competitiveness of the social model.

Conclusion

Strategic HRM, of the stakeholder-­oriented variety identified in the Harvard model

(Beer, Boselie, & Brewster, 2015; Beer, Spector, Lawrence, Mills, & Walton, 1984), can be
seen as a way of balancing interests, with the organization as the core institution. In the
Nordic countries, stakeholder interests are in many ways already organized and bal-
anced at the societal level. The task of HRM in these countries is, for these reasons alone,
arguably different than the task that HRM faces in US organizations. In the Nordic
countries, HRM operates on the back of an already existing collaborative model. Besides
managing that model, HRM can arguably focus more on other aspects of HRM that
relate to organizational competitiveness, for example, human capital advantage and
organizational process advantage (Boxall & Purcell, 2016). The specific Nordic HRM
practices that have developed in different industries and types of organizations need to
be researched further (see Boglind et al., 2011, for a Swedish example of such a study).

Acknowledgments
We acknowledge the contribution of the authors of the country portraits of Finland: Adam
Smale, University of Vaasa; Norway: Karen Modesta Olsen and Paul Gooderham, NHH
Norwegian School of Economics, Bergen; and Sweden: Per Thilander and Karin Allard,
University of Gothenburg.

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 chapter 11

H um a n R esou rce
M a nagem en t i n th e
Postsoci a list R egion
of Cen tr a l a n d
Easter n Eu rope

Michael J. Morley, Andrej Kohont,

József Poór, Rūta Kazlauskaitė,
Veronika Kabalina, and Jana Blštáková

The countries of central and eastern Europe (CEE) have a range of endowments
(Berend, 1996) and show significant variations in their preferred approaches to human
resource management (HRM). Such variations arise for an assortment of reasons,
including their distinct political, cultural, institutional, and developmental trajectories
(Brewster & Bennett,  2010; Kohont & Brewster,  2014; Kohont, Svetlik, & Bogičevic
Milikic, 2015). While the socialist system under which these countries operated until
the 1990s stretches back to 1917 in the case of Russia, the other countries of the CEE
region fell under this governance arrangement after the Second World War and
remained within it until after the collapse of communism, the fall of the Berlin Wall,
and the opening up of the region in 1989. The transition process toward democracy and
free market principles that has been taking place since has been characterized as one of
the most significant economic and social processes of recent times (McCann &
Schwartz, 2006). As has become apparent through the successive waves of reforms that
have taken place, many of the CEE countries have demonstrated a robustness and
capacity for change in the face of these difficult reforms. Our interest in this chapter,
HRM, has, since the inception of the transition process across the region, had to rein-
vent itself and, in the process, become redefined according to capitalist principles.
Where it has taken hold, the emergence of the modern conception of HRM in CEE can
240   Morley et al.

be traced to the broader development of the sustainable, competitive market economy

and the desire to achieve a closer alignment between strategy and HRM (Morley,
Minbaeva, & Michailova, 2018).
Despite their common socialist legacy, each of these countries exhibits unique char-
acteristics. Their distinctiveness is especially reflected in the divergence and heteroge-
neity that characterizes their current approaches to HRM (Sahadev & Demirbag, 2011).
Lane (2007) has suggested that, for classification and analytical purposes, the econo-
mies in the CEE region can usefully be divided into three categories, namely, middle,
low, and very low income. The first (including, for example, Slovenia and the Czech
Republic) are closest to continental European capitalism, reflecting the fundamental
requirements associated with joining the European Union (EU) and the need to estab-
lish institutional arrangements that complement those of their closest developed trad-
ing partners. Others, such as Bulgaria and Romania, are less developed and have moved
closer to liberal market–type arrangements. In the case of the low-­income group, their
economic status makes the processes of attracting investment and equipping people
with the right mix of knowledge and skill increasingly challenging, with the result that
the securing and sustaining of a developmental trajectory remains problematic for them
(Reymen et al., 2015). The very low-­income category includes countries such as Belarus
and Ukraine.
In this chapter, we explore several key features relating to the development of HRM in
the CEE region and we contextually situate and landscape core aspects of contemporary
practice. We commence with a background discussion of the evolution of HRM in the
region. In this effort, we identify and describe three distinct sequential phases (Szelenyi &
Wilk, 2010; Szirmai, 2015) under which the development of HRM in the region can be
situated and understood: the socialist period, the transition period, and the contempo-
rary period. Having set out the contours of these phases of the development of HRM in
CEE, we then turn to providing an account of a select number of particular historical
and contextual factors frequently referred to by scholars to account for some of the com-
monalities and differences exhibited in contemporary HRM in the region. Chief among
these factors are cultural determinants, variations in the control provisions that oper-
ated under socialism, the path to gradual Europeanization, the ownership structure in
the economy, along with the shifting fortunes of trade unions in CEE, and noteworthy
variations in the levels of managerial competence. Finally, drawing on three waves of the
Cranet data gathered between 2004/5 and 2014/15, we provide an evidence-­based
account of selected aspects of organizational-­level HRM policy and practice in the
region. Our analysis proceeds on a comparative basis whereby we set down the key
results for the CEE cluster of countries represented in the Cranet survey in comparison
with the results for all participating countries across the globe. Our intention is to pro-
vide a succinct overview of certain developments in CEE, allowing the reader to situate
and appreciate the commonalities and differences that represent postsocialist countries
and to understand the extent to which HRM policy and practice developments in these
countries are characterized by unique postsocialist recipes, relative to their counterparts
elsewhere.
 Human Resource Management in the Postsocialist Region   241

The Evolution of Human Resource

Management in the Central and
Eastern Europe Region

In tracing the evolution of HRM in the CEE region, we focus on three key phases. Firstly,
we treat the socialist period which was characterized by the close control of the HR
function and its activities by the communist party. We then move to the transition
period marked by the collapse of communism and eventual waves of reform and privati-
zation. Finally, we turn to the contemporary period where, in particular, we call atten-
tion to the emergence and influence of foreign direct investment on the evolving HR
landscape in CEE and the increasing number of skill shortages in certain sectors
throughout the region.

The Socialist Period

Under socialism, people management in the CEE region has been characterized as being
underdeveloped, politicized, and distorted by ideology (Fey, Engstrom, & Bjorkman,
1999). Branded as a “politically oriented decision-­making system” (Garavan, Morley,
Heraty, Lucewicz, & Suchodolski, 1998, p. 210), the personnel function and all its associ-
ated activities were closely supervised by both the Communist Party and local govern-
ment officials. The consequence was that the system and the architecture governing it
were not favorable to the growth of “more sophisticated value-­adding activities, with
the result that there was always going to be significant ground to be made up if the
transition economies of CEE were going to be able to support, sustain and expand a
developmental trajectory based on free market principles” ( Morley, Poór, Heraty, Alas, &
Pocztowski, 2016, p. 74).
In the early years of postwar socialism, personnel policy was largely formulated at
the state level and was enforced by legislation. In this, the central task of the personnel
function was to ensure employment and social standards of workers, to collect and
store personal data, and to calculate wages (Letiche,  1998; Zupan & Kaše,  2005).
Because personnel issues were under the close control of the Communist Party and the
heads of state, personnel functions were routinely staffed by political appointees
deemed suitable by state authorities for the key personnel positions available (Koubek &
Brewster, 1995). The local Communist Party committee typically had the final say in
sanctioning appointments and, indeed, in organizational promotions more broadly. It
was considered crucial that the director of the personnel function was a reliable politi-
cal ally, even if, as was typically the case, they lacked the relevant formal education or
personnel-­related experience that might make them more effective. Adam (1995, p. 67)
highlights that in the early years, top managers were selected almost solely on the basis
242   Morley et al.

of political criteria, with professional competence and likely ability to perform the role
only coming to the fore as an important selection criterion at a later juncture. More
broadly, access to education, especially at the university level, and appointment to
­positions that were considered potentially influential, most notably those involving
working with people such as teachers, foremen, and directors, were filled by those
who were viewed as being politically reliable. The selection of specialists and many
­personnel-related decisions, even relatively routine and mundane ones, were influenced
by the Communist Party and by government politics and objectives (Pundziene &
Bučiūnienė,  2009). Management was not considered a profession, and decisions
regarding promotion were not based on performance assessment (Pearce,  1991).
Indeed, the absence of any formal performance appraisal system was a characteristic
feature. Koubek (2009) postulates four particular reasons for this, namely, the princi-
ple of social egalitarianism, which resulted in wage and salary leveling; the full employ-
ment policy with the consequence that few were afraid of any negative appraisal
because there was little danger of becoming unemployed; the scarcity of labor in poorly
planned and managed economies in the region; and the centralized system of compen-
sation, which meant that superior or inferior performance was not taken into account.
As in other contexts, in CEE the role of the personnel function in organizations was
plagued by debates as to its ambiguity and lack of demonstrable contribution to the
bottom line. Pocztowski (2011, p. 14) describes personnel management under commu-
nism in Poland as having several characteristics that made it reactive, disorganized,
and ineffective. He notes that the personnel function lacked a comprehensive system-
atic perspective and was characterized by the following features: the haphazard and
temporary nature of actions undertaken, politicization and the impact of third parties
on personnel-­related decisions, a high level of centralization within organizations, the
low competence of the people taking care of HRM issues, insufficient tools used to
solve personnel-­related problems, and finally insufficient institutionalization or even
its complete absence. The result was a low-­ranking function, characterized by over-
staffing, high fluctuation, and limited effectiveness.
The socialist period did see relatively rapid industrialization in several countries.
Many nations in the Soviet bloc drafted a Petletka, which was essentially a five-­year plan
of economic development (Turner & Collis, 1977). These plans led to the creation of new
organizations in different locations and resulted in an influx of rural workers into bigger
urban centers. National cyclical five-­year plans also led to the creation and bolstering of
public services in the fields of education, health, child care, and other sectors. Under
these state-­led initiatives, the main task of personnel functions was to ensure the new
industrial centers that were springing up had a sufficient labor supply, typically secured
through encouraging and facilitating migration from rural areas into zones designated
for industrial and urban expansion. The principle of collective distribution of gains from
these enterprises, coupled with the principle of equal access to services and support, did
result in the satisfaction of basic needs for families, including the provision of basic
housing and access to healthcare and primary education, all of which were provided by
the state.
 Human Resource Management in the Postsocialist Region   243

Among ex-­Yugoslavian countries (e.g., Slovenia, Serbia, and Croatia), the development
of the personnel function under socialism was also significantly influenced by the
­shaping influence of the “self-­management system,” which was initiated in 1950 after a
dispute between Tito and Stalin resulted in Yugoslavia steering a different course to
other countries within the Soviet bloc. By introducing self-­management and social
ownership, the governance of organizations was divided between the state and repre-
sentatives of management and workers’ collectives through a series of joint works coun-
cils (Pološki Vokić, Kohont, & Slavić, 2017). Here, some of the most important personnel
decisions were made by these works councils. Gradually, various practices in the areas of
work design, workload assessment, planning and recruitment, training, health and
safety, and employee assistance schemes all began to take hold and occupy much of the
time of those working in the personnel function. Nevertheless, despite this newfound
expansionary role, even in Yugoslavia the function remained relatively underdeveloped.
Once again, a lack of adequate professional education among those leading the function
and ongoing close monitoring by the Communist Party served as constraints on
development.
Throughout the 1960s, rapid industrialization continued in different parts of CEE,
although some economies in the region, among them the then Yugoslavia, faced a crisis
and sought to engage in economic reforms aimed at introducing more market principles
and increasing the autonomy of company directors in charting a more autonomous path
for their enterprise. These developments began to signal the emergence of what became
known as market socialism in some countries. Of note, some, including Hungary,
Poland, and what is now the Czech Republic, were able to retain elements of private
enterprise and aspects of entrepreneurial activity during Soviet occupation, a feature
that aided the overall industrialization effort in those countries and one that was to
prove important in their overall transition after the fall of the Berlin Wall in 1989 (Dirani,
Ardichvili, Cseh, & Zavyalova, 2015, p. 358; Horwitz, 2011). Others, such as the then
Yugoslavia, combined public and private enterprises and also some early foreign invest-
ments that can be traced back to the 1960s to enhance both the quality of production
and the inflow of foreign currency (Kohont et al., 2015; Svetličič, 2016). Within the Soviet
bloc, countries such as Estonia, Latvia, and Lithuania were considered front-­runners in
industrialization and were touted by ruling officials as showcase examples to illustrate
what was possible under socialism. There is little doubt that the emphasis placed on
these countries by Soviet authorities resulted in their development. They gained a repu-
tation, in particular, for highly qualified workforces capable of supporting light and
heavy industry and for food processing (Sippola, 2009).
In the case of Russia, industrialization began in the prewar period and continued after
the end of the Second World War. The construction of enterprises in remote areas in the
Urals, in Siberia, and in the Far East was accompanied by the creation of company towns
and a paternalistic model of personnel management. The organizations that located them-
selves in these regions built, in addition to their own production facilities, important social
infrastructure such as hospitals, elder-­care homes, and child-­care facilities, along with
cultural facilities. In colocating these amenities with their production facilities,
244   Morley et al.

they  became readily accessible for employees working in these factories. Beyond
­immediate workforces, they were also often made available to residents of these indus-
trializing cities more generally. The use of cheap labor from gulags, an elaborate system
of labor camps set up in the Soviet Union from 1930 to 1945, often contributed to the
emergence of an authoritarian leadership style (Lazarev, 2003). Of note, where trade
unions existed, they became part of the broader personnel management system in these
setups, resulting in their roles being confined to distributing social benefits and operating
the social insurance fund (Ashwin & Clarke, 2002).
On the whole, sophisticated workforce planning in organizations in CEE during the
socialist period was rare, something that was reflected, for example, in large discrepan-
cies between anticipated and actual employees’ competences. Poor workforce planning
often led to overstaffing, as on the one hand organizations were obliged to recruit certain
quotas of employees assigned to them by the Petletka, irrespective of their actual labor
needs, while on the other hand, organizations were motivated to give a job to surplus
employees because they came with additional financial funds (Koubek & Brewster, 1995).
As a result of being guaranteed lifetime employment, employees rarely feared being dis-
missed for underperformance and were seldom motivated to exhibit extra discretionary
effort (Zientara & Kuczyński, 2009). More broadly, as a rule, employees did not have
much freedom in choosing their employer, but were rather assigned to one, something
that again served to undermined overall motivation and performance in the long run
(Cook, 1993).
Training and development, like other personnel practices, were underdeveloped and,
where they existed, by and large limited to on-­the-­job training only. Training interven-
tions were performed more as a formality in response to the requirements made by cen-
tral authorities to improve education in the society in general, rather than to meet
particular organizational needs. Because training and development had no effect on
promotion, such interventions were therefore also often regarded by employees as being
of little value (Fey et al.,  1999). Employee motivation was also largely ignored and
bonuses were rare, with authorities instead favoring the awarding of medals and
mementos as a way of recognizing the efforts of employees.
Those employed in the personnel function typically came from an economic, legal, or
psychological background. In the 1950s, the first specialized training courses in person-
nel management were developed, followed by the introduction of the first undergradu-
ate programs in the field in the 1960s in Slovenia, Serbia, and Croatia (Svetlik et al.,
2010). Nevertheless, the interest of employers in solving personnel problems was
small, and there was a lack of experts. During the period of communist rule, the person-
nel agenda in individual organizations was dispersed into different, relatively in­de­pend­
ent units (Koubek, 2009). In some instances, so-­called personnel departments focused
on administrative services largely relating to personnel records. Compensation and
work organization were administered by departments of labor and wages or by depart-
ments of labor economics. Departments of planning took autonomous responsibility
for manpower planning and labor supply, while departments of employee care distrib-
uted benefits and organized social activities. In other contexts, two separate units were
 Human Resource Management in the Postsocialist Region   245

favored, one focused on dealing with office staff and management and the other dealing
with blue-­collar workers. The group dealing with office staff reported to the personnel
manager, while the one dealing with blue-­collar staff reported to the finance director
(Denisova-­Schmidt, 2011; Poór, Engle, & Brewster, 2017). Regardless of how the activi-
ties were divided up, all associated units were highly administrative, and the important
personnel policy decisions of organizations remained the preserve of representatives of
the Communist Party.
Under socialism, the CEE region was also marked by the guaranteed right to
employment on the part of the employee and a duty to provide it on the part of the
employer, alongside the principles of equality and solidarity. Consequently, overall
organizational performance and effectiveness were secondary considerations, relative
to the social function of the firm in providing a place of work for citizens. Issues sur-
rounding labor costs and productivity of workers were neglected, and workforce
reductions arising from technological advances or as a result of prevailing economic
circumstances were not possible. Thus, the economy and overall productive effort
were largely regulated by dominant social principles. In many CEE countries, the
need for new workers was facilitated through the organizing of migration of workers
from rural areas to burgeoning industrializing urban centers. During this period, the
works councils and representatives were dealing with issues of wages, social stan-
dards, and workers’ rights, while at the same time staffing was agreed at a macro level
(for example, in the so-­called social arrangements created by “self-­governing interest
communities” in Yugoslavia). Macro agreements related to employment, wages,
scholarships, and education aimed at creating common government-­led personnel
and employment policies. Pay was characterized by Uravnilovka, a form of wage and
benefits egalitarianism (Pološki Vokić et al., 2017), and its range in many countries
was limited to 1:3.3 in all organizations (Kohont et al., 2015). Of note, in the Soviet bloc
countries, qualified workers could earn more than engineers (Denisova-
Schmidt, 2011). Research by Brekić (1983) and Kavran (1976) found that the staffing
function was largely administrative, with relatively little professionalism surrounding
the staffing of organizations and the training of employees. In the 1970s, the first
undergraduate personnel management programs were launched in Yugoslavia, which
ultimately contributed to a gradual incremental increase in the power of the person-
nel function in organizations and an eventual diminution of the role and authority of
self-­governing bodies as the developers and purveyors of policy in the human
resources field. The professionalization of personnel management education and
activities came later for many of the other countries in the CEE region, with the result
that the perceived value and relevance of the function to the successful operation of
the firm and the actual competence of those working in the function varied signifi-
cantly throughout the CEE region. Specifically in the case of Russia, for example,
the professional education of specialists in the field of personnel management based
on the Bologna process was launched toward the end of the 1990s, with the result
that specialist bachelor’s and master’s programs are now offered in some 170 higher-
education institutions throughout the country.
246   Morley et al.

The Transition Period

Economic problems and political conflicts deepened in the 1980s in different parts of the
CEE region. The socialist system was becoming increasingly ineffective and there were
clamors for economic reforms. Liuhto (2001, p. 15) highlighted that while the transition
economies did not necessarily require their own microeconomic theories, it was funda-
mentally important to understand that organizational change in these economies was
more profound and far-­reaching than in the Western context, insofar as almost the entire
enterprise population and, indeed, the whole of society more broadly was engaging in an
unprecedented transformation to be able to survive in a competitive landscape As a
result, from early in the transition process, the performance question, albeit in different
guises, formed a central policy agenda and an important aspect of academic enquiry with
the emergence and institutionalization of new approaches to workforce management
being bound up in the economic transition process (Morley et al., 2018). In organizations,
costs were reduced, and many internal activities, such as training and research, were
abolished, reduced, or collapsed. In Russia, the old system of vocational retraining largely
collapsed, but very little emerged to take its place. The links between vocational schools
and organizations in which the students obtained combined professional and firm-
specific skills were also broken. The majority of new private employers emerging in the
new business landscape in CEE made very little provision for the training of their
employees, relying heavily on training provided by previous state employers or on the
motivation of their own employees or prospective employees to undertake training on
their own initiative, at their own expense, and in their own time. Thus, the availability of
appropriate training was limited and it was expensive to access. Nevertheless, research
does suggest that those who undertook training did experience significant increases in
earnings as the transition process unfolded and took hold (Clarke & Metalina, 2000).
The pace and depth of the changes and their impact on society served as additional
contextual determinants governing variations among CEE countries in their approach to
HRM during the transition period (Havrylyshyn, Meng, & Tupy, 2016). The beginning of
the transition period in Poland, for example, can be traced to the early 1980s, almost a
decade before the eventual collapse of communism. Reforms introduced in this earlier
period in Poland, coupled with the fact that Poland maintained aspects of its entrepre-
neurial business culture during the communist period, meant that it was better placed
than some of its neighbors to engage with the transition process when it eventually came.
In contrast, the transitional period in Russia, for example, had a profoundly negative
impact on public health, demography, and productivity. In the 1990s, the immediate pri-
ority of workers, managers, and organizations was to secure their own existence: THe
watchword of the 1990s was “survival” (Clarke, 2007). The historical attributes of Soviet
personnel practices continued to be perpetuated in Russian organizations during this
time. However, the shortage of young employees and qualified workers for manufactur-
ing enterprises in Russia became a particularly prominent topic from 2000 onward,
prompting a requirement for deeper reforms (Gimpelson & Kapeliushnikov,  2013).
 Human Resource Management in the Postsocialist Region   247

Unilateral changing of wages by employers was the subject of particular discussion in

Russia. Most scholars agreed that a specific system of remuneration has evolved in the
country with characteristics that do not exist either in other postsocialist countries or in
developed capitalist economies (Clarke, 1998; Gimpelson & Kapeliushnikov, 2013). Here,
employees were not laid off, but their wages were adjusted to the economic situation
faced by the employer. In the 1990s, the major practice applied by employers was to delay
the payment of wages and salaries through recording arrears. These measures were
accompanied by temporary layoffs where they were deemed necessary (Gerber, 2006;
Gimpelson & Kapeliushnikov, 2013; Kapelyushnikov, Kuznetsov, & Kuznetsova, 2012).
Beyond Russia, throughout CEE, many were not prepared for mass layoffs after priva-
tization and the numerous bankruptcies that followed (Redman & Keithley, 1998). These
countries’ experiences were marked by the loss of former domestic and regional markets
and they had to eke out new markets, which were often more demanding than their expe-
rience allowed them to meet. Peiper and Estrin (1998), in an analysis of the emerging situ-
ation in Poland, Hungary, the Czech Republic, Slovenia, Romania, and Russia, reported
developments in three major areas. First, they observed an effort at modernization of
practices and tools in the areas of recruitment and training, with accompanying altered
skill and work patterns. They also observed skill shortages and salary and benefit adjust-
ments, and they examined the evolving role of expatriate managers working in these
transition economies and the shift from employing expatriates to relying on locals.
Despite differences between countries in reform and economic performance, the authors
found these particular changes to be surprisingly common across the countries studied.
A study of HRM innovations in Polish enterprises revealed that the most widespread
innovations of the 1990s were the introduction of confidential wages and individual
bonuses for blue-­collar employees (Weinstein & Obloj, 2002). Human resource man-
agement representation on boards was found to have grown in around a quarter of the
firms investigated and was considerably more common among foreign-­owned firms.
The diffusion of HRM innovation was mainly driven by the need to enhance efficiency,
by competitive pressure arising from foreign competition in particular, and by the desire
to achieve a stronger fit between HRM and business strategy.
Overall, during the transition period, the HRM function played an increasingly
demanding role. In particular, it had to adapt to a multitude of new legislative provisions
and profoundly altered labor market dynamics. Specialists in HRM were at the forefront
in managing layoffs, while concomitantly paying increasing attention to expanding the
skills and competences of those remaining in employment. Activities in the areas of
training and education had to be expanded enormously, with a particular emphasis
being placed on the development of managers.

Contemporary Developments
Since the late 1990s, waves of ongoing restructuring, increasing productivity, introduc-
ing new technologies, and rising exports, along with the concomitant managing of labor
248   Morley et al.

costs, have been the hallmarks of the developmental trajectories that the CEE countries
have sought to secure. The rise of multinationals in the region has been particularly pro-
nounced and it has been argued that multinational companies have redrawn the labor
market map of the former socialist countries in many respects (Lewis, 2005). In particu-
lar, it has been noted that the role of multinational corporations (MNCs) in reshaping
the characteristics of labor markets and HRM practice has been significant, especially in
the securing of foreign capital, the arrival of expatriate managers, and the emergence of
mimetic pressures to adopt new practices. Significant growth in the CEE region has
been achieved through the securing of foreign direct investment (FDI), and that is play-
ing a role in the emergence of a more strategic approach to HRM (Poór et al., 2020).
Among other things, they have abandoned the policy of egalitarianism in reward sys-
tems pursued under communism and introduced a basic salary system based on the
importance of the type of job executed by the job holder and the performance standard
achieved. In the 1990s, with the exception of Hungary, inward FDI in the countries for
which we have data grew faster than their outward FDI, indicating that these countries
are on a developmental path significantly vested in the inward FDI flows secured
(Kalotay, 2017).
On the HRM front, new methods and new approaches have been introduced and
senior HRM specialists are increasingly operating at more strategic levels and serving as
members of the top management teams and boards. Devolution of some activities from
the HRM function to line managers has been taking place, along with a broader trend
involving the transition from traditional administrative personnel management to
more strategic HRM (Lewis, 2005). Kаbalina, Zelenova, and Reshetnikova (2019) sug-
gest that the devolution of decision-­making to line managers in the relevant areas of
HRM has increased the variability and flexibility of HRM practices.
Kazlauskaitė et al. (2013) engaged in a contextual HRM analysis of selected CEE coun-
tries, using Sparrow and Hiltrop’s (1997) sets of factors that account for differences in
national patterns of HRM in Europe: (1) HRM role and competence, (2) business struc-
ture, (3) institutional factors, and (4) cultural factors. Their analysis suggests that
although they share a common past, there are a number of key emerging differences
between the countries with respect to the ownership and structure of businesses, the
nature of economic development, the levels of education, and overall national culture,
which in turn result in significant differences in overall national patterns of HRM in the
CEE region, something that we will return to when we present the data from Cranet on
selected aspects of HRM in CEE in a comparative perspective.
However, work by Holden and Vaiman (2013, p. 134) suggests that CEE domestic
organizations continue to employ mainly centralized and administrative HRM prac-
tices and continue to neglect more strategic aspects. They note that although “the need
to move from purely administrative towards strategic HRM has already emerged, there
is still little evidence that this shift has materialised” on a widespread basis. Jankelová,
Joniaková, Blštáková, and Némethová (2017) found that in the case of Slovakian organi-
zations, despite their awareness of the importance of having a more strategically ori-
ented HRM function as part of the overall armory of the business in rising to the
 Human Resource Management in the Postsocialist Region   249

competitive challenges being faced, a majority remained focused on operational

­matters. In particular, they noted that the key issue that worked against their securing a
more strategic orientation lay in the evaluation by many organizations of little strong
evidence on the contribution of HRM to the success of organizations’ overall value
chains or overall business performance. In the Russian case, Latukha (2015, p. 1057)
accounts for this by a lack of core competencies, which limits HRM specialists in their
roles, something that may be linked to the relatively young age of the Russian business
culture and business education system. An overall competency deficit is found in other
research in the postsocialist region (Kazlauskaitė et al., 2013; Kohont & Brewster, 2014).
Several factors were thought to account for this, including a long tradition of perform-
ing rather traditional administrative tasks, a lack of appropriate educational and profes-
sional development programs, a preponderance of lawyers and clerical staff within the
function, and a belief among managers that the main role of HRM specialists was to
ensure legal compliance (Morley et al., 2018). This latter factor is consistent with find-
ings from other transition economies where, for example, the underlying managerial
mindset presents an important determinant of divergence in HRM practices, especially
in terms of the ongoing absence of a deeper strategic involvement of the HRM function
(Zupan & Kaše, 2005).

Key Contextual Determinants of

Commonalities and Differences in
Human Resource Management among
Central and Eastern European
Countries

Having examined some key developments in HRM from a temporal perspective under
the three key phases of change in the CEE region, we now turn to outlining a number of
critical contextual factors occurring at different levels that, scholars suggest, hold signif-
icant explanatory power in accounting for commonalities and differences in HRM in
the CEE region. We focus on both the macro-­level contextual factors of national culture,
state control, Europeanization, and ownership structure, and the meso factors encom-
passing the role of trade unions in CEE organizations and the competence set of the
HRM specialists leading the functions in these organizations.
From a contextual perspective, national culture represents a critical determinant of
variations in HRM approaches and practices. High power distance cultures in the
region, in particular in Slovakia, Russia, and Romania and among the countries of the
former Yugoslavia, serve to constrain elements of engagement and workplace empower-
ment. It has been suggested that employee participation is challenging in the CEE con-
text, employee engagement remains low in relative terms, and managers exhibit a
250   Morley et al.

“heroic” style (Michailova,  2002). There is a proclivity for autocratic, top-­down

­management, hierarchical structures, and risk-­averse behaviors (Michailova, 2000), in
particular in public-­sector organizations (Zientara & Kuczyński, 2009). This is also one
of the reasons that the cost-­effective model still prevails, HRM investments are not suf-
ficiently appreciated, and the use of performance appraisal remains low (Karoliny,
Farkas, & Poór, 2009; Letiche, 1998; Zupan & Kaše, 2005). Research by Woldu, Budhwar,
and Parkes (2006) concerning the predominant culture in Poland and Russia suggests
that changes in individual preferences have become evident during the transition
­process and that there has been a shift from group-­oriented values toward greater indi-
vidualism. The authors suggest that employees who work in similar organizations in
comparable positions show a degree of convergence in cultural orientations. Analyses of
organizational cultures in CEE also point to similarities between Bulgarian and Russian
cultures deriving from both their geographic proximity and their Greek Orthodox reli-
gious roots, along with underlying similarities between the Estonian and Finnish cul-
tures and basic differences between Estonian and Russian cultures, despite Estonia’s
protracted period of engagement with the Soviet system (Jarjabka, 2010). Estonia had
already experienced democracy and a market economy and enjoyed living standards
comparable to Scandinavian nations before its incorporation into the Soviet Union in
1940 (Zamascikov, 1987, p. 226).
Another regional contextual factor that accounts for differences in HRM between
postsocialist countries and between those countries and their Western counterparts
relates to the variations in the levels of control that were exercised by the state and the
ruling party during the socialist period. In particular, it is suggested that variations in
control resulted in significant differences in the preferred approach to labor market reg-
ulation and management (Ignjatović & Svetlik, 2006; Kapelyushnikov et al., 2012). At
least three traditions in the management of labor market dynamics in CEE have been
identified. First is the ex-­Yugoslavian tradition, which was marked by a relatively high
incidence of open unemployment, self-­management, possibilities for freer movement
across borders for travel and work, fewer media blockades, and outward FDI, which
contributed to a greater openness and a stronger orientation toward Western markets
(Pološki Vokić et al.,  2017). Second is the Orthodox Soviet system that operated in
Russia, Bulgaria, Estonia, Lithuania, and Latvia, which was marked by a strong empha-
sis on rules and the absolute power of the Communist Party. And third is a more moder-
ate intervention model that was found in the Czech Republic, Slovakia, Poland, and
Hungary. These earlier variations in approaches to the management of the labor market
are still reflected in, for example, the much stricter labor legislation in Slovenia and
Russia in comparison with Poland and Hungary (Groux, 2011).
The particular nature of the path toward gradual Europeanization among CEE post-
socialist countries, along with the timing and the manner through which this occurred,
also serve as an important contextual determinant of variations in HRM practices and
preferred approaches in the CEE region. Gurkov and Zelenova (2009, p. 278) highlight
that for most CEE countries, despite the differences in the point of departure of their
transition journey, there was an identified point of destination, namely, to “re-­join the
 Human Resource Management in the Postsocialist Region   251

wider Europe, to re-­establish normal economic and social relations, to reach the
European level of economic and social welfare.” They note that while in the case of East
Germany this leap happened virtually overnight with the reunification of Germany,
other CEE countries traced their own trajectories in joining the EU family. The first
wave of EU expansion to CEE saw membership extended to the Czech Republic,
Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, and Slovenia in 2004. These
countries were followed by Bulgaria and Romania, which became members in 2007, and
subsequently by Croatia, which became an EU member state in 2013. Europeanization
has been characterized as “a process of reorienting the direction and shape of politics to
the degree that the EC political and economic dynamics become part of the organiza-
tional logic of national politics and policy making,” culminating in eventual member-
ship of the EU (Ladrech, 1994, p. 69).
In relation to the impact of this process on HRM, this orientation contributed to the
harmonization of labor legislation with EU rules and to an increase in the free move-
ment of citizens between countries, especially among migrants from new member states
seeking labor market opportunities in others. Because of the prevailing economic differ-
ences, marked by higher incomes and gross domestic product rates in Western coun-
tries, the labor mobility from CEE to EU countries with higher wages rose significantly.
The result was that CEE countries began to experience a significant brain drain, with
several countries being challenged by the consequences of this loss of skill and knowl-
edge, particularly in services, transport, and construction (Stachova,  2013). Arising
from this process of Europeanization and integration, labor markets in CEE postsocial-
ist societies are now much more regulated, compared to the situation during the earlier
transition phase in the 1990s, with the result that expectations concerning prevailing
HRM practices and standards have risen and scholars have suggested that many organi-
zations in CEE have re-­evaluated the role and the place of HRM as a key shaping deter-
minant of organizational performance (Stacho & Stasiak-­Betlejewska, 2014).
The prevailing ownership structure and industry mix existing in these economies also
hold particular explanatory power when accounting for variations in the nature of HRM.
Many countries’ ownership structure was highly marked by waves of significant dena-
tionalization, as in the case of Croatia and Slovenia, for example, and to a lesser extent in
Poland (Stirböck, 2001), or by a high degree of privatization involving the transfer of sig-
nificant assets to oligarchs in the particular case of Russia (Gurkov & Settles, 2013). In
addition, in postsocialist countries, waves of FDI during the transition process have
become an important part of the armory of development in these economies and, in
many instances, as the critical mass of foreign multinationals grew, they began to change
the framework for HRM and to create the conditions under which conservative, admin-
istrative personnel and HRM practices and policies began to be jettisoned in favor of
more strategic approaches (Berber, Morley, Slavić, & Poór, 2017; Poór et al., 2014, 2017).
Importantly in this regard, the scale and density of FDI differ significantly among postso-
cialistic countries. Poland, Hungary, and Slovakia are the leading host countries in the
region for FDI, while countries in the Western Balkans, such as, for example, Serbia,
Romania, and Bulgaria, have received comparatively less FDI, partially as a result of their
252   Morley et al.

perceived economic and political instability (Estrin & Uvalic, 2016). A more gradual,
incremental transition process, as in, for example, the case of Slovenia, may also be a
structural condition impacting the shape of HRM (Ignjatović & Svetlik, 2006).
The nature and role of trade unions in the CEE region have also been noted as holding
particular explanatory power in accounting for the manner in which HRM developed.
In the socialist period, union membership was close to 100 percent (in the Soviet bloc
countries it was obligatory); however, unions performed a social and welfare role rather
than dealing with employee relations matters per se (Sippola, 2009). The political role
and overcentralized structures operated by the trade unions during socialism, together
with the overall poor regard for trade unions (Solidarnosc in Poland being an excep-
tion), resulted in a diminution of their status and skepticism concerning their role post-
transition (Dimitrova & Petkov, 2005). Given this heritage, unions were not prepared
for a new role in the postsocialist period and were neither popular nor active. The result
was a significant drop in trade union density in the region, and low density rates are now
characteristic of many of these countries (Cooke, Wood, Psychogios, & Szamosi, 2011;
Groux, 2011; Karoliny et al., 2009; Psychogios et al., 2013). Estimates of union density in
the region range from lows of approximately 10 percent in Estonia and Lithuania to
highs of 27 percent in Slovenia and 35 percent in Croatia. Thus, while there is little doubt
that in some countries trade unions still have an important partnership role (Milikić,
Janićijević, & Cerović, 2012) and a stronger power base in organizations, as in, for exam-
ple, Slovenia and Croatia (Kazlauskaitė et al.,  2013; Pološki Vokić et al.,  2017;
Stanojević, 2017), the weakening of the industrial relations framework has been a key
regional development. Morley et al. (2018) suggest that, on the whole, the unions were
ill-prepared for the new political and economic realities that emerged as part of the
­transition process. They suggest that “the majority of workers were minded to escape
from the constraints of union membership and the payment of membership fees,” with
the result that “with the exception of traditional industries and the public sector, the
level of unionisation dropped” (p. 80). In addition, the transition process saw the emer-
gence of a new management authority at the firm level that was not sympathetic toward
the unions (Aguilera & Dabu, 2005).
Finally, scholars have also called attention to HRM specialists’ competencies in the
region as an important determinant of the nature and direction of the development of
HRM, in particular around planning, change management, and dealing with interna-
tionalization (Kazlauskaitė & Bučiūnienė,  2010; Kazlauskaitė et al.,  2013; Kohont &
Brewster, 2014). It has also been argued that this professional competency gap is accom-
panied by an ongoing lack of continuous professional self-­development, something that
is likely to serve as a continuing constraint in the securing and maintaining of a well-
equipped professional managerial cohort against the backdrop of significant environ-
mental dynamism (Latukha,  2015). Multinational corporations, relative to their
domestic counterparts, are especially aware of this managerial competency deficit
(Holden & Vaiman, 2013). As a result, they are, in comparative terms, investing more in
HRM to develop a cadre of professional managers and assist in overcoming legacy ele-
ments of the socialist tradition.
 Human Resource Management in the Postsocialist Region   253

Organizational-­L evel Empirical

Evidence on Selected Aspects of Human
Resource Management in the Central
and Eastern European Context

We now turn to some empirical evidence on the nature of HRM in the CEE region in
which we draw on three waves of organizational-­level data collected under the aegis of
Cranet. In the 2004/5 survey round, a total of thirty-­two countries participated, six of
which were from the CEE region (Bulgaria, Estonia, Hungary, Czech Republic, Slovenia,
and Slovakia). In the subsequent 2009/10 survey round, again a total of thirty-­two coun-
tries participated, with nine of those from the CEE region (Serbia, Russia, Bulgaria,
Hungary, Czech Republic, Slovenia, Slovakia, Estonia, and Lithuania). Finally, in the
most recent survey round for 2014/16, a total of thirty-­five countries participated, ten of
which were CEE countries (Serbia, Russia, Romania, Croatia, Hungary, Slovenia,
Slovakia, Estonia, Lithuania, and Latvia).
For the purposes of benchmarking, we have created three comparative samples as
follows:

1. The global sample of organizations that have participated in the particular survey
round.
2. The non-­CEE sample of organizations that have participated in each survey
round.
3. The CEE sample of organizations that have participated in each survey round.

By way of sample characteristics, organizational size, which was measured by the size
of the workforce in each case, confirms that the distribution of the entire sample in all
three survey rounds is similar to the vast majority of the surveyed organizations (80, 74,
and 72 percent, respectively) with than one thousand employees. The proportion of
respondent organizations with over one thousand employees in the three CEE samples
(14, 12, and 17 percent in each round) is lower than in other parts of the world (Figure 11.1).
With respect to ownership, in the global sample slightly more than two-­thirds of the
respondents (67, 74, and 70 percent, respectively) were private-­sector organizations in
each of the three survey rounds, while nonprofit organizations and those with mixed
ownership feature much less commonly among respondents (between 7 and 8 percent
in each of the three survey rounds). In the CEE subsample, in each of three survey waves,
the proportion of private-­sector respondents at 72, 77, and 72 percent, respectively, is
slightly higher than in the total sample (Figure  11.2). Conversely, the not-­for-­profit
cohort in the CEE subsample is slightly lower. In terms of the industry-­related distribu-
tion of the sample, the largest share is represented by industrial and manufacturing
companies in all three periods (32, 28, and 24 percent, respectively). Globally, in each of
254   Morley et al.

120

100

80 Below 100
101–250

60 251–1,000
1,001–2,000

40 2,001–5,000
Above 5,000
Total
20

0
Glob Non-CEE CEE Glob Non-CEE CEE Glob Non-CEE CEE

2004/5 2009/10 2014/15

Figure 11.1.  Distribution of the sample by number of people employed (percentage). CEE,
central and eastern Europe sample; glob., global sample; non-­CEE, non–central and eastern
Europe sample.

120

100

80
Private sector
60 Public sector

40 Nonprofit
Mix (public and private sector)
20 Total

0
Glob Non CEE Glob Non CEE Glob Non CEE
-CEE -CEE -CEE
2004/5 2009/10 2014/15

Figure 11.2.  Distribution of the sample by ownership (percentage). CEE, central and eastern
Europe sample; glob., global sample; non-­CEE, non–central and eastern Europe sample.
 Human Resource Management in the Postsocialist Region   255

Table 11.1.  Presence of human resource management department (percentage)

2004/5 2009/10 2014/15

HRM department Glob. Non-­CEE CEE Glob. Non-­CEE CEE Glob. Non-­CEE CEE

All organizations 90.5 90.9 87.4 83.7 88.5 65.1 90.7 93.9 81.6
Private sector 90.8 91.2 87.6 85.2 91.0 63.3 92.8 95.9 84.5
Public sector 89.6 90.1 84.2 80.9 83.7 70.1 84.7 88.9 74.3
<250 Employees 80.8 81.0 79.0 65.3 74.2 47.0 79.0 85.4 67.4
251–1,000 Employees 95.1 95.3 93.6 93.1 93.4 91.2 94.4 95.9 89.7
>1,000 Employees 99.0 99.0 99.2 98.0 98.2 96.4 98.4 98.3 99.0
Total 91.2 91.6 88.4 83.7 88.6 65.0 90.6 93.7 81.5

Note: HRM, human resource management; CEE, central and eastern Europe sample; glob., global
­sample; non-­CEE, non–central and eastern Europe sample.

the three survey waves, the sectors with the lowest proportion of respondents in the
sample are represented by the agricultural sector (2–3 percent), energy (3–4 percent),
construction (4–5 percent), and education (4–6 percent), respectively.
Turning to HRM structural and functional mechanisms, the number of organizations
reporting the existence of a specialist function is obviously one important bottom-­line
indicator of the nature and role of HRM within respondent organizations. A majority of
organizations in each survey round report the existence of a HRM department.
However, compared with other parts of the world, the percentage of CEE respondents
reporting the existence of a dedicated HRM function is slightly lower. This disparity was
more pronounced during the global financial crisis, though the decline in the existence
of specialist functions arising from the impact of that financial crisis is not confined to
the CEE sample (Table 11.1). Most large organizations in all three samples have a dedi-
cated HRM department. The most significant differences can be observed in organiza-
tions employing fewer than 250 people.
The existence of a written HRM strategy has long been taken as one proxy indicator of
the extent to which the function operates at a more strategic level in the organization. In
the case of CEE, while previous research from studies conducted throughout the 1990s
and early 2000s pointed to a predominantly administrative orientation within the func-
tion, there is some evidence of an emerging, more strategic orientation involving the spe-
cialist function playing roles and engaging in activities rather different from those
traditionally pursued, one particular indicator of which is the existence of a written HRM
strategy. In our data, on average between 56 and 68 percent of all participating organiza-
tions in the three survey rounds have a written HRM strategy. Notwithstanding, CEE
respondents do consistently report a slightly lower incidence of the existence of such
written strategies. This gap is most significant for smaller enterprises, while larger organiza-
tions more broadly compare favorably with their counterparts elsewhere (Table 11.2).
The uptake of human resource information systems, defined as a technology-­based
system used to acquire, store, manipulate, analyze, retrieve, and distribute pertinent
256   Morley et al.

information regarding HRM in the organization (Tannenbaum,  1990), has provided

increased opportunities for the integration of strategic planning, HRM planning,
­performance management, training and development, reward management, and risk
and compliance management and serves as an additional indicator of a more strategic
approach to HRM. Among the global sample of respondents in our data, access to HRM
information systems was available among approximately 80 percent of respondents
in the 2004/5 and 2009/10 survey rounds, while, once again, this figure is slightly lower in
the case of CEE respondents. In the case of larger organizations, the differences across the
three clusters with respect to the use of information systems are minimal (Table 11.3).
The use of external service providers occurs most commonly in the domain of train-
ing and development. This is followed by recruitment and selection, which emerges as

Table 11.2.  Written human resource management strategy (percentage)

2004/5 2009/10 2014/15

HRM strategy Glob. Non-­CEE CEE Glob. Non-­CEE CEE Glob. Non-­CEE CEE

All organizations 56.4 57.2 49.7 53.1 56.1 41.2 67.6 69.9 61.0
Private sector 53.5 53.9 50.7 52.0 54.6 41.9 68.1 69.8 63.5
Public sector 63.1 64.7 44.7 59.7 64.5 39.2 67.5 72.7 54.3
<250 people 46.7 48.4 36.6 43.1 47.8 33.2 60.2 65.2 50.7
251–1,000 people 56.7 56.9 55.2 53.2 54.9 43.7 67.2 67.2 67.1
>1,000 people 68.2 68.1 70.0 66.2 67.1 58.4 78.1 78.3 77.2
Total 56.1 56.9 49.6 52.7 56.1 39.2 68.0 70.2 61.6

Note: HRM, human resource management; CEE, central and eastern Europe sample; glob., global
­sample; non-­CEE, non–central and eastern Europe sample.

Table 11.3.  Access to human resource management information systems

2004/5 2009/10 2014/15
Human resources
information system Glob. Non-­CEE CEE Glob. Non-CEE CEE Glob. Non-­CEE CEE

All organizations 80.2 80.4 78.4 81.8 84.1 73.2 70.8 72.1 67.3
Private sector 79.1 79.2 78.4 81.1 83.9 70.7 70.1 71.5 66.4
Public sector 83.7 84.0 80.1 85.5 87.9 75.8 72.2 73.7 69.0
<250 people 68.6 69.0 66.2 68.5 72.2 61.0 55.1 55.8 54.0 
251–1,000 people 83.9 83.7 85.6 87.0 86.5 90.0 73.3 71.3 79.1 
>1,000 people 89.2 88.8 93.4 94.1 94.0 94.9 85.0 85.5 82.2 
Total 80.1 80.2 78.7 81.9 84.2 73.2 70.8 71.6 68.6 

Note: CEE, central and eastern Europe sample; glob., global sample; non-­CEE, non–central and
eastern Europe sample.
 Human Resource Management in the Postsocialist Region   257

the second most commonly outsourced area. Of note, the trends in outsourcing of HRM
activities observed among CEE respondent organizations broadly mirror developments
in the other clusters examined (Figure 11.3).
Finally, in contemporary workplace relations in CEE, trade union recognition remains
an issue of significant debate. In particular, there is considerable evidence of increased
management opposition to unionization in recent years, particularly among MNCs and
in indigenous smaller firms. Writing on the nature of workplace relations in CEE, Festing
and Sahakiants (2010) suggest that the lack of a strong institutional environment at the
national level, the weak position of trade unions, and the absence of strong institutional
pressures on the part of the EU have led to a situation where the main features of social-
ist  employment relations retain a certain relevance. As indicated earlier, during the
socialist period, there were notional rates of 100 percent unionization, with the unions
playing an active role in the Communist Party and in the implementation of state-
mandated goals at national, sectoral, and organizational levels (Alas, 2004). By 2004,
things had changed. In each of the three waves of the Cranet survey, the largest propor-
tion of organizations in the CEE countries had no trade union membership (Figure 11.4).
In the case of the public sector, this ratio was much smaller (Tables 11.4 and 11.5). In nearly
60 percent of smaller businesses, there is no trade union in this region. Of course, there
are differences between countries. For historical reasons, as alluded to earlier, the influ-
ence of trade unions in the former Yugoslavia, for example, is much greater than in other
CEE countries. Overall, while the future of the union movement in CEE will be deter-
mined by many factors, Morley et al. (2016) suggest that, above all, the nature of the vari-
ety of capitalism that becomes institutionalized in the region will become a critical
determinant of any renewed legitimacy that may be secured.

70
60 2009/10
50 2009/10
40 2009/10
30 2014/15

20 2014/15

10 2014/15

0
l

n
ol

en

en
fit

tio

io

io
te
yr

ne

pm

tm
ns

t
s
uc

lec
Pa

sy
Be

Pe

ui
d
lo

Se
n
re

cr
ve

io

Re
ce
de

at
or

rm
nd

kf

fo
ga

or

in
t/w
in

ce
ain

en

ur
Tr

so
em

re
ac

an
pl
ut

um
O

Figure 11.3.  External providers covering human resource management functions (percentage).
258   Morley et al.

120

100

80 0%
1–10%

60 11–25%
26–50%

40 51–75%
76–100%

20 Total

0
Glob Non-CEE CEE Glob Non-CEE CEE Glob Non-CEE CEE

2004/5 2009/10 2014/15

Figure 11.4.  Trade union membership—all countries (percentage). CEE, central and eastern
Europe sample; glob., global sample; non-­CEE, non–central and eastern Europe sample.

Conclusion

Overall, it is apparent that there are significant structural, institutional, and configura-
tional differences, along with significant practice differences, in HRM among CEE
countries and between the CEE region and other regions. Prior to the fall of the Berlin
Wall in 1989 and the subsequent wave of political, social, cultural, and administrative
transitions that this major development heralded, the key elements of HRM policy and
practice in CEE operated under strict state control. Such control and political interfer-
ence resulted in the emergence of an underlying ideational legacy in HRM with little
emphasis on performance and motivation, resulting in ineffective compensation sys-
tems, ambiguous responsibilities, and hiring and promotion based on political loyalty
and connections rather than performance and competence (Koubek, 2009). Awareness
of this legacy, Horwitz (2011, p. 432) suggests, is especially important for foreign MNCs
operating in CEE to give proper consideration to the “lingering effects of the previous
institutional environment and state directed political economies that retain influence
on the type of HRM practices adopted.” Since the commencement of the transition
proc­ess, contextually among the things that unites these countries in the recent past is
the rapid change in culture and political and economic systems, with research on cul-
tural aspects suggesting that there has been a rise in individualism and a concomitant
diminution in power distance in the region (Dirani et al., 2015).
 Human Resource Management in the Postsocialist Region   259

Table 11.4.  Trade union membership: Private-­sector organizations (percentage)

Proportion union 2004/5 2009/10 2014/15
membership—
private sector Glob. Non-­CEE CEE Glob. Non-­CEE CEE Glob. Non-­CEE CEE

0% 29.3 27.6 41.7 37.2 31.1 59.4 30.0 26.5 38.7

1–10% 15.6 16.7 8.0 14.1 15.9 7.9 23.9 25.8 19.1
11–25% 10.9 11.4 7.5 8.7 9.2 6.8 11.5 10.9 12.9
26–50% 12.5 12.2 14.9 12.2 12.4 11.8 12.1 12.1 12.3
51–75% 15.7 15.2 19.3 13.0 14.2 8.6 11.4 12.0 10.0
76–100% 15.9 16.9 8.6 14.7 17.2 5.5 11.1 12.7 7.0
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Note: CEE, central and eastern Europe sample; glob., global sample; non-­CEE, non–central and eastern
Europe sample.

Table 11.5.  Trade union membership: Public-­sector organizations (percentage)

Proportion of union 2004/5 2009/10 2014/15
membership—public
sector Glob. Non-­CEE CEE Glob. Non-­CEE CEE Glob. Non-­CEE CEE

0% 7.7 6.6 19.9 15.6 13.5 23.9 8.9 8.8 9.1

1–10% 6.4 6.6 3.5 8.7 7.2 14.8 13.0 11.6 16.1
11–25% 10.0 10.0 10.6 5.1 4.5 7.4 10.8 8.5 16.4
26–50% 14.1 13.4 22.7 8.9 8.0 12.5 12.4 10.3 17.5
51–75% 16.6 15.6 27.7 15.9 15.2 18.8 21.3 21.5 21.0
76–100% 45.1 47.8 15.6 45.8 51.5 22.7 33.5 39.2 19.9
Total 100.00 100.00 100.00 100.0 100.0 100.0 100.0 100.0 100.0

Note: CEE, central and eastern Europe sample; glob., global sample; non-­CEE, non–central and eastern
Europe sample.

Specifically in the HRM sphere, differences may be observed between the levels of
development in the HRM practices of different postsocialist countries, variances that
may be attributed, among other things, to distinct traditions, disparities in levels of eco-
nomic development, and deviations in the underlying levels of centralization applied in
the previous economic and political systems (Erutku & Vallee,  1997; Kazlauskaitė
et  al.,  2013; Tung & Havlovic,  1996). The shift that occurred since 1989 in the HRM
domain has variously been characterized as one from a unitarist toward a pluralist sys-
tem, from an administrative toward a more value-­adding model, and from a low-
legitimacy function to one now characterized by increasing power and legitimacy.
Considering that it was only after the fall of the socialist regimes throughout CEE that
260   Morley et al.

modern HRM as we have come to understand it in the Western context started taking
hold in the discourse of management thinking and in emerging practice, it is clear that
in the intervening thirty years, differences in HRM between CEE and other countries
have narrowed significantly. The overall effect, Pundziene and Bučiūnienė (2009) sug-
gest, is organizations making more significant investments in HRM systems and prac-
tices in the face of dynamic and radically altered labor markets and a new competitive
reality.

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 chapter 12

H um a n R e sou rce
M a nagem en t i n th e
L ati n Eu rope a n
Con text

Jordi Trullen and Carlos Obeso

This chapter provides an overview of the current human resource management

(HRM) landscape in Latin Europe. We start by providing a brief rationale for the term
Latin Europe and define what we understand by it. We then go on to explain the fea-
tures that characterize labor markets in Latin Europe. As we will see, Latin European
countries are commonly associated with lower levels of active population, weaker sys-
tems of social protection, higher rates of self-­employment, and a dualistic labor market
clearly distinguishing employees with fixed-­term contracts from the rest (Davoine,
Erhel, & Guergoat-­Lariviere, 2008). After reviewing the labor market, we investigate,
on the basis of the 2014/5 Cranet project dataset, the extent to which we can also talk
of an idiosyncratic Latin European model in relation to HRM. Like previous analyses
(Filella, 1991; Stavrou & Papalexandris, 2016), we observe significant variance in rela-
tion to HRM among Latin European countries. At the same time, however, there seem
to be some distinguishable traits, especially with regard to the role of the HRM depart-
ment within the organization, the significance of trade unions, and the levels of invest-
ment in training and development of employees. We conclude by comparing our
findings to those obtained by Filella (1991), who first analyzed the state of Latin
European HRM a quarter century ago, even if he concentrated only on a subset of
countries for which data were available at the time (i.e., Spain, France, and Italy). While
formalization of HRM in Latin European countries has advanced and there are trends
toward convergence, several challenges remain that are idiosyncratic for the Latin
European context.
266   Trullen and Obeso

Latin Countries: A Complex Reality

There is no political entity that encompasses the term Latin countries. However, it is
possible to refer to a geographical and cultural environment (with imprecise limits) that
can be described as “Latin” and whose cohesive elements are the “Latin” languages
derived from original Latin that accompanied the expansion of the Roman Empire.
Portugal, Spain, France, and of course Italy are commonly included in this group. We
can deduce that when a language is imposed and endures (with multiple derivations),
this is also the result of a broad and extensive process of political, cultural, and economic
domination. Such control implies a certain homogenization of the political and social
structures. This homogenization can be seen in the legal systems of Latin countries—
which are based on Roman law.
Moreover, with the exception of Portugal, sharing a common sea, the Mediterranean,
with much more benign sailing conditions than the Atlantic, but also especially the rela-
tive proximity between its shores, has enabled centuries of trade and cultural exchanges
that also partly explain the possibility of talking about north coast Mediterranean coun-
tries (e.g., Greece, Cyprus) with similar structures that go beyond language. While
Greece and Cyprus—which were, nonetheless, also romanized—cannot be considered
Latin countries in strictu senso (their language not being Latin based), when we use the
term Latin Europe in this chapter we include them in the category because of the cul-
tural and social similarities they share with the rest of the Latin Mediterranean nations
(Stavrou & Papalexandris, 2016).
In any case, this theoretical homogeneity cannot hide the development of different
socioeconomic and demographic conditions in Latin Europe from the early Middle
Ages and especially during the eighteenth, nineteenth, and twentieth centuries, with the
decline of the Spanish and Portuguese Empires, the rise of the French Empire (that
would reach its peak during the nineteenth century), and the late unification of Italy
(previously fragmented into a multitude of weak states).
So the region has enough of a common history, together with the geographical reality
of an easily navigable sea, giving rise to a socioeconomic cluster that we can call Latin,
with features that differ from other European clusters or nations. The results of our
empirical analysis affirm that we can speak indeed of a Latin cluster with some differen-
tial features.

A Latin European Welfare State Model

In his 1990 influential book titled The Three Worlds of Welfare Capitalism, the Danish
sociologist Esping-­Andersen (1990) described three models of welfare states: the liberal
(United States), the conservative corporatists (Germany), and the universalist social
 Human Resource Management in the Latin European Context   267

democratic (Sweden). After living for long periods in Italy and Spain and studying these
countries in more depth, he added a fourth model, the “southern European,” which
included Italy, Spain, Portugal, and Greece, all of them within our Latin Europe cluster.
The southern European model of Esping-­Andersen was mainly characterized by low
levels of social protection (Ferrera, 1996), which gave families a crucial role in relation to
support structures. As. Ferrera says (2010, p. 622), “The family has historically been the
cornerstone of South European societies, functioning as an effective ‘social shock
absorber’ and welfare broker for its members and responding to a wide range of
risks  and needs: from childcare to unemployment, from care for the elderly to
disabled housing.”
Martin (2015) highlights that the consequences of this model in the labor market are
evident on a number of fronts: THe first consequence is that the model of “familialism by
default” or “unsupported familialism” (Saraceno & Keck, 2010) affects female employ-
ment and thus female social citizenship. It is a model that puts care obligations and the
care work/burden on the shoulders of women, which also means that it is a model based
on the male breadwinner–female housewife contract. The consequences include low
rates of female employment (especially in Spain, Italy, and Greece) and also partly
explain the dramatic decline of fertility among women sandwiched between onerous
home duties and unfriendly labor markets.
The second consequence is the configuration of a dualistic work model with a clear
opposition between overprotected insiders, or regular white-­collar staff (public employ-
ees and the labor force of large companies), and outsiders, or irregular workers (in the
traditional services and agriculture sectors, but also female and young workers). In
summary, the consequences include strongly gendered labor markets and a substantial
shadow economy with a large role for the informal labor market. Martin (2015) also calls
attention to the fact that the social assistance schemes are minimal precisely because of
the role played by the family, with care for children and the elderly generally being pro-
vided by family members as unpaid work by women. The resulting labor market seg-
mentation creates gaps and inequalities in both employment and social protection, and
unemployment benefits and vocational training programs tend to be underdeveloped.
We must, however, be cautious when trying to explain the origins of the model. It
would be an error to believe that the weak implementation of social welfare models in
southern Europe (and its reflection in the labor market) are the result of family structure
(with remote historical explanations) and its active role as a “shock absorber.” There
are at least two alternative, and possibly more robust, explanations for this weak
implementation.
The first would be the low level of proletarianization in the southern nations—
together with the significant level of self-­employment and small farms during the emer-
gence and growth of capitalism in Europe. The rise of industrialization, starting in
England, moved along the countries of central Europe and northern France, with later
expansion to the east. There was little impact in southern nations, except for specific
areas (suppliers of coal or iron). The consequence is that the southern nations had low
levels of proletarianization (because of low levels of industrial development), a tendency
268   Trullen and Obeso

that was reinforced by the major migrations from the south toward central and northern
Europe in the 1950s and 1960s (Andreotti et al., 2001). This fact is important because the
adoption and development of welfare models in Europe is not so much the consequence
of a certain ideology, but a response to the effects of industrialization on expanding
working classes (Polanyi, 1957). Second, and of equal importance, is the wide expansion
of Roman Catholicism in the southern countries (with its orthodox transformations),
which decisively influenced the economic and social structures of the Latin European
cluster (Kersbergen & Manow, 2009; Manow, 2015).
While for some authors (Gal, 2010) there is a (modernized) survival of the Latin model,
the evidence shows significant sociocultural changes since the entry of these countries
into the European Union (for example, in the concept of marriage and the role of women).
According to Moreno and Marí-­Klose (2013), the incorporation of new cohorts of better-
trained and less tradition-­bound generations has generated new attitudes, expectations,
and practices. Between 1998 and 2009, the marriage rate per thousand inhabitants fell
sharply in Spain, Portugal, France, and Italy, and slightly in Cyprus—and only maintained
its previous level in Greece. Marriage is beginning to lose its role as a fundamental pillar of
society—with implications for the role of women who gain individual freedom at the cost
of a certain loss of family protection. To maintain their “individuality,” these women need
access to the labor market on equal terms men.
Cultural norms do not change overnight. Latin family-­centeredness has very deep
historical roots and although new generations are breaking with that cultural frame-
work, the family will continue to play a fundamental role as a social shock absorber for a
long time, stepping in where the state fails to provide. Even in the early twenty-­first cen-
tury in Latin countries, intergenerational solidarity remains very strong and this has
limited the impact of the crisis. In addition, and as we will see later, if the mindset
changes, but the economic structures and procedures do not adapt at the same pace,
then little real change will occur. For example, if there are no subsidized public day-­care
centers, then the emancipation of women becomes difficult, even if women want it.
Despite the economic changes, and especially the social changes that the Latin coun-
tries have experienced, the effects on the model of social protection have not been sub-
stantial. Table 12.1 clearly shows how Portugal and Spain are below the EU-­28 average for
social spending per capita (in purchasing parity), as well as Cyprus, while Greece and
Italy appear slightly above the average. In this aspect, France differs from the other Latin
countries.

Characteristics of the Labor Market

in Latin Europe

The Latin social welfare model is affected by and affects the composition of the labor
market and the active population (a key indicator of the capacity of an economy to
 Human Resource Management in the Latin European Context   269

Table 12.1.  Total spending on social services per inhabitant (2016)

  Percentage of gross domestic product
EU-­28 19.1
France 24.4
Denmark 23.4
Italy 21.1
Greece 20.7
Germany 19.3
Portugal 18.0
Spain 16.8
Cyprus 13.8
Romania 11.6

Source: Eurostat (2016).

generate jobs). Latin countries have a smaller proportion of the population in the labor
force than the EU-­27 average (Eurostat, 2016) and much smaller labor forces than the
countries of central and northern Europe. At the same time, the informal economy con-
tinues to be an important element in the cluster. Although lower than that found for
some newer EU members—such as Lithuania, Estonia, Latvia, Romania, and
Bulgaria—it remains far above the percentages of the countries in central and northern
Europe (Schneider, 2013). The relatively small active population affects the expansion
capacity of the systems of social protection and consequently hinders the incorpora-
tion of labor into the market—especially women. The active female population in
Latin countries (except France and Portugal) is below the European average and very
far from that of the countries of central and northern Europe (Eurostat,  2016).
Nevertheless, growth in female participation in labor markets (except in Greece)
shows that the tendency is toward a convergence with men. Italy and Greece still
maintain a significant differential, whereas Spain is already at the European average.
Portugal is a separate case because it has always had, in relative terms, a high percent-
age of female participation in the labor market, a result of historical reasons linked to
greater male emigration.
A significant percentage of the active population in the Latin cluster are self-employed.
Spain, Portugal, France, and Italy are in the range of 20 percent self-employment, with
Greece reaching 30 percent. Significantly, this structure of employment, which has
been a characteristic feature of the Latin labor market, is not currently an especially
desired option in these countries. In effect, the countries of the Latin cluster are below
the average in relation to self-­employment if one looks at whether the decision to
become self-employed is freely adopted rather than forced (Marthijn, 2017). It is an
obvious sign of changes in the preferences of a population dissatisfied by the socioeco-
nomic model.
Another characteristic of the labor market concerns the quality of work in these
countries, including aspects such as earning quality, labor market security, and quality
270   Trullen and Obeso

of the work environment. On the basis of a variety of job quality indicators, Davoine
et al. (2008) found up to five clusters in the twenty-­eight EU member countries—includ-
ing a “southern cluster” of Spain, Italy, Portugal, Greece, and Malta. These countries are
below the European average and well below the average of the central and northern
European countries in relation to job quality, with Greece occupying the last place in the
quality ranking. They are also characterized by low rates of training and education pro-
vision (especially in vocational training), standing in contrast to the Nordic and conti-
nental clusters (Davoine et al., 2008). France is an outlier on this issue.
The southern cluster also shows the greatest difference in the gender gap, revealing
the difficulties that women face when entering the labor market (a differential that is
less extreme in the new EU countries). The percentage of temporary contracts is high
compared to other clusters, while the number of part-­time contracts is lower than for
other clusters (it is assumed, although with many nuances, that part-­time contracts
facilitate female participation in the labor market). The southern cluster is also
remarkable for the impact of the labor market on parenthood, which is much lower
than for other clusters.
Finally, two other aspects are worth highlighting. The first is the large number of early
school leavers—which is very high compared to all the other clusters. The second is the
relatively low number of children attending preschool (Davoine et al., 2008).
In sum, Latin European countries (mainly Portugal, Spain, Italy, Greece, Cyprus, and,
to a lesser extent, France) reveal specific and differential features in their labor markets.
These differences include structures that are sometimes evidently preindustrial, such as
the proportion of the population working in the informal economy, that contrast with
increased training levels and run contrary to the desires of populations who are
“European” in their outlook. Women suffer the most from the tension between their
increasing desire to enter the labor market and the difficulties of working normally in
that market because of low investments in social assistance programs, even if the gap
with other European regions has been closing. Finally, quality of work remains below
that of their central and northern European partners.

Human Resource Management: Is There

a Latin European Model?

We have seen in the previous section that Latin European countries share several fea-
tures in common, along with obvious variation in others, a number of which—such as
the low levels of social protection and a dualistic labor market—may partially explain
the difficulties these countries have experienced in overcoming the economic crisis that
began in 2008. An important question that arises is whether these countries share fea-
tures in common with respect to the management of human resources. To explore this
 Human Resource Management in the Latin European Context   271

question, we use data from the latest 2014/15 Cranet survey and, whenever possible as a
comparative element, Filella’s (1991) study, which used data from the first Cranet
­survey conducted in 1989 to investigate the existence, or otherwise, of a “Latin model”
in the context of the then incorporation of southern nations into the European community.
According to Filella (1991), catching up with northern neighbors was then the chal-
lenge—we dare say this remains so in the early twenty-­first century.
Following our introductory comments to this chapter, to carry out our analysis we
include data available from Spain, France, Italy, Greece, and Cyprus. We also include
Germany, the United Kingdom, and Denmark to be able to illustrate potential differ-
ences with other European regions. Below, we summarize the data, which, arguably,
show the consolidation of a model that differs from that found in the Nordic or Anglo-
Saxon countries. In particular, we focus our attention on: (1) the role of HRM in the
organization (its structure, strategic importance, etc.); (2) the role of trade unions (both
generally and paying special attention to internal communication and salary negotia-
tion); and (3) training and development. The analysis of HRM policies could be
extended with data from Cranet to areas such as recruitment sources, selection tools,
performance evaluation, or incentive management. However, we did not find any pat-
tern in the data in these areas that could justify setting Latin European countries apart
from the rest. The lack of a clear pattern in the data does not mean that all countries are
converging toward the use of the same policies, but rather that differences among coun-
tries vary depending on the types of practices (Farndale, Ligthart, Brewster, &
Poutsma, 2017), without significant levels of intracluster similarity (Walker, Brewster, &
Wood, 2014). We further reflect on this point later in concluding the chapter.

Role of the Human Resource

Management Department

Starting with a basic question, we explore the proportion of firms in Latin European
countries that have an HRM department. The answer shows the degree of commitment
of companies to people management—beyond mere administrative management.
Table  12.2 shows that most of the selected countries (Latin, central, and northern
European) companies have HRM departments—with the lowest rates found in Cyprus
(70 percent), probably because of Cyprus being a smaller country with fewer large firms
with established HRM departments—and Finland (85 percent). Latin countries there-
fore reveal a high degree of specialization and professionalization.
It does not automatically follow, however, that people management is a priority, in the
same way as marketing and finance, for example, in these organizations. The question is
whether the presence of a dedicated HRM department means we can assume that HRM is
seen by companies as strategically important. To answer this question, Filella (1991) cre-
272   Trullen and Obeso

Table 12.2.  Percentage of companies with a human resource management

department
Does your company have a human resource management department?

Spain France Italy Greece Cyprus United Kingdom Germany Finland Sweden
99 96.8 100 89.9 77 97.6 98.5 85 94

Source: Data from Cranet survey, 2014/15. Table compiled by the authors.

3.5

2.5

1.5

0.5

0
Spain France Italy Greece Cyprus United Germany Denmark
Kingdom

1991 2014

Figure 12.1.  HRM department influence ratio.

From Cranet survey (1991, 2014/15).

ated an indicator called the “influence ratio,” which results from dividing the ­percentage of
firms in which the human resource specialist is involved in the development of business
strategy from the outset by the percentage of firms in which the human resource specialist
is on the board. This ratio aims to assess the effectiveness of an HRM manager on the board
in framing company policy. Ratios of less than 1.00 may indicate that the presence of an
HRM specialist does not translate into an active commitment in setting policy, while ratios
above 1.00 suggest that the HRM specialist is actively involved in setting company policy.
Figure 12.1 shows the influence ratio for various nations for 1991 and 2016.
The “anomalies” of Italy and Germany in 1991 reflect the low number of companies
that claim to have an HRM board director (Italy, 18 percent, and Germany, 19 percent)
and the influence in the earlier years of the “worker director” in Germany, although these
few directors have considerable influence (hence the data). The data for both 1991 and
2014/15 show that the presence of an HRM director on the board does not automatically
 Human Resource Management in the Latin European Context   273

imply an equivalent amount of participation in framing HRM policy. Firms in countries

with the highest presence of an HRM manager on the board in 2014/15, such as Spain
(85 percent) and France (88.4 percent), show proportionally little influence exerted. The
data from Spain and France, among others, point to some ambivalence about the role of
HRM departments, because—and the question seems obligatory—why would a com-
pany have an HRM manager on the board without involving them in framing company
policy from the outset? A likely explanation may be that in Latin European countries,
every department has to see its head on the main board, but decisions are made in a
smaller grouping, which often excludes the main HRM person (Larsen & Brewster, 2003).
Whatever the answer, it is clear that during the almost thirty years since 1991, the
influence of the HRM department in strategic decisions remains relatively low in all the
sampled nations—which corresponds with the United Kingdom, Germany, and
Denmark. Within the Latin countries, Italy appears to be the country where the influ-
ence of the department is greatest.

Academic Specialty of Human Resource Management

Managers
Another interesting aspect linked to the role played by HRM departments and HRM
professionals in organizations has to do with their academic background. In our case,
and using the Cranet data, we have grouped those origins into four groups: (1) business
administration and economy, (2) social sciences and humanities, (3) engineering and
similar, and (4) law. Figure 12.2 presents the results.

80.0

70.0

60.0

50.0

40.0

30.0

20.0

10.0

0.0
Spain France Italy Greece Cyprus United Germany Denmark
Kingdom

Business & economics Social science & humanities Engineering & sciences Law

Figure 12.2.  Academic origin of senior human resource management specialists.

From Cranet survey (2014/2015).
274   Trullen and Obeso

The larger presence of law graduates in Latin countries, mainly Spain and Italy but also
France, is notable given that such graduates are a small minority in other nations. This is
probably because of the greater weight of legislation as a regulator of social activity in
these countries (a legacy of Roman law) and the concomitant high standing of the legal
profession. The legal background as a route of entry to HRM may also be a function of the
institutional rules and their codification. Because of this, individuals with a legal back-
ground are valuable. In addition, it may also be a consequence of a history of ideologically
radicalized clashes between “capital” and “labor,” reflecting a view of the relationship
between employers and employees as conflictive rather than consensual. Finally, it is also
worth noting the reduced presence of business and economics graduates in Spain and
Italy (but not France) when compared to the rest of the countries. This is a possible reflec-
tion of the lesser strategic importance given to people management in those countries.

Existence of Human Resource Management Strategy

Having a specialist department is a sign of the importance that a company gives to a
function, and so is the degree to which a company publishes its policies in writing—to
the extent that this involves a process of structured strategic thinking and explicit com-
mitment. By focusing on HRM, we analyze the degree to which companies publish their
generic and functional strategies. Figure  12.3 presents this information for the Latin
cluster. The data reflect some unanimity, but with nuances. Up to 80 percent of compa-
nies have published their corporate mission and strategy and, to a lesser extent, their
training policy. In contrast, the publication of a HRM strategy drops, on average, to 65 
percent. Spain remains above this figure and, to a lesser degree, so does Greece. In com-
parison, and although it is not reflected in Figure 12.3, Sweden and Finland are at around
80 percent. The other nations are below average. Corporate social responsibility policies
are only published by 50 percent and diversity policies by 40 percent of companies.
Publication of these policies is generally less common in Cyprus. Consequently, with
the exception of Spain, the degree of commitment to published HRM policies in Latin
European countries is relatively low.

Implementation of Human Resource Management Strategy

In line with analyzing the strategic importance of the HRM department, we study the
role that the department assumes in HRM policies by investigating where these policies
are made and how they are implemented. This is because the locus of control is an
important indicator of the importance of the HRM department within an organization.
The data we offer show where the locus lies: namely, with line managers, with the HRM
department, or shared between both (Brewster, Brookes, & Gollan, 2015). We first ana-
lyze the “locus of control” in the area of labor relations, because this domain varies
­significantly across institutional contexts and also because traditionally relationships
 Human Resource Management in the Latin European Context   275

100
83.9 83.0
90
80
65.8
70 68.6
59.9
60
53.3 44.4
50
40
30
20
10
0
Mission Business HR strategy Recruitment T&D CSR Diversity
statement strategy strategy strategy statement statement

Spain France Italy Greece Cyprus

United Kingdom Germany Denmark Average

Figure 12.3.  Degree of mission, corporate strategy, and human resource management policy
publication. CSR, corporate social responsibility; HR, human resource; T&D, training and
development.
From Cranet survey, (2014/15).

80

70

60

50

40

30

20

10

0
Spain France Italy Greece Cyprus United Germany Denmark
Kingdom

Line manager responsibility Shared responsibility Human resource responsibility

Figure 12.4.  Human resource management department locus of control in labor relations.
From Cranet survey (2014/15).
276   Trullen and Obeso

with trade unions have been one of the most significant responsibilities of HRM depart-
ments. Figure 12.4 shows the locus of control in the management of labor relations.
Figure 12.4 shows that the management of labor relations in Latin countries is the core
activity that determines the function of the department, especially in France and Italy,
but also in Spain (53.6 percent), where line management plays no role. We must refer
here to the academic origin of those responsible for HRM (analyzed in another section),
where law graduates predominate, these being the skills and knowledge necessary for
such institutionalized environments.
Next, Figure 12.5 shows the average for the HRM department having sole responsibil-
ity in a variety of HRM domains (including compensation and benefits, recruitment and
selection, training and development, workforce reduction or expansion, and labor rela-
tions). In agreement with the previous partial results, we find that in Latin countries,
and especially in France and Italy, the role of the department is especially relevant as sole
implementer. This greater responsibility was clear in 1991 and became more manifest in
2014/15. In contrast, the role of line management is less relevant than in other countries,
which confirms a trend that was already clear in 1991. Scandinavian countries are more
consistent in relying on line management for the implementation of HRM policies.
In sum, we find that in Latin countries HRM departments generally play a more deci-
sive role than in central and northern Europe. This is probably partly explained by the
higher level of training that line management receives in central and northern Europe, a
reflection, in turn, of the delay that Latin countries have suffered in the introduction and
development of vocational training plans. A complementary explanation may lie in cul-
tural differences. Latin cultures are traditionally high power distance cultures, where
one would expect more centralized control of HRM activities and less delegation.

40

35

30

25

20

15

10

0
Spain France Italy Greece Cyprus United Germany Denmark
Kingdom

Figure 12.5.  Country average for human resource management (HRM) department having
sole responsibility for decisions in all HRM domains.
From Cranet survey (2014/15).
 Human Resource Management in the Latin European Context   277

Role of Unions

Next, we analyze the presence and influence of unions in companies in the Latin cluster.
The degree of union membership in the companies surveyed is a crucial point and is
illustrated in Figure 12.6.
This highlights the percentage of firms in each country with different levels of union
membership (from 0 to 100 percent affiliation). Spain and France clearly stand out for
zero membership (15 and 16 percent, respectively, report being nonunion) or low levels
of membership (51 and 65 percent of companies report that between 1 and 10 percent of
their workforces are covered by trade unions). Italy presents a more balanced model,
while Greece reveals both extremes, with membership of up to 100 percent in 20.2 per-
cent of companies, but also with 36.3 percent of companies without trade union mem-
bers. Finally, Cyprus stands out as a very unionized country, with clear differences
vis-­à-­vis the rest of the Latin European countries. In theory, these data should reflect the
degree of perceived influence of unions in companies, but is this the case? Figure 12.7
presents data on perceived union influence.
Perhaps the most interesting observation is that influence and membership are not
necessarily linked. Spain and France have low levels of membership, but union influence
is perceived as high or very high in 27.2 and 22.4 percent of companies, respectively. In
the case of Italy and Cyprus, levels of influence seem consistent overall with levels of
membership, while in Greece, where almost 30 percent of firms show union member-
ship levels above 50 percent, the influence of unions is perceived as very low. The United

70

60

50

40

30

20

10

0
Spain France Italy Greece Cyprus United Germany Denmark
Kingdom
0% 1–10% 11–25% 26–50% 51–75% 76–100%

Figure 12.6.  Union membership in organizations (as a percentage of total staff).

From Cranet survey (2014/15).
278   Trullen and Obeso

80

70

60

50

40

30

20

10

0
Spain France Italy Greece Cyprus United Germany Denmark
Kingdom
None Low Medium High Very high

Figure 12.7.  Union influence.

From Cranet, (2014/15).

Kingdom stands out for the low perceived influence of unions, and Germany does as
well, to a lesser extent. Denmark shows high levels of membership and influence.
Despite the low levels of membership, companies in Latin countries perceive that unions
have a greater influence than in countries such as the United Kingdom or Germany.
Denmark is representative of the Nordic countries, where unionization and union influ-
ence are strongest.

Union Role in Employee Communication

Accepting that the concept of union influence refers to the degree of bargaining power
of the unions, which is their traditional role, we also ask about their role as partners or
mediators between the company and workers at an individual or group level. We esti-
mate this through an analysis of the communication channels used between companies
and employees. We look at three categories (direct communication through electronic
media, communication through supervisors, and communication through trade union
representatives and work councils) and explore the frequency with which each of these
channels is utilized. The results are shown in Figure 12.8.
In Latin European countries, with the exception of Greece, trade union representa-
tives are used more frequently as communication channels than in the United Kingdom
or Germany. Conversely, in some Latin countries (namely, Spain and Italy, and to a
lesser extent also France), communication through middle management is lower than
in central and northern Europe and the United Kingdom. Finally, direct communica-
tion tends to be high in all countries, although the United Kingdom and Germany are
the highest ranked in that respect.
 Human Resource Management in the Latin European Context   279

70

60

50

40

30

20

10

0
Spain France Italy Greece Cyprus United Germany Denmark
Kingdom
Through electronic communication Through immediate superiors Through trade unions

Figure 12.8.  Forms of communication between companies and employees (top-­down).

From Cranet, (2014/15).

70

60

50

40

30

20

10

0
Spain France Italy Greece Cyprus United Germany Denmark
Kingdom

Electronic communication Through immediate superior Throught trade unions

Figure 12.9.  Forms of communication between employees and companies (top-­down).

From Cranet, (2014/15).

Communication between employees and companies reveals different but also inter-
esting patterns, as shown in Figure 12.9.
Direct communication through electronic media is much less used in a bottom-­up
fashion in all countries. Interestingly, as in the case of top-­down communication, mid-
dle managers are significantly less frequently used as intermediaries in Spain and Italy
than in the other countries. In terms of trade unions, we also find a similar pattern as in
280   Trullen and Obeso

Figure 12.8, since employees in Latin countries (with the exception of Greece) seem to
use trade unions more frequently to voice their opinions than is the case in the United
Kingdom or Germany.

Trade Union Role in Setting Wages

Salary negotiations for different categories of employees (managers, professionals, and
administrative staff) through collective external agreements, company agreements, or
individual negotiation reveal interesting differences—which likely reflect the different
models of labor relations in European countries.
Starting with the managers, and looking at Figure 12.10, it is interesting to see how
individual salary negotiations predominate in the United Kingdom, Germany, and
Denmark, but not necessarily in Latin European countries. On the one hand, company
agreements play a key role in Spain, Greece, and Cyprus, as well as France. On the other
hand, collective bargaining is indeed still broadly applied for managerial ranks in coun-
tries like France and Italy. Company agreements also play a very important role in the
United Kingdom, a possible inheritance from productivity agreements of the 1980s.
Compared to 1991, the data provided by Filella (1991) show that individual-­level bar-
gaining has generally been gaining in importance, reflecting a widespread trend in
Western countries (and others) toward nonunionization and individualized employ-
ment relations.
Collective agreements become more prevalent across nations when looking at profes-
sionals (Figure  12.11) and, even more so, when focusing on clerical employees
(Figure  12.12). However, we can still observe differences between Latin European

100
90
80
70
60
50
40
30
20
10
0
ain

us

m
ly
ce

91
k

‘91

1
y
ce

an

l ‘9
ar
Ita

do
an

pr
ee

a‘
Sp

m
m

tin

ra
Gr

Cy
Fr

ng

vi
en
er

nt
La

na
Ki

Ce

di
d

an
ite

Sc
Un

Collective bargaining Company agreements Individually

Figure 12.10.  Payment agreements: managers.

From Cranet, (1991; 2014/15).
 Human Resource Management in the Latin European Context   281

100
90
80
70
60
50
40
30
20
10
0
ain

us

m
ce

ly

91
k

‘91

1
y
ce

an

l ‘9
ar
Ita

do
an

pr
ee

a‘
Sp

m
m

tin

ra
Gr

Cy
Fr

ng

vi
en
er

nt
La

na
Ki

Ce

di
d

an
ite

Sc
Un

Collective bargaining Company agreements Individually

Figure 12.11.  Salary agreements: professionals.

From Cranet, (1991; 2014/15).

120

100

80

60

40

20

0
ain

us

m
ce

ly

91
k

‘91

1
y
ce

an

l ‘9
ar
Ita

do
an

pr
ee

a‘
Sp

m
m

tin

ra
Gr

Cy
Fr

ng

vi
en
er

nt
La

na
Ki

Ce

di
d

an
ite

Sc
Un

Collective bargaining Company agreements Individually

Figure 12.12.  Salary agreements: clerical and manual.

From Cranet, (1991; 2014/15).

c­ ountries and the rest, with France and Italy (as well as Spain, in the case of clerical
employees) showing significantly higher levels of collective negotiations and, hence, a
stronger influence of trade unions in wage setting. At the same time, company agree-
ments that result from internal negotiation processes also play a more relevant role in
Latin countries than they do in Germany or Denmark. Although trends in Latin Europe
have not changed much since 1991 (with collective agreements and company agree-
ments remaining at the top), individual agreements have gained increasing importance.
282   Trullen and Obeso

Training and Development

Training and development is another area of core HRM activity and represents an
important indicator of the approach to HRM. We limit our remarks here to the training
budget, which is calculated as the proportion of annual salary spent on training.
Figure 12.13 shows spending on training.
All countries in the Latin cluster, except France (where legislation forces companies
to spend at least 1.2 percent on training), spend less than their counterparts in the cen-
tral and northern European nations. In the Latin European countries, more than 40 per-
cent of companies spend less than 1 percent of wages on training, which stands in
contrast to the United Kingdom and Denmark, where fewer than 20 percent of organi-
zations spend less than 1 percent of wages on training annually. The exception is
Germany, with its highly developed public training system. However, even in Germany,
some 42.6 percent of companies spend more than 2 percent.
These figures are similar to those from 1991, as shown in the study by Filella (1991),
who highlighted that central and northern European countries spent more on training
than Latin countries, even when no specific legislation existed. This in turn confirms
our claims that line management in central and northern countries is better prepared to
implement HRM strategies.

70

60

50

40

30

20

10

0
ain

us

m
ly
ce

91
k

‘91

1
y
ce

an

l ‘9
ar
Ita

do
an

pr
ee

a‘
Sp

m
m

tin

ra
Gr

Cy
Fr

ng

vi
en
er

nt
La

na
Ki

Ce

di
d

an
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Sc
Un

1% or less Between 1 and 2% More than 2%

Figure 12.13.  Percentage of annual salary spent on training.

From Cranet, (1991; 2014/15).
 Human Resource Management in the Latin European Context   283

Conclusion

Does a Latin European HRM model exist? If we pay attention to the type of HRM
policies in large companies in Latin European countries, then the answer may be no.
The fact that we could not find any distinguishable Latin European pattern in areas such
as recruitment and selection, performance appraisal, or incentive systems (especially for
managerial employees) suggests that large firms in these countries tend to adopt the
same types of “best practices” that are found in other countries.
Having said that, it is also true that a more detailed analysis of the labor markets in
which companies operate, as well as the role played by the HRM departments and trade
unions, shows significant differences relative to countries in other clusters—such as the
Nordic or Anglo-­Saxon clusters. In this sense, Latin countries feature a dual labor mar-
ket with large differences between male breadwinners and other employee cohorts such
as women, the young, and migrants. Latin European countries offer little social assis-
tance compared to other European countries, and unemployment benefits and voca-
tional training are underdeveloped. This lack of development in the labor market is also
reflected in the less strategic role for HRM, since although most of the companies sur-
veyed report having an HRM department, it has a low degree of influence on strategic
decision-­making, a relatively low tendency to publish HRM strategies, and little train-
ing for HRM specialists. The Latin model also reveals a greater level of labor unrest vis-
à-­vis continental Europe—for example, in relation to average days not worked because
of industrial action (European Trade Union Institute,  2018)—which gives unions a
prominent role in decision-­making (with special emphasis on pay) and results in the
primary objective of the HRM department being labor relations. Finally, the low levels
of investment in training in Latin countries also means less involvement of line manage-
ment in the management of employees—because they are not trained with the needed
skills for carrying out their HRM responsibilities—which reduces the strategic role of
the HRM function.
In retrospect, if we look back at Filella’s (1991) original portrayal of Latin European
HRM, we observe some changes, but also high levels of inertia and stability. On the one
hand, the increasing formalization of HRM strategy and policies in Latin Europe does
not resemble the highly informal nature of HRM depicted by Filella in the early 1990s.
Similarly, it seems that this formalization paired with the increased variety in the types of
recruitment, appraisal, and compensation practices being introduced, which resemble
those of other European regions—seem to have minimized the prevalence of word of
mouth in recruitment and personalized deals in compensation that were common in the
past, as a result of a more paternalistic culture. While these changes seem to point toward
convergence in Latin HRM, many traditional features of HRM systems in these countries
remain more or less unmodified. For instance, in 1991 there was a growing recognition of
HRM departments by top management, along with serious doubts about its capacity
to positively contribute to a company’s growth in ways similar to the departments of
284   Trullen and Obeso

­ arketing or finance. Our data seem to indicate that although HRM managers sit on the
m
boards of Latin firms, this does not necessarily translate into direct influence. Similarly,
Filella (1991) found in Latin countries greater centralization of HRM functions (that is,
less devolution to the line), lower levels of investment and training and development, and
lower union affiliation levels coupled with strong union power, all of which are patterns
that apparently repeat themselves almost a quarter of a century later.
In sum, while a Latin European HRM model per se may not exist, there seems to be
enough evidence, both in relation to labor markets and in some aspects of the HRM
function, that justifies taking the Latin European context into account when carrying
out HRM research in these countries. Several factors such as isomorphic pressures from
multinational corporations operating in Latin European countries (Quintanilla,
Susaeta, & Sánchez-­Mangas, 2008), as well as ongoing changes in the cultural values of
citizens in these countries (Moreno & Marí-­Klose, 2013)—for example, more emphasis
on gender egalitarianism or performance orientation—make us think that convergence
forces will remain strong in these countries. However, if we look at what has happened
since Filella’s (1991) study, we can expect these changes to take place only very
slowly, supporting directional convergence arguments (Mayrhofer, Brewster, Morley, &
Ledolter, 2011).

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 chapter 13

H um a n R esou rce
M a nagem en t a n d
I n dustr i a l R el ations
i n the L ati n A m er ica n
Con text

Wilson Aparecido Costa de Amorim

and Antonio Carvalho Neto

This chapter seeks to discuss and characterize key features of human resource
­management (HRM) and industrial relations systems (IRS) provision in Latin America.
We focus on five countries, namely, Brazil, Argentina, Uruguay, Paraguay, and Chile, to
illustrate the nature and contours of HRM and IRS in the region. Brazil, Argentina,
Uruguay, and Paraguay form the Mercosur economic free trade bloc, which allows for
movement of labor between these states. Established in March 1991 under the Treaty of
Asuncíon (in Paraguay), the subsequent Treaty of Ouro Preto (in Brazil) signed in 1994
formalized a customs union. Bolivia, Chile, Colombia, Ecuador, and Peru are associate
members, a status that provides for their joining of free trade agreements while remain-
ing outside the customs union. Negotiations to incorporate Chile as a full member were
suspended after it signed a free trade deal with the United States in 2002. Venezuela was
accepted into membership in 2006, pending ratification by the other member states, but
so far, Paraguay has not ratified Venezuela’s full membership, citing concerns regarding
its democratic credentials. Nor does Mexico belong to the bloc, having joined the North
American Free Trade Agreement with the United States and Canada in 1994.
We start by “landscaping” the industrial relations (IR) characteristics of these five
countries, because we believe the IR macro context and the institutional provisions that
operate within the systems serve to condition the HRM policies and practices pursued
at the organizational level. Subsequently, we consider the HRM policies and practices
288   Aparecido Costa de Amorim and Carvalho Neto

that are commonplace in Mexico, Colombia, and Peru to provide a broader Latin
American framework. This initial characterization serves as a starting point to provide a
more detailed account of the HRM policies and practices pursued by organizations
operating in the region. We use a comparative capitalisms approach (Jackson &
Deeg, 2008) to frame our thinking and to explain commonalities and differences in the
preferred approaches to HRM and IR in the countries under examination.
Hall and Soskice (2003) focused on varieties of capitalism to identify and differentiate
current models of economic organization and institutions within a set of developed
countries, arguing that complementary spheres of relationships, separately and between
them, define the ideal-­type models of either Anglo-­Saxon liberal market economies
or the Rhineland countries (plus Japan’s) coordinated market economies. In particular,
they compared five sets of relationships between firms and their characteristics and/or
problems: the IRS, professional training in the country, corporate governance, relations
between firms, and relations between employers and employees. We present the main
characteristics of the varieties of capitalism model in Tables 13.1 and 13.2.
Based on the key characteristics of the relationships of interest, the varieties of
capitalism model identified two basic types of capitalism among countries: liberal
market economies and coordinated market economies, as shown in Table 13.2. While
the classification is not exhaustive, importantly, it does allow countries to be positioned
in situations that are intermediate to those of the two varieties of capitalism ideal types
(Wood, Brewster, & Brookes, 2014).
Schneider (2009) offers a comparable analysis with respect to Latin America. Here,
five relevant institutional domains are identified: labor relations (the IR macro systems
context); education/training for work (skills training, the HRM micro context);
­corporate governance (the HRM micro context); the relationships between national
firms (the IR systems macro context); and the relationship between multinational cor-
porations (MNCs) (another part of the IR systems macro context). The model advanced
by Schneider has features distinct enough to conform to what he calls hierarchical market
economies. Latin America has a history, culture, and economic background rather
different from that of other regions, with characteristics and dynamics different from
those recorded and reported in developed countries.
Schneider (2009) acknowledges the diversity that exists among Latin American
countries. Nevertheless, he identifies common characteristics in these economies, such
as the prevalence of family-­owned as well as more diversified national business groups,
the strong presence of MNCs, a low-­skilled labor force, and atomized workplace rela-
tionships. According to Schneider (2009), the combined presence of large MNCs and
national business groups with family roots produces a business environment often com-
prising a set of complementarities that negatively impact local development.
Characteristic features such as the low skills of the workforce (HRM micro context) and
low levels of trade union representation at the organizational level often result in high
income inequality in the region. This, in turn, constitutes an obstacle to the develop-
ment of local markets.
 HRM and Industrial Relations in the Latin American Context   289

Table 13.1.  Complementarities and economy subsystems

Domain area Challenges for the firm

Industrial relations arena Organize and coordinate negotiations on wages, working conditions, etc.,
with unions and other employers.
Training and human Organize and coordinate efforts to ensure an adequate supply of workers
resource development with appropriate skills. This coordination can result in gains for firms and
workers.
Corporate governance Organize and coordinate efforts to ensure access to low-­risk sources of
finance (for funders).
Relationships between Organize and coordinate relationships with and between suppliers and
firms customers.
Workplace employee Ensure that employees have the necessary skills and also cooperate with
relations each other to meet the firm goals.

Source: Adapted from Hall and Soskice (2003).

Table 13.2.  Key features of varieties of capitalism

Variety Features Country examples

Liberal market Firms coordinate activities using hierarchies and United States, United
economy competitive market arrangements Kingdom, and
Market relations are characterized by the extent to Australia
which goods and services are exchanged
Actors respond to prices established by the market to
adjust their supply and demand
Actor behavior more effectively coordinated by the
market
The balance between supply and demand arises from
the competitive market
Coordinated Nonmarket relationships are key to firms being able to Scandinavian
market economy coordinate their efforts with other actors and grow countries, Germany,
their managerial skills and Japan
Networking conveys information and a more
cooperative exchange of experiences resulting in the
building of managerial skills
Nonmarket modes of coordination outline incomplete
relationships and contracts
Market balance results more from interactions among
actors

Sources: Economic Commission for Latin America and the Caribbean (2017); World Bank GDP Ranking
(2016); IBGE (2018).
290   Aparecido Costa de Amorim and Carvalho Neto

As to the management of organizations (the HRM micro context), Schneider (2009)

points to the prevalence of hierarchy as the guiding corporate governance mechanism.
The lack of dialogue with stakeholders outside organizations, or indeed within the closest
circle of business owner groups, often results in a management style that is less open
than both the more competitive negotiations of the liberal market economies model and
the more socially structured negotiations of the coordinated market economies model.
Specifically relating to HRM and to the policies and practices characteristic of the
region, there is a lack of detailed research evidence. Elvira and Davila (2006) note that it
is somewhat surprising that there are so few studies of HRM specifically focused on the
region, given the overall economic significance of Latin America. Those studies that
have been completed usually involve the development and presentation of case studies
of national firms that are to be taken as broadly representative of the national approach
to HRM. Furthermore, there are relatively few sectoral studies within countries and
even fewer comparative studies focused on the Latin American region. Of particular
note also is that relatively few of even the limited number of comparative studies
conducted have focused on countries that comprise the Mercosur bloc. A bibliometric
search involving journals with an impact factor equal to or greater than 1.3 combining
the search strings “HRM” or “SHRM” and involving all or any of the countries of this
bloc—Argentina, Brazil, Paraguay, and Uruguay—yielded only five relevant articles
(Arrau, Eades, & Wilson, 2012; Bello-­Pintado, 2015; Cristiani & Peiró, 2015; Friel, 2011;
Ugarte, 2017).
Despite the paucity of academic research and the very modest number of empirical
studies on HRM in the region, there is a vibrant HRM practitioner community operating
in all of these countries. The presence and visibility of these five countries, along with
Peru, Colombia, and Mexico, in international rankings regarding the quality of
HRM  management and/or job satisfaction would certainly suggest so (“Best
Workplaces,” 2019).

Background and Context

Latin America comprises a vast area of about 13 million square miles (21.1 million square
kilometers) on the American continent and has approximately 648 million inhabitants.
This territory, characterized by geographical and economic diversity, comprises
forty-­eight countries (including the Caribbean region). Many are Spanish-­speaking
countries, whereas Brazil is Portuguese speaking (Economic Commission for Latin
American and the Caribbean, 2019a).
The economies of the region vary greatly in size. Many emerged from colonialism in
the nineteenth century and remained underdeveloped or were under development
throughout the twentieth century. As a characteristic common to the entire region,
inequality has been one of the main obstacles to the development of their countries
(Economic Commission for Latin American and the Caribbean,  2019b). Currently,
 HRM and Industrial Relations in the Latin American Context   291

against the backdrop and the dynamics of globalization, from an economic perspective,
these forty-­eight countries oscillate between periods of greater and lesser economic
growth. In almost all of these countries, the production of commodities is the funda-
mental basis of economic activity. Brazil and Mexico, as two of the larger economies, are
an exception in this regard, because they are more economically diversified (Economic
Commission for Latin American and the Caribbean, 2019a, 2019b).
Much of Latin America has historically had a strong economic relationship with the
United States and we can observe the presence of European and US MNCs in the business
landscape. Recently, there has been a growing Chinese presence in investment and trade
flows in the region (Economic Commission for Latin American and the Caribbean, 2015).
On the one hand, these neighboring countries differ in geographic, linguistic, popu-
lation, and economic terms. While Argentina, Paraguay, Uruguay, and Chile suffered
from colonization by Spain, Brazil was colonized by Portugal. As the economic power-
house of the Mercosur bloc, Brazil’s gross domestic product (GDP) (the ninth in the
world) is more than three times that of Argentina, six times that of Chile, and more than
thirty times that of Paraguay and Uruguay (see Table 13.3).

Table 13.3.  Key economic indicators of Mercosur countries (2015, 2016,

and 2017)
Characteristics   Brazil Argentina Paraguay Uruguay Chile

Population (millions)   207.7 44.7 6.8 3.5 18.9

Gross domestic product 2015 –3.5 2.6 3.0 0.4 2.3
(GDP)—annual growth rate 20162017 –3.5 –2.2 4.0 1.5 1.6
(%) 0.9 2.9 4.0 3.0 1.5
Per capita GDP—annual 2015 –4.4 1.6 1.6 0.0 1.2
growth rate (%) 20162017 –4.3 –3.2 2.8 1.1 0.5
0.1 2.0 2.8 2.6 0.5
Consumer prices—annual 2015 10.7 27.5 3.1 9.4 4.4
growth rate (%) 20162017 6.3 38.5 3.9 8.1 2.7
2.7 22.9 4.9 6.0 1.9
Urban unemployment 2015 9.3 6.5 6.5 7.8 6.4
rate—annual average 20162017 13.0 8.5 7.7 8.2 6.8
percentage (%) 14.5 9.0 8.7 8.4 6.9
Current account balance 2015 –59,434 –17,170 –301 –395 –4.670
(millions of 20162017 –23,530 –14,533 415 888 –3.574
US dollars) –11,938 –26,853 –802 1,661 –4.425
GDP ranking value 2016 1,796,186 545,476 27,424 52,419 298,231
(millions of US dollars)
GDP ranking—position 2016 9 21 98 78 41
among 200 countries

Source: Economic Commission for Latin America and the Carribbean (ECLAC, 2017); World Bank GDP
Ranking 2016; IBGE, (2018).
292   Aparecido Costa de Amorim and Carvalho Neto

On the other hand, all of these countries are encompassed by a shared Latin culture.
In addition, Brazil, Argentina, Paraguay, Uruguay, and Chile have also experienced, at
various points throughout their history, long periods of dictatorship, populism, and
caudilhos, a deadly local mixture of dictatorship and populism, which were accompa-
nied by dramatic and punishing economic shocks. The longest dictatorship among these
four countries occurred in Paraguay. The caudilho Alfredo Stroessner was the supreme
dictator for thirty-­five years, until 1989. In 2018, his Colorado Party, the main political force
in Paraguay for the past seventy years, elected Marito Abdo as leader, a liberal-­oriented
politician who is the son of an earlier politician from Stroessner’s close circle.
In Argentina, for most of the second half of the twentieth century, strong ties existed
between the trade union movement and the state, which was ruled by the Peronist Party,
a populist party led by the caudilho Juan Perón for several decades. The adoption of
neo-­liberal policies eventually disrupted this dominant political system, leaving the
trade union movement in a fragile state from the 1990s onward (Levesque et al., 2015;
González & D’Urso, 2018).
In Brazil, similarly strong ties between the trade unions and the state prevailed from
the beginning of the twentieth century under the dictatorship of the populist caudilho
Getúlio Vargas (1930s to 1945). The nineteen subsequent democratic years were domi-
nated by populists (among them Vargas, who served as interim president from 1930 to
1934 and constitutionally elected president from 1934 to 1937) who were attached to official
trade unions, eventually culminating in the union movement becoming heavily dependent
on the state (Carvalho Neto, Amorim, & Fischer, 2016). The military dictatorship that
followed repressed the labor movement, including some of the major trade unions.
Following the end of the military dictatorship, the trade unions in Brazil experienced a
golden decade of revitalization and achieved a significant rise in political and bargaining
power. As in Argentina, the eventual adoption of neo-­liberal policies resulted in a
weakening of the trade unions during the 1990s.
However, since the early 2000s, a political left turn in Argentina (Levesque et al., 2015)
and in Brazil (Carvalho Neto et al., 2016) resulted in the enactment of numerous labor
policies dealing with income distribution, social security, and legal protection, which
were favorable to the labor movement and to the trade unions. The left turn brought the
unions back to prominence in Argentina (González & D’Urso,  2018) and in Brazil
(Carvalho Neto et al., 2016). Brazil, Argentina, and Uruguay (and Paraguay for a com-
paratively shorter period) experienced political changes toward greater regulation in
the economy under “neo-­developer” governments that sponsored more state interven-
tion on economic labor relations matters. From 2000 to 2015, these four countries expe-
rienced a dramatic improvement in their economies, with a significant accompanying
drop in unemployment rates and a strengthening of trade unionism (González &
D’Urso, 2018).
Since 2015, Brazil and Argentina have once again been experiencing liberal govern-
ments, after the impeachment of President Dilma Roussef and the election of Maurício
Macri, respectively. In Uruguay, the left front remained in power, winning new elections,
with Tabaré Vázquez succeeding the charismatic José Mujica. In Paraguay, for at least
fifteen years a liberal economic policy has been maintained, and it has not been modified,
 HRM and Industrial Relations in the Latin American Context   293

even during a brief rise to power of the left for a few short years (the liberals are now
ruling Paraguay again).
In both Argentina and Brazil, following the coming to power of the Macri and Temer
liberal governments after 2015, the trade union movement has faced enormous chal-
lenges. In Argentina, extremely high inflation and the liberal shock to the economy,
coupled with the inclusion of labor rights flexibility and the establishment of wage
increases below the inflation index, have posed enormous challenges for trade unions,
which, even if weakened in relation to the previous situation, managed to organize mass
popular protest demonstrations (González & D’Urso, 2018). In Brazil, the approval by
the national congress of the greater flexibility of workers’ rights in the past seven decades
represented a hitherto unthinkable and enormous defeat for the trade union movement
in the private sector, and the policy of curbing state spending has had a significant nega-
tive impact on public-­sector employees.
In Chile, Salvador Allende’s socialist-­oriented government was overthrown in 1973
and was succeeded by the dictatorship of Augusto Pinochet, which lasted until 1990.
During this period, the governance of the country resembled a field experiment of ultra-
liberal and monetarist economic policies. Among the main changes in this period in the
country were the privatization of state companies, the reduction of social security provi-
sions and labor reforms focused on increasing the flexibility of hiring, decentralizing
collective bargaining between companies and unions, and the reducing of labor con-
flicts (Edwards & Edwards,  2000). The restoration of democracy in Chile provided
opportunities for both socialist governments (Ricardo Lagos, 2000 to 2006; Michele
Bachelet, 2006 to 2010 and 2014 to 2018) and liberal-­conservatives such as Sebastian
Piñera (2010 to 2014 and 2018 to 2022).
As with other countries in the region, since the early 2000s, Chile has experienced a
period of economic growth based on the commodity boom. With respect to its IRS and
the labor movement, trade unions are generally organized on a company basis and
therefore engage in decentralized negotiations. While the unions do have some ties to
political parties, unlike Argentina, Brazil, and Uruguay, they have less influence on the
general political landscape. More recently, under Bachelet’s second government, new
labor reforms were proposed and approved in 2014, giving unions greater bargaining
power (Ramires, 2015; Slattery, 2016).

Economic and Labor Market Features of

Brazil, Argentina, Uruguay, Paraguay,
and Chile

A common economic characteristic of these four countries is that they are all commod-
ity exporters, having relatively high international trade exposure in goods and services
with emerging markets such as China, India, and Russia. They are not as dependent on
industrialized economies in western Europe and the United States as other Latin
294   Aparecido Costa de Amorim and Carvalho Neto

American countries (Izquierdo & Talvi,  2011). Table  13.3 presents recent economic
indicators covering the period 2015 to 2017.
The labor markets of Argentina and Uruguay during the past twenty years have
moved from being dominated by intensive manual work to more professional activities.
The adoption of robotics permits the substitution of manual labor in certain tasks
(Apella & Zunino, 2017). Brazil, as the main, most complex, and most developed econ-
omy among these four countries, had moved in this direction sometime earlier.
Brazil is the key economic driving force of the Mercosur bloc, and as the ninth largest
economy in the world, it is easily the largest in Latin America. Following a deep reces-
sion in 2015 and 2016, there are signs that the contraction in Brazilian GDP has ended,
with an annual growth of 0.9 percent in 2017 (see Table 13.3). Inflation has significantly
reduced (to 2.7 percent) and continues to decline, leading to a substantial reduction in
the nominal basic interest rate. However, it would be somewhat premature to speak of a
sustained improvement. Despite fiscal adjustment efforts, the public deficit remains
high. Consumption and investment are still lower than the levels seen in 2014, before the
global financial crisis, and public investment has decreased sharply. The unemployment
rate also remains stubbornly high (Economic Commission for Latin America and the
Caribbean, 2017).
The GDP in Uruguay has been growing over the past fifteen years, as is also the case in
Paraguay. The unemployment rate in Uruguay has remained at approximately 8 percent.
Despite that, real wages rose significantly. The GDP grew by about 3 percent in 2018 as a
result of the continuation of the favorable conditions that fueled growth in output and
because of the recovery of public infrastructure investments (Economic Commission
for Latin America and the Caribbean, 2017). Uruguay is the only country among those
included for discussion here that continues to be led by a long-­term left-­leaning
government.
In the aftermath of a significant economic crisis, GDP in Argentina expanded during
2017 as a result of increasing public social spending and rising investment. The turn-
around may also, in part at least, be associated with the recovery in the Brazilian econ-
omy because the economy of Argentina is substantially intertwined with that of Brazil.
Nevertheless, the inflation rate remains high. Unemployment is high and growing (see
Table  13.3). The fiscal and the current account deficits were financed by a marked
increase in external borrowing in 2017, which also underpinned an increase in interna-
tional reserves. The account deficit widened in 2017, standing at 4.2 percent of the GDP
in the first half of the year (Economic Commission for Latin America and the
Caribbean, 2017), a situation that in 2018 culminated in the return of the country as a
debtor of the International Monetary Fund.
The GDP in Paraguay has been growing steadily during the past fifteen years, at a rate
of 4.5 percent per year. Since 2003, poverty has dropped from 50 percent to 28 percent.
According to the Economic Commission for Latin America and the Caribbean (2017),
soybean exports and the maquila industries, which mirror the Mexican model of
operating largely duty-­free and tariff-­free, and which, in the case of Paraguay, are
oriented to the Brazilian and Chinese consumer markets (foodstuffs, textiles and
 HRM and Industrial Relations in the Latin American Context   295

apparel, paper, chemicals, and base metals), have played an important role in this recovery.
In addition, Paraguay’s role in serving as a financial haven for Brazilian and Argentinian
capital investors, coupled with having a cheap and compliant labor force, have proven to
be important contributors to the economic recovery.
The Chilean economy, as well as the rest of Latin America, benefited greatly from the
global commodity boom in the first ten years of the twentieth century. The country is
highly dependent on its copper exports and agribusiness. In the past three years, despite
the improvement of the international environment, the Chilean economy grew only
slightly, with rates of 2.5 and 1.6 percent recorded in 2016 and 2017, respectively. Given its
more liberal economic regime compared to its neighbors, Chile tends to have a more
positive image vis-­à-­vis global financial markets. Only recently has there been greater
integration of its activities with those of its neighbors (Economic Commission for Latin
America and the Caribbean, 2017).
Overall, at the macroeconomic level, the IRS features of the Mercosur countries,
along with Chile, show some convergence, though there are significant economic differ-
ences between the countries. All of these countries are commodity exporters and have
strong ties with China. This common characteristic makes them less reliant on industri-
alized economies from western Europe or on the United States than are other Latin
American countries. Throughout their recent history, Brazil, Argentina, Paraguay,
Uruguay, and Chile have experienced periods of similar political turmoil: dictatorships,
populism, and caudilhos, along with dramatic and often far-­reaching economic shocks.
Beginning in the early 2000s, left-­wing governments in Argentina and Brazil insti-
tuted numerous labor policies favorable to workers, a move that, in turn, reinvigorated
the trade union movement and its legitimacy. However, with the return of liberal gov-
ernments in Brazil and Argentina in 2015 and the implementation of policy provisions
less favorable to workers’ rights or the trade unions, along with cuts to public expendi-
ture on social programs, the pendulum has swung once again, resulting in the trade
unions facing enormous challenges in both countries. There has been a sharp increase
in unemployment and a raft of funding cuts.
In contrast, GDP in both Uruguay and in Paraguay has been growing steadily over the
past fifteen years. The leftist political party that has been in charge in Uruguay is
pragmatically market oriented but maintains social and developmental programs, while
in Paraguay the liberal governments have resulted in a highly deregulated economy.
The key economic indicators drawn on for comparative purposes highlight that Brazil
and Argentina have experienced acute economic crises, with Argentina experiencing
even bleaker circumstances than Brazil, while Uruguay, Paraguay, and Chile have, in
relative terms, been living through a decade and a half of economic growth. At the end
of 2019, after fifteen years ruling Uruguay, the left-­wing government was defeated by
liberals. Concomitantly, Argentina elected a left-­wing government against the liberal
President Macri, while Chile faced an almost nationwide movement of popular unrest
that has forced the liberal-­conservative government to negotiate a new constitution.
Similar movements challenging the liberal economic agenda have become a common
feature of the political landscape in both Colombia and Ecuador.
296   Aparecido Costa de Amorim and Carvalho Neto

Labor Regulation, Union Role, and

Collective Bargaining in Selected Latin
American Countries: Hierarchical
Market Models in Turmoil?

Building on the more general macroeconomic framework we have presented, Table 13.4

gives the general characteristics of these five countries over the recent period. The
elements of the framework focus on the role of unions, the general characteristics of
collective bargaining, and key issues related to the legal and institutional regulation
of labor relations. The final column lists important recent changes in the general rules of
these systems.
A first key observation is that recent changes in the contextual and economic
­environment of Brazil, Argentina, Uruguay, Paraguay, and Chile have had consequences
for the labor relations arena. As outlined in Table 13.4, in all countries, developments
designed to alter or rearrange labor contracting occurred at both the individual and the
collective levels, following similar patterns emerging in various other countries around
the world (Adascalitei & Pignatti Morano, 2015). In Argentina, Brazil, and Uruguay,
left-­wing governments, more closely aligned with the trade unions as political actors,
produced at least two concomitant phenomena, namely, the growth and expansion of
union action and the reinforcement of the role and importance of labor relations in
society. In the case of Paraguay, given the historically weaker presence of the unions
operating on the national scene, the evidence for this shift is more limited, with the
result that the overall IR system would appear to be less impacted.
Another important issue of note is that the two largest countries in the region have
experienced significant changes since 2014 in the regulation of hiring and in labor
relations in a more general sense. Argentina and Brazil, through different paths, experi-
enced the change of their political orientation from 2016 with the beginning of the Macri
and the Temer and Bolsonaro governments, respectively. Thus, while the smaller countries
of the region—Paraguay, Uruguay, and Chile—maintained the general characteristics of
their IR systems, Argentina and Brazil underwent important changes in labor legislation.
In Chile, although three left-­wing governments have been in power over the past twenty
years, it was only under Bachelet’s government between 2014 and 2018 that there was a
change in labor legislation resulting in more favorable conditions for the trade union
movement.
In Argentina, the balance of power shifted strongly to the employers’ side through the
more interventionist actions of the state, including redefining the national minimum
wage, establishing limits to collective bargaining wage clauses, and the imposition of
greater restrictions around strikes organized by the trade unions (González &
D’Urso, 2018). In the case of Brazil, the changes were more radical and altered more than
one hundred laws of the old Brazilian labor code of law stretching back to 1943
Table 13.4.  Mercosur and Chile: Key features of the industrial relations systems
  Argentina Brazil Paraguay Uruguay Chile

Unions’ role Centralized representation of Representation of workers by Fragmented Collective bargaining More common:
workers in collective professional category and representation at with companies; company trade
bargaining; strong interaction geographic region; low union company level; participation in forums unions (mining,
with political parties presence at company level; competition with companies; construction,
interaction with party parties between unions participation in national infrastructure: higher
intensified (2003–14) tripartite negotiations level of unionization)
Less common:
intercompany trade
unions
Collective Centralized collective Collective bargaining covers all Only reaches 4% Reaches 75% of Collective bargaining
bargaining bargaining and increasing formal contracts in the of private-­sector private-­sector workers agreements: mainly
number of agreements in the private sector workers at company level; low
private sector until 2014 application in the
overall employment
market
Labor Reorganization of legislation Labor regulation (1943) defines No protective labor Neo-­corporatist No prior authoriza-
regulation (2004) revitalizes centralized labor rights and the way trade legislation for union tripartite system tion issued by public
(law and collective bargaining and unions and labor relations operate; action (National Wages Council) authority is required
institutions) labor rights (National Council flexibilization began in the 1990s to form a union
of Salaries) (required number of
employees by the
law)
Main recent Institutional reforms of liberal Labor reform (2017): liberal bias, A general strike Labor reform (2005) Recent changes
changes bias and flexibilization of flexibilization of hiring rules, happens for the first strengthened trade (2016) strengthened
industrial relations; initiatives reinforcement of individual forms time in 2013; social unions and collective trade unions and
to weaken trade unions of hiring, weakening of trade dialogue begins to bargaining collective bargaining
unionism be practiced

Sources: Cristiani and Peiró (2015), LO/FTF Council (2014), Gonzáles and D’Urso (2018), Carvalho Neto, Amorim, and Fischer (2016), Liberman (2019).
298   Aparecido Costa de Amorim and Carvalho Neto

(Krein, 2018). The labor reform provisions put in place included a broad spectrum of
measures regulating flexible forms of hiring, restricting forms of union financing,
reducing the scope of labor justice, and shifting labor legislation provisions such that the
employment relationship is more akin to a common exchange ratio in the market.
Looking at the IR systems of the region through Schneider’s hierarchical market
economy model, it is possible to comparatively summarize the various changes that
have occurred and their impact. As in Hall and Soskice’s (2003) approach, in addition to
analyzing the institutional aspects of the countries, it is important to observe the com-
plementarities among them. Table 13.5 shows the hierarchical and market characteris-
tics in each country. In addition, from a longitudinal perspective, the complementarities
possible from the changes in the respective IR systems are also presented.
Table 13.5 highlights that the recent changes in the IR system of Argentina and Brazil
have reinforced the hierarchical and market aspects enumerated by Schneider (2009).
This is partly because the reforms carried out, especially at a time of economic crisis,
have shifted the balance of institutional bargaining power strongly in favor of the
employers (Brazil) or in the direction of the state itself (Argentina), to the detriment of
the unions as social actors. In this way, the reforms carried out in the two countries
reinforced the market features normally associated with the functioning of labor
markets in Latin America, as well as the hierarchical traits associated with the
­institutions in their more general sense. It follows from this picture that the comple-
mentarities expected in these two countries also accentuate the negative bias observed
by Schneider. This negative bias is heightened by the fact that the prevalence of a market
logic without a counterweight or attenuation of the hierarchical profile of societies is
strongly inducing social inequality and income concentration.
With regard to the other three countries—Uruguay, Paraguay, and Chile—it is
interesting to note that they have experienced a positive economic period. In the case of
Uruguay, the observed complementarities have a positive bias since, at least in terms
of per capita income, the country’s trajectory has been positive. In the Paraguayan case,
per capita income growth has also occurred, but at a pace that is systematically lower
than that found in the country’s economic growth, with the result that the reduction in
inequality has not occurred in any significant way. In Chile, economic growth was also
observed, but with ongoing and persistent inequality remaining a feature of the
­landscape. Recent popular demonstrations of protest in the country indicate that the
long-­term effects of the privatization of welfare, even during military rule, resulted in
the further impoverishment of the older portion of the population. Chile’s ultraliberal
economic policy seems to have resulted in deepening social inequality, a development
that is at the root of the huge wave of protests the country has experienced in the recent
past. Because there are significant differences in the size of these economies, the basis for
aspects of the comparison may be weakened. Focusing specifically on the cases of
Argentina and Brazil, which allows for the preserving of more specificities, there is
broad alignment between their labor relations environments in terms of an increase in
flexibility in the hiring of labor.
Table 13.5.  Mercosur: Recent changes and institutional complementarities
  Argentina Brazil Paraguay Uruguay Chile

Hierarchy State interferes by Reinforcement of the position Companies in a Less hierarchical Hierarchical: Company-­level
creating barriers to of the companies in the labor position of labor relations because bargaining in companies
union action or limits market, reduction of protection predominance in of the existence of with trade union (very low
to negotiated contents to union activity by the Labor the definition coordinated influence of company
Court of forms of negotiation spaces trade union on human
hiring labor resource policies and
practices)
Market Flexibilization of labor Flexibilization of labor rights, Recent changes Recent changes have Retirement system
rights reinforcement of the individual are insufficient to introduced more pressures workers to stay
hiring of labor attenuate market mechanisms of in labor market
orientation in labor economic coordination
relations (decreasing
market-­oriented
relations)
Complementarities Commoditization of Commoditization of labor, Persistent Persistent economic Persistent economic growth
(positive/negative) labor, fall of workers’ more sudden adjustments in economic growth, growth is accompanied followed by per capita
income, concentration the labor market, concentration but with persistent by per capita income income growth, but
of income of income concentration of growth persistent inequality
income
300   Aparecido Costa de Amorim and Carvalho Neto

Latin America: Evidence of Divergence

and Convergence

A closer examination of the conditions under which the IR systems of Latin American
countries operate would require more space than this chapter allows. However, from the
data presented, it can be noted that while the countries of the region have made economic
progress in the past twenty years, they remain linked to the very strong structural
characteristics of their history and development, which continue to impact their capacity
to secure and maintain the socioeconomic trajectory sought. None of the five countries
has overcome a commonly occurring situation in the region, namely, subordinate
international insertion into the global financial system and international trade. Even
Brazil, which experienced a global repositioning from its designation as one of the
BRICS countries (Brazil, Russia, India, China, and South Africa) and a growth and
expansion of its regional role in Latin America up until 2014, can now be seen to have
retreated from these roles in recent years.
This results in a situation where US, European, and Asian MNCs operating in this
region have a strong capacity to influence local economies as they enjoy support from
home governments. This phenomenon of the rising influence of foreign-­owned MNCs
is not restricted to the countries studied here and has also been observed in Mexico,
Colombia, and Peru. In addition, it must be acknowledged that there has been a significant
expansion of Latin American–owned MNCs in the region, with Brazilian- and
Mexican-­originating MNCs in particular now having a significant presence throughout
much of the continent. Ongoing research indicates that, in general, MNCs—either
originating in Latin American or elsewhere—have HRM departments that are broadly
controlled by and subject to strong direction from their respective headquarters. Such
levels of centralization and control being exhibited by MNC headquarters facilitate the
importing and reproducing of HRM practices from abroad into the region.
Of note in the case of Brazil, Argentina, Uruguay, Paraguay, and Chile is that it is more
difficult to identify the presence of international consultancies committed to establishing
HRM best practice rankings (“Best Workplaces,” 2019). The prevalence and the impact
of these consultancies, engaged in the institutionalization of so-­called best practices,
seems to occur more commonly in less complex economies such as Paraguay, the
Dominican Republic, and Honduras.
Drawing on recent Cranet data collected in Brazil, Table  13.6 highlights the key
characteristics of the human resource departments in the country. The institutionalization
of HRM areas within organizations has advanced because of its proximity to the
instances and/or processes that define the strategic actions of companies. In particular,
the data indicate the presence of an HRM department in almost all organizations.
Furthermore, there is a significant proportion of organizations in which the HRM
manager is a member of the companies’ board and is also involved in the processes
initiating strategic decisions in respondent organizations (Cranet Brazil, 2015).
 HRM and Industrial Relations in the Latin American Context   301

Table 13.6.  Brazil: Strategic characteristics of the human resource management

department
Indicator Data
(%)

Percentage of organizations that have an HRM department 99

Percentage of organizations in which the person responsible for HRM sits on the board of 64
directors or equivalent body in the upper echelon of executives
Percentage of organizations in which the person responsible for HRM is involved from the 60
beginning in the company’s strategic development process
The HRM department is primarily responsible for decisions about HRM policies, either alone 66
or in consultation with the line manager
The line manager is primarily responsible for decisions about HRM policies, either alone or in 34
consultation with the HRM department
The HRM department was involved in the initial phase of defining organizational change 56
processes
Decisions about human resources policies are made at the organizations’ national 49
headquarters

Note: HRM, human resource management.

Source: Cranet Brazil (2014/15).

However, against the backdrop of what might be considered “normal” HRM practices
for MNCs, or indeed for indigenous companies, there is one overriding contextual chal-
lenge to this regional “normality” and likely future development trajectory, namely,
political instability. From time to time, the region faces the limits imposed internally
and externally on its economic and social development and is institutionally tested by
either more gradual (left or right) government transitions such as those in Chile and
Uruguay, and to some extent in Mexico, or more abrupt transitions, as in the case of
Brazil, Colombia, Ecuador, and Bolivia. While on the one hand these political shifts may
be considered part of the natural effort to consolidate democracy in the region, on the
other hand they also fuel a certain degree of social instability as a by-­product of the sig-
nificant political swings characteristic of several countries in the region. With rare
exceptions, such as Uruguay, the periods of economic growth in the countries of the
Latin American region typically occur without bringing about any significant reduction
in social inequality. The result is often social discontent, which leads to social unrest and
political instability—culminating in frequent government changes.
Thus, political instability serves as an important institutional constraint on the IR sys-
tems of Latin American countries and, by extension, in the performance of companies
and their HRM practices in the Latin American space. Proof of this is found in the vari-
ous radical changes since the beginning of this century in the labor and social security
legislation provisions that have been put in place by several countries in the region. As a
result, it is not uncommon to find that the HRM practices that have taken hold in Latin
302   Aparecido Costa de Amorim and Carvalho Neto

America are MNC based and are often derived from headquarters abroad. The result is
that they frequently do not adhere to local labor market conditions at play in the
­different countries in the region.

Conclusion

Having looked at some of the key institutional features operating in the Latin American
context, an important question that arises is, What are the consequences of these insti-
tutional characteristics for HRM in these countries? The available evidence points to an
ongoing dissemination of HRM practices throughout Latin America (Bello-­Pintado,
2015; Elvira & Davila, 2005). The ever-­stronger presence and influence of external
MNCs in the region clearly serves as an important conduit for the spread of particular
HRM approaches. As reported in the literature, MNCs are strong drivers of the dissemi-
nation and standardization of HRM policies and practices (Elvira & Davila, 2005;
Friel,  2011). Mimetic isomorphism is resulting in a situation where even indigenous
companies that restrict themselves to their local markets in the region are engaging in
the uptake of particular HRM practices.
Historically, MNCs operating in the region were largely US and UK owned. More
recent years have witnessed the arrival of MNCs from Spain, Portugal, and, most signifi-
cantly, Asia, particularly China. As discussed previously with the economic features,
China has increasingly been a major economic and commercial partner of Brazil and
Paraguay. In another recent turn, there has been a rise of Latin American–owned MNCs
operating in the Mercosur region. Hence, Brazilian-, Argentinian-, Chilean-, Colombian-,
and Mexican-­owned MNCs have gradually become a more common feature of the
business landscape of the region (Arrau et al., 2012; Economic Commission for Latin
America and the Caribbean, 2018; Fleury & Fleury, 2016).
As mentioned earlier in this chapter, additional evidence of the spread of HRM poli-
cies and practices in the Latin American region can be found in the growing presence of
rankings of corporations organized according to the quality and quantity of their best
HRM policies and practices. These rankings attest to at least the existence of a knowl-
edge market about HRM policies and practices between the companies that operate in
the region. The simultaneous presence of some of these MNCs in the rankings of best
places to work in the five countries reinforces this perception.
There are several issues that arise from the topics discussed in this chapter that merit
investigation. A critical issue requiring examination is whether the dissemination of
HRM policies and practices in an institutional setting that emphasizes the hierarchical
and market characteristics of labor relations will also produce some kind of convergence
in these practices. For example, in Brazil and Argentina, two countries that are experi-
encing drastic changes related to the flexibilization of labor legislation and a reduction
in the level of state protection afforded to the union movement or to the right to engage
in industrial action, an important question that arises is whether HRM produces more
 HRM and Industrial Relations in the Latin American Context   303

diverse or similar policies and practices. A second important question is whether the
rather different institutional environments existing in, for example, Paraguay and
Uruguay would generate diverse or similar HRM policies and practices. A third relevant
question concerns the extent to which there might be a mimetic influence in the spread
of practices. Thus, for example, since Paraguay has pursued liberal market policies, with
relatively few labor protections for several decades, what is the likelihood that Brazil and
Argentina will follow the trend of liberalization pursued by Paraguay?
Overall, our analysis leads us to conclude that the elements isolated for examination
in the frameworks that we have discussed in the chapter could serve as a useful theoreti-
cal point of departure for identifying both national and regional contextual influences
on HRM and IRS. In addition, they may serve to ignite interest in comparative analyses
in the Latin American context. As alluded to earlier in the chapter, accounts of HRM in
the Latin American context, along with comparative analyses of specific countries in the
region, are significantly underrepresented in the literature. Furthering national com-
parative research on HRM policies and practices of organizations in the Mercosur
region could open up new lines of inquiry on the likelihood of, and limits to, conver-
gence in the Latin American context.

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 chapter 14

H um a n R esou rce
M a nagem en t i n th e
A fr ica n Con text

Frank M. Horwitz and Linda Ronnie

This chapter aims to address the paucity of published work on human resource
­management (HRM) in transitional economies (Zupan & Kase,  2005). Much of the
extensive literature on international HRM practices focuses predominantly on the
developed economies of the “West” and the emerging economies of the “East,” with
the African context being the least studied on HRM issues (Adeleye, 2011; Ellis, Nyuur,
& Debrah, 2016; Jackson, 2002a; Kamoche, 1997). Although there is an increasing num-
ber of research outputs on HRM in Africa (Budhwar & Debrah, 2001; Ellis et al., 2016,
Kamoche, Debrah, Horwitz, & Muuka, 2004), this body of knowledge pales in compari-
son with the volume of material dealing with the West and with Asia (Kamoche,
Chizema, Mellahi, & Newenham-­Kahindi , 2012). Kamoche et al. (2012, pp. 2525–2827)
therefore argue that the field of HRM is no longer uncharted territory and any claim
purporting that “literature on human resource management (HRM) and management
in general in Africa is ‘scarce/ scanty/ sketchy,’ is largely untenable today.”
Notwithstanding, the business environment of African countries is, in several cases,
experiencing gross domestic product growth based on the increasing inflow of invest-
ments and management systems from different regions. This is coupled with the chang-
ing values of the increasing educated and diverse workforce of more than fifty countries
on the continent. Encouragingly, Amankwah-­Amoah (2017, p. 511) finds that “an accu-
mulated body of research indicates a sign of growing self-­confidence in African man-
agement research that must be maintained and revitalized.” He argues that both
indigenous and comparative dimensions of management research are important.
This chapter provides a critical overview of the evolving HRM research context, labor
market developments, insights regarding cross-­cultural diversity, HRM practices, issues
pertaining to the efficacy of adoption of Western and East Asian international HRM,
and employment relations in African countries. Given the influence of multinational
308   Horwitz and Ronnie

corporations (MNCs) on the diffusion and development of HRM in African countries,

issues pertaining to their influence are critically evaluated; however, we note that the
chapter is not primarily about MNC HRM policy and practice.

Research Context

Empirical studies on African management or HRM are often country specific, occasion-
ally comparative, and variously suggest that HRM practices follow the convergence per-
spective, the “cross-­convergence” perspective, or divergence perspectives. Additionally,
there are still unexplored issues relating to African management or HRM and new find-
ings could reshape the research agenda (Ellis et al., 2016). Though it is often country or
regionally focused, there is evidence of increasing research on HRM issues and mergers
and acquisitions, impacts of privatization on HRM, knowledge appropriation, emerg-
ing market MNC HRM policy and practice, diversity and cross-­cultural management,
HIV/AIDS policy implementation issues, sustainable development and corporate social
responsibility, and impacts of the institutional and regulatory environment on HRM
and employment relations (Newenham-­Kahindi, Kamoche, Chizema, & Mellahi, 2013).
The multicultural, multilingual, multiethnic, and multiregional nature of the African
continent is characterized by diversity on several dimensions reflecting the colonization
legacy; the level of social, political, and economic development; the state of institutions;
the cultural and ethnic groupings; and religious affiliations (Adeleye, 2011; Ellis et al.,
2016; Nkomo, du Plessis, Haq, & du Plessis, 2016). This diversity and complexity impact
the kind and effectiveness of HRM practices employed in organizations. With fifty-­six
countries, Africa is subdivided into two distinctive regions, North Africa and sub-
Saharan Africa. The continent is also home to indigenous Africans, Arabs, Indians, and
all nationalities in the world from the east, west, central, and south and has over two
thousand languages and ethnic groups (Ellis et al.,  2016). While some countries are
commodity rich, for example, Nigeria, Angola (oil), Guinea (bauxite), South Africa
(gold, diamonds, coal), and Zambia (copper), many countries, like Ethiopia and Malawi,
have few natural resources and are predominantly agriculture-­based economies.
Politically, almost all of the countries have gone through some form of political trans-
formation and policy developments since independence. In several countries, for exam-
ple, Ghana, Malawi, Algeria, and Botswana, among others, economic policies have been
developed to implement a more liberal stance in relation to attracting foreign direct
investment to ensure business growth and survival (Ellis et al., 2016). The resultant con-
texts create a potentially exciting yet challenging environment for organizations and
their human resources.
Although most African economies are quite volatile, with an annual growth rate of
some 5 percent since 2010, Africa has been observed to be the second-­fastest-­growing
region in the world (Lund & Van Wamelen, 2012). Ellis et al. (2016, pp. 395–396) further
note that “economies such as Ethiopia, Ghana, Kenya, Nigeria, Uganda, and Tanzania
 Human Resource Management in the African Context   309

are growing strongly while others including South Africa have faltered in their gross
domestic product growth in the past three years, but are slowly advancing toward the
rank of transition economies.” However, the onset of the Covid 19 pandemic in 2020
contributed to lower even negative growth rates and government debt in several African
countries. Previously, even when Africa’s growth was hit hard—along with the rest of the
world—by the global economic crisis, it rebounded within a year. It was predicted that
the economic growth of countries such as Nigeria, Angola, and Ethiopia, accompanied
by Ghana, Côte d’Ivoire, Kenya, Uganda, South Africa, and Tanzania, will be uneven,
but sustained (“Africa’s Rise,” 2013; World Bank, 2012). Although the poverty rate has
also declined at about 1 percent per year, unemployment remains high in countries such
as South Africa, at over 25 percent (Statistics South Africa, 2017), and in most African
countries wages are around a third of those in newly industrializing countries, such as
Vietnam and Bangladesh.

Labor Markets and the Human Resource

Management Function in Africa

As noted earlier, although unemployment remains high in many countries, levels of

education are slowly improving. There is an increasing number of educated workforce
members with skills and capabilities for a growing market for businesses (Pennisi, 2013).
This have contributed to the gradual increase in the number of foreign-­invested enter-
prises in Africa. Foreign investment has been on the increase, from USD$7 billion in
1998 to USD$18 billion and USD$56 billion in 2003 and 2009, respectively (United
Nations Conference on Trade and Development, 2005, 2008, 2009). The World Bank
(2011) argues that the continent’s growth could be faster and more widespread if Africa
could address its most fundamental challenges: the effective development and deploy-
ment of its human resources, appropriate organizational HRM practices, and infra-
structural development.
These issues reflect important concerns about the way people are managed in Africa.
They also reflect what impediments managers must overcome before HRM can come of
age. Multinational corporations in Africa, through their local managers, are increas-
ingly adopting contemporary management ideas and HRM practices (Horwitz, 2017).
Data from the Cranet survey of employers on HRM (a large international comparative
study) indicates a marked increase in the prevalence of formal HRM departments in
South African organizations since 2004/5 (Table 14.1). (The Cranet survey does not col-
lect data from other African countries).
Further, Table 14.2 indicates an increasing proportion of organizations that have a
written HRM policy and strategy.
The latter concern the contribution of HRM to organizational strategies and perfor-
mance. Human resource management is increasingly seen as a business alignment
310   Horwitz and Ronnie

Table 14.1.  Increase in prevalence of human

resource management departments (South Africa)

2004/5 2009/10 2014/15

54% 86% 96%
(n = 378) (n = 191) (n = 121)

Source: Cranet (2004/5, 2009/10, 2014/15).

Table 14.2.  Organizations with a written human

resource management strategy (South Africa)

2004/5 2009/10 2014/15

61 69 84
n = 378 n = 191 n = 121

Source: Cranet (2004/5, 2009/10, 2014/15).

­ roc­ess potentially contributing to better performance outcomes and competitive

p
advantage (Schuler & Jackson, 1999). The nature of African society is variously charac-
terized by strong masculine and patriarchal elements, collective decision-­making con-
siderations, and extended family. Adaptation of modern HRM practices is expected
therefore to contribute to achieving organizational objectives. As African workplace
practices tend toward more collectivist than individualist cultures, HRM practices such
as team working based on group and collective behavior and norms operate effectively,
especially if reward systems are designed for group or team performance.
Migration and the flight of knowledge workers from Africa or between African coun-
tries has become critical as more African countries seek to attract, develop, and retain key
skills to grow their economies and compete both domestically and globally (Horwitz,
2007a; Kamoche, Debrah et al., 2004). In Africa, the main labor-­receiving countries are
Botswana, Mauritius, and South Africa. An allied issue is the widespread move toward
labor market flexibility and an increase in subcontracting and outsourcing as work is
externalized. The informalization and casualization of the labor market are increasing,
even in countries with more regulated legal regimes such as South Africa, with the notion
of “decent work” having low prevalence in many areas especially in lower level skills work
(Webster & Ludwig, 2020). Numerical and temporal flexibility and even pay flexibility
have a profound effect on employment security, the psychological contract, and workplace
arrangements of professional staff. Research has found that increased casualization of the
workforce, employment of Chinese labor by Chinese MNCs, and use of flexible labor
regimes has led to increased precarious employment (Wegenast & Schneider, 2017).
 Human Resource Management in the African Context   311

Good working conditions, career opportunities, and competitive pay are vital. For
example, well-­trained African nurses have been lost to hospitals in developed countries
such as Britain, resulting in serious shortages in South African hospitals. Other para-
medical occupations such as occupational therapists, as well as engineering skills, are
being lost as better opportunities occur abroad. Estimates are that over thirty-­four thou-
sand additional engineers, technologists, draftspersons, and technicians will be required
in South Africa over the next five years (Young, 2010). Budget constraints, together with
poor HRM practices and, in some instances, poor application and unintended conse-
quences of employment equity measures, have made retention problematic. Yet these
problems are reversible with progressive policies, implementation of good HRM prac-
tices, and senior leadership commitment.

Diversity and Inclusion in Africa

Commentators tend to make broad generalizations about management and culture in

Africa, ignoring the unique features in each country (Horwitz, 2007a; Nkomo et al.,
2016). The diversity of Africa cuts across many dimensions: ethnically, with some two
thousand different ethnocultural communities; historically, with effects going back to
whether the country is a former colony of Britain, France, or Portugal, for example;
politically, with dictatorships and democracies; and, economically, with several high-
income countries amid a poverty-­stricken majority. It is erroneous to assume homoge-
neity within specific countries too, since many African countries have diverse
ethnocultural communities struggling to establish an identity as a nation-­ state
(Kamoche, Debrah et al., 2004, p. xvi). In countries like Zambia and Ghana with exten-
sive privatization of state-­owned enterprises, the HRM landscape has been reshaped in
significant and enduring ways. Many Zambian state-­owned enterprises, for instance,
have been bought by South African companies, whose managers apply employment
practices based on those of the parent company. The Southern African region (in par-
ticular, Botswana and South Africa) has emerged as a catchment area for talent from
other parts of Africa, in particular East and Central Africa. Political-­historical factors
such as apartheid and colonialism have seen postindependence governments promot-
ing policies variously referred to as Africanization, localization, indigenization, and
employment equity, for which employer compliance is required (Nkomo et al., 2016).
The goal remains to transform the representation and power of the different race, eth-
nic, and gender groups, not only in terms of employment but also in terms of business
ownership (Habib & Bentley, 2008). As a case in point, this indigenization process was
found to be strongly mediated by Ghanaian cultural and institutional factors. In some
countries, the constitution permits policies aimed at the redressing of past discrimina-
tion based on race, culture and ethnicity, and gender. South Africa has employment
equity legislation promulgated in 1998 and a more recent strong focus on broad-­based
Black Economic Empowerment to enhance share ownership. Industry charters are
312   Horwitz and Ronnie

developed, setting targets for Black Economic Empowerment in sectors such as

­insurance, mining, oil, and energy. The basis of these policies is to redress employment
skills and access to managerial and professional career opportunities by majority groups
previously denied these opportunities by discriminatory colonial and apartheid regimes
(Stoermer, Hitotsuyanagi-­Hansel, & Froese, 2017). The effects of ethnicity are not well
documented regarding impacts on HRM and employment relations in Africa (Almhdie &
Nyambegera, 2004). Managerial styles, HRM practices, and preferences for particular
types of conflict resolution may be mediated by ethnic factors, including the degree of
cultural ethnocentrism, and tolerance or intolerance of diversity. Firm-­level employ-
ment practices in some countries like Kenya and South Africa have in some sectors
reflected preferences for particular ethnic groups or family members of an ethnic group.
In most African countries where such policies and practices occur, they focus on the set-
ting of targets or quotas, timetables for special measure pro-­proactive recruitment and
selection, and review of employment practices regarding potentially unfair discrimina-
tory aspects. These tend to focus on numerical change to enhance representation at all
levels of an organization. Qualitative changes in workplace attitudes, institutional cul-
ture, and managerial and leadership styles are less evident but also vital. More organiza-
tions have diversity training aimed largely at promoting cross-­cultural understanding
and tolerance, though these have been criticized as unwittingly promoting cultural
stereotypes.
In South Africa, the work of Nkomo et al. (2016) indicates that, despite the wide-
ranging legislation research, public debate, and statistics, progress toward employment
equity has been incremental and slow. Trend data in South Africa indicate that the
national, provincial, and local levels of government perform much better compared
with private-­sector employers (Commission for Employment Equity, 2017). Progress on
Black Economic Empowerment has been less than planned and has been described by
scholars as incremental and less successful in transforming equity ownership of busi-
nesses in South Africa (Horwitz & Jain, 2011). Significant progress has been made in the
representation of women in parliament (45 percent), with close to the same representa-
tion in ministerial positions (Nkomo, 2012). However, representation in private-­sector
management positions has grown more slowly (Business Women’s Association, 2017).
In other countries, such as Namibia, employment equity progress has been somewhat
more successful, although only 29 percent of executive director positions are held by
racially disadvantaged persons (Republic of Namibia Employment Equity Commission
Report, 2018).
Cumulatively, the available research on diversity management in African organiza-
tions suggests the dominant approach to diverse identities in the South African work-
place has been along the lines of what Thomas and Ely (1996, pp. 79–89) labeled the
“discrimination-­and-­fairness perspective.” However, some multinational companies do
position diversity as a competitive advantage. A large-­scale study of twelve South
African organizations across several sectors revealed minimal focus on diversity man-
agement but a primary emphasis on compliance and reaching numerical targets as a
response to the Employment Equity Act of 1998 (Steyn & Kelly,  2010). Zulu and
 Human Resource Management in the African Context   313

Parumasur (2009) examined managerial perceptions of the management of cultural

diversity and workplace transformation in three production companies and reported
that while there had been significant change in the political and economic spheres in the
country, similar progress had not been realized in the labor market. Despite the efforts
of some organizations to implement valuing diversity interventions, practical stumbling
blocks, including the lack of skilled and experienced black candidates and resistance to
affirmative action, often impede progress (Motileng, Wagner, & Cassimjee,  2006;
Vermeulen & Coetzee, 2006; Zulu & Parumasur, 2009).
Some studies (Nkomo et al. (2016) can be found on internation diversity in Africa.
Nkomo et al. refer to South African Breweries, which grew from being a dominant local
brewer to become SABMiller, now the second largest brewer in the world (Bluen, van
Kralingen, & Hirschowitz, 2013). While the company focuses on equity initiatives and
diversity initiatives that fit the national context of South Africa, lessons learned have
informed localization and diversity initiatives across its operations in Africa. In respect
of staffing its multinational operations, given the general talent scarcity and expatriate
skills required, most SABMiller expatriates recruited into markets like South America
were drawn from SABMiller Europe, rather than South Africa (Bluen et al., 2013). The
company has adopted what Nishii and Özbilgin (2007) refer to as a top-­down, multido-
mestic global diversity strategy. Standard Bank, in its initial multinational strategy into
markets in various African countries, relied on deploying South African expatriates,
which highlighted cultural obstacles (Morris & Zinn, 2013). However, more recently the
bank has stressed localization of talent as a means of capacity building and improving
cultural adaptation to business demands and the managing of diversity.

Adoption of Human Resource

Management Practices

Research in Ghana highlights how localization effectiveness depends on how localiza-

tion of various HRM practices, such as recruitment and selection, training and develop-
ment, performance and reward management, is rolled out in the subsidiary operations
of MNCs in Africa (Adams, Nyuur, Ellis, & Debrah , 2016; Azungah, Michailova, &
Hutchings, 2018). Ellis et al. (2016) provide an instructive overview of recruitment and
selection, training and development, and reward and performance management sys-
tems in a thematic evaluation of HRM practices in African countries. They note that
practices such as performance management have become a critical part of administra-
tive reform in many African countries (p. 408). They find that various types of perfor-
mance management systems occur with varying degrees of effectiveness. On this point,
research in Uganda and South Africa underlines the need for performance leadership to
directly shape employees’ perceptions of the efficacy of performance management
(Magoola & Horwitz, 2010).
314   Horwitz and Ronnie

The adoption of HRM practices does not exist in a vacuum. It is important to

­ nderstand special contextual circumstances within which managers in Africa operate,
u
the sort of challenges they face, and how they respond to those challenges. An enduring
theme in policy debates in developing countries is the appropriateness of Western man-
agement principles and practices. Many authors have challenged the tendency by MNCs
as well as local managers to adopt practices with little consideration as to the suitability
and relevance of such practices (Horwitz, Nkomo, & Rajah, 2004; Nkomo et al., 2016).
Some have identified the limitations of concepts formulated in the West (Jackson,
2002a,  2016; Kamoche,  2000; Kamoche, Debrah et al.,  2004; Nkomo et al.,  2016;
Nzelibe,  1986), while others have offered empirical evidence on the nature of extant
practices, pointing to their appropriateness or lack thereof (Kamoche, 2000; Jackson &
Horwitz,  2017). This growing critique has highlighted the need to understand the
African context and indigenous thought systems and, in particular, the perspective of
the African worker.
Jackson (2002a,  2016) argues that in Africa there are often paradoxical value sys-
tems—Western instrumental and individualist versus humanistic systems with their
roots in tribal and rural communities. However, elements of both often constitute the
framework within which the African indigenous thought system occurs. This thought
system includes features such as a high degree of social cohesion and collectivist orien-
tation and use of symbolism and metaphors to make sense of the world. The importance
of extended family (in relation to the Western notion of the nuclear family) is seen in the
network of interrelationships, extended family relations, and mutual obligations not
dissimilar to the paternalism found in Asia (Kamoche, 2000). This results in a sense of
communalism and traditionalism (Nzelibe, 1986), which is not unlike the Confucian
influence on Asian cultures. An advantage of this approach is that team-­based practices
are possible, as are group incentive systems. A disadvantage may arise in some countries
through a high degree of group conformism and sometimes nepotism in hiring, promo-
tion decisions, and practices.
Nonetheless, this has led some authors (Kamoche, Debrah et al., 2004; Mangaliso, 2001;
Nkomo et al., 2016) to propose a shift away from the predominant Western management
theories to alternative ones based on African perspectives. These include cultural hetero-
geneity as a source of mutually beneficial, win–win cooperation, a multicultural vision
considering the mental connectedness the worker shares with group members, the idea
that individuals assume a relational existence and identity whose raison d’être is located
within the community to which they belong. But HRM strategies should not be assumed
to be identical across different managerial functions, and a blind application of a nar-
rowly regional approach should be avoided. Arguably, the African notion of ubuntu is not
widespread in organizational behavior in many parts of modern Africa. The precepts of
African ubuntu tend to equate with African values as a basis for fostering an Afrocentric
managerial culture with aligned HRM practices (Mbigi, 2000). Ubuntu, literally trans-
lated, means “I am who I am through others”; this is in contrast to the Western tenet of
“cogito, ergo sum—“I think therefore I am.” It is this contrasting of a form of communal
humanism with individualism and instrumentalism that has a normative appeal for
 Human Resource Management in the African Context   315

advocates of an African economic and cultural renaissance. Caution is, however,

­necessary in potentially confusing a desired future vision with current empirical reality.
The socio-­economic context of management therefore differs across African countries,
most of which have high levels of unemployment, poverty, and illiteracy. At the same
time, there is a high need to develop people (Kamoche, 2000).
Although Western managerial practices have prevailed for decades in African coun-
tries, there is an increase in southern African firms adopting Japanese and East Asian
practices (Faull, 2000; Horwitz, 2017; Horwitz, Kamoche, & Chew, 2002). This is partic-
ularly evident in the use of lean manufacturing, just-­in-­time methods, and other
operations management measures to reduce product defects, stock holdings, inven-
tory, and waste. Quality and productivity improvement measures have sought to bench-
mark international standards in the South African hospitality multinational Sun
International. These measures have also increased in the manufacturing sector, in which
firms have introduced kaizen, kanban methods, Nissan-­type green areas, lean and total
quality management, and quality improvement teams since 2000 . The ideas of lean
thinking gained currency in African firms such as Bell Equipment, Nampak–Metalbox
Management Services, SABMiller, Shatterprufe Windscreens, Sasol Polymers, and Joel
Goldmine. The motivation for adopting these measures is primarily productivity and
work process improvement. However, widespread adoption of East Asian work prac-
tices is seen by many as unworkable. Many firms believe that Japanese work philoso-
phies are rooted in a different cultural context and cannot therefore be copied in African
countries. Effective HRM diffusion thus requires adaptability and sensitivity to the
African context.

Afro-­A sian Influences, Culture, and

Human Resource Management Practices
in Africa

Although Western management has been proffered as the answer to Africa’s manage-
ment challenges (Jackson, 2004, 2016), it has often failed to provide appropriate solu-
tions because the instrumental, transactional assumptions of Western HRM have not
aligned well with the more collectivist, humanistic values in certain African communi-
ties. While Western international management scholars have shown a keen interest in
the study of other cultures, for example, in Chinese management since the early 1990s
(Child, 1994), Jackson (2016) finds that less is known about African management and
diversity, including that of values and management organization. The perception is that
Africa has been regarded as less interesting by management scholars despite the large
presence of Western companies and notwithstanding the significant Chinese invest-
ment in the continent over the past decade and longer. Jackson (2016) refers to cultural
“Third Spaces” (after Bhabha, 1994), which are being socially constructed given a tripartite
316   Horwitz and Ronnie

interaction among the West, Africa, and China and through the power dynamics
and geopolitical relations of these regions. A key research question stemming from
this nexus is the possible implications for HRM policy and practice at the organiza-
tional level.
Jackson (2016) notes that there are critical conceptual frameworks for North–South
relations, including postcolonial theory (Bhabha, 1994; Said, 1995) and dependency the-
ory (Frank, 1969), but little to conceptualize South–South relations and power dynam-
ics. Jackson (2016) further argues that we are beginning to construct conceptual
categories to analyze colonial, modern Western and embryonic indigenous African
influences on people management in Africa that can be used to understand other
emerging regions. Concepts such as HRM cross-­vergence and hybridization can then be
utilized to understand what types of organization and management emerge
(Jackson, 2004). Ip (2009), for example, identifies what a Confucian firm might look
like, and this may be useful as an ideal-­type analytical category for understanding the
possible nature of Chinese influence on organizations in Africa. This may well be one
stream of influence on Chinese organizations and HRM Africa, but not the only one.
Gelb (2005) asserts that South–South resource-­seeking investments may embody busi-
ness models that are less corporatized and more informal than Western models. This
conclusion is supported by Kamoche and Siebers (2015), who found that there is little
understanding about cross-­cultural, HRM, employment, and expatriation issues in
their study of Chinese management practices in Kenya.
Jackson (2016) further highlights that research is needed to investigate evidence of
indigenous knowledge and management systems and how this representation may be
associated with geopolitically dominant knowledge systems. He posits that
organizational-­level HRM cross-­vergence theory, together with an integrated concept
of how global power relations operate, can be used to analyze the different influences on
HRM policy and practice at the organizational level in Africa. This considers approaches
to HRM honed in the home country that seek to balance a people and results orienta-
tion. This is well represented in contemporary HRM literature (e.g., Kamoche, Debrah
et al., 2004). Yet people, within this instrumental conceptualization of HRM, are still
seen as “resources.” Jackson (2002b, 2002c, 2016) has observed that when more mature
systems of HRM are exported to (or imported into) emerging or developing countries,
they can revert back to a “harder” form of instrumental people management. Despite
two decades of structural adjustment programs, liberalization of economies, and influ-
ences of Western MNCs and of management education, Western management systems
transferred into African organizations have not, according to Jackson, provided widely
acceptable or legitimate HRM models.
Hence, the cultural construct of ubuntu management has been much debated in
southern Africa (Jackson, 1999, 2016), popularized, among others, by Mbigi (1997) and
experimented with in some of the larger companies and public enterprises, amid a focus
on empowerment and employment equity. This represented an emphasis on the human-
ity of people working in organizations and a move away from seeing people as a resource
in an instrumental way. This shift represents a perception that African communities and
 Human Resource Management in the African Context   317

attendant HRM policies and practices differ from Western ideas of an intrinsic value of
human resources as people rather than instrumental resources, a value in their own
right. Ideal-­type management or HRM systems are not often found in any pure sense in
organizations in Africa, although researched cases such as Afril and First Bank in
Cameroon might have come close, argues Jackson (2016). In the more general cross-
cultural management literature, “collectivism” is seen as target specific: THat is, in-­group
and out-­group members are treated differently (Hui, 1990; Triandis, 1990). Yet it has
been argued that ubuntu principles and the communalism of Africa might not necessar-
ily only pertain to in-­group members (Jackson, 2016; Mutabazi, 2002) in studies in sub-
Saharan countries.
In the area of HRM, Shen (2007) suggests that although home-­country practices are a
strong influence on what international companies do abroad, a simple transfer of sys-
tems and practices cannot be assumed because of political, legal, economic, and socio-
cultural differences. In HRM issues, the local situation plays a key role in determining
the practices of Chinese MNCs among the companies investigated. Hence, they paid
higher rates than the market average in developed countries to compensate for the lack
of training and development opportunities and a lack of employee participation and
involvement, while subsidiaries in developing countries, including those in Africa, are
paid low wages with poorer working conditions, in contrast to the generally good work-
ing conditions they operated under in developed countries. Despite this localization,
Shen (2007) also asserts that the lower labor standards in African and other developing
countries were influenced by similar standards in China and the generally negative atti-
tudes of senior Chinese managers toward trades unions. Jackson (2004,  2016) has
pointed to the need to focus on decision-­making within the complex context of Africa
and the wider involvement of stakeholders in dealing with environmental uncertainty.
The nature of corporate governance, the inclusion of a wider stakeholder base, and the
implications for concepts and measures of appropriateness are all aspects that are little
known about HRM in Chinese organizations in Africa and need to be further investi-
gated. For example, an approach could identify the synergies between Chinese values
(perhaps through Confucianism) and Africa community values (such as ubuntu) and
better inform both Chinese and African stakeholders.
In a comparative analysis with East Asian and African HRM, researchers found that
practices from certain Asian countries such as Japan and China are being increasingly
diffused into more developed and investment-­attracting organizations in African coun-
tries (Horwitz et al.,  2002; Luiz,  2007). Managerial styles reflect organizational and
national cultural patterns. In South Africa, while achievement is valued, group and
organization conformity are also important. While there is a paucity of empirical
research on managerial culture in southern African firms, a masculine dominance is
evident across ethnic groups underlined by individualist values and a relatively large
power distance between groups. This supports Jackson’s (2002a) framework and is
based on historical racial and ethnic disparities.
However, an emergent Black middle class has begun to occupy decision-­making roles.
Class mobility is likely to have an impact on managerial culture and inform strategic
318   Horwitz and Ronnie

choices about appropriate organizational culture, business, and HRM practices in the
African context. There is some evidence, therefore, for elements of an African renais-
sance approach. Managerial ideologies also tend to reflect unitarist ideas—the organiza-
tion as a “happy family” or cohesive team emphasizing loyalty and conflict avoidance,
notions similar to the Japanese notion of “industrial familism.” However, organization
and national culture in many African countries tend to reflect considerable diversity and
pluralism, with procedural regulation of conflicts in South Africa particularly. The latter
lends support for the postinstrumental model in Jackson’s framework. The advent of
democracy, especially in South Africa, and the glasnost effect of global competition begs
the on-­going question as to the inevitability of high-­performance work practices conver-
gence and the global hegemony of “best practice” over local exigencies. In practice,
hybrid models appear more likely.

Employment and Industrial Relations

African countries are not monolithic in their HRM, employment, and industrial rela-
tions systems (Maree,  2016, Wood & Brewster,  2007). The contiguous sub-­Saharan
African countries differ in levels of infrastructural development or acquisition for
expanding wage employment and industrial sectors. Unevenness in this regard widens
when comparing regional faster-­growing and more rapidly industrializing South Africa
with other African countries like Ethiopia (Matanmi, 2000). As noted earlier, industrial
relations in Africa are often rooted in past regimes of colonialism or apartheid
(Horwitz,  2016), which created wage work in the exploitation of primary natural
resources such as gold and diamonds and in emergent manufacturing sectors such as
clothing and textiles. Political independence expanded wage-­ employment sectors
(largely public, but also private sectors), creating legislative frameworks legitimizing
trade union rights to varying degrees. According to Hayter, (2018, pp. 16–18), “In South
Africa social dialogue has played a more important role in wage policy and protective
labor standards (e.g. minimum wage policy) and endeavours towards the notion of ‘reg-
ulated flexibility.’ South Africa adopted a tripartite declaration in 2017 on Wage
Inequality and Labour Market Stability that introduced a minimum wage and measures
to promote collective bargaining and address protracted violent strike action.” Yet as
previously mentioned, “decent work” with above minimum wages and fair conditions of
employment remain elusive in certain sectors (Webster & Ludwig, 2000).
With often weak or variable institutional and regulatory capacity, “a plurality of insti-
tutional contexts and political interests” (Cooke et al., 2015, pp. 3–4), employment rela-
tions regimes in Africa are relatively new and evolving. The International Labour
Organization (ILO), for example, has a number of advisors working with African coun-
try governments to establish industrial relations systems, legislative frameworks, collec-
tive bargaining, and dispute resolution systems based on ILO conventions. Since its
launch in 2000, the ILO Project based in Pretoria has made considerable progress in
 Human Resource Management in the African Context   319

initiatives to strengthen social dialogue in six South African Development Community

countries—South Africa, Namibia, Lesotho, Botswana, Swaziland, and Zimbabwe—
through seeking to create tripartite forums and designing industrial relations and dis-
pute resolution systems (Anstey, 2004, p. 59).
The regulatory and institutional context of employment relations in Africa varies
considerably (Maree, 2016, Wood & Horwitz, 2016) but also needs to be examined from
broader international perspectives rather than a dominant national or regional pattern
in labor market regulation (Klerck, 2019). There is a substantial body of work in these
systems, their challenges, and their reforms. Foreign investors often rely on this body of
knowledge in considering investment decisions.
Human resource management in Africa has been affected by multifaceted themes
(Ellis et al., 2016; Horwitz, 2017). The first is the impact of structural adjustment pro-
grams where, except for Libya and South Africa, most countries assessed here have
implemented World Bank and International Monetary Fund economic reform mea-
sures. Employment and industrial relations have felt the brunt of these market-­led
reforms. Liberalized economies with privatization and deregulatory measures have seen
a drop in formal employment and deterioration of labor standards. The issue of privati-
zation and its effects on HRM and employment in Africa have been found to be complex
and often problematic, with research in countries such as Mozambique finding adverse
effects on employment security and remuneration levels and a shrinking pool of “good
work” (Dibben & Wood, 2013).
While there is some evidence of a concomitant rise in industrial relations institutions
such as collective bargaining and dispute resolution, as democratization occurs, strong
independent trade unions not linked to the state or employers are rare. Positively, how-
ever, tripartite corporatist engagement is not uncommon, for example, in South Africa.
There is, therefore, a vital need for institution building in African countries to strengthen
HRM and employment relations systems and practices. This underlines a need to extend
the human capital agenda to the arguably most important challenges facing Africa,
namely, human resource development, building managerial capacity, investing in train-
ing and development, and sound HRM practices.
As previously discussed, the second key development is that of rising Chinese invest-
ment in African countries and a preference of these organizations to prefer home country
rather than host country employment standards impacts on employment, employment
and health care costs, and union membership decline. A third theme is that of HIV/
AIDS and most recently COVID-­19, where in sub-­Saharan Africa the ­former especially
has had devastating effects on lives. These diseases have a deleterious effect on absentee-
ism, training, career, and succession planning, with adverse effects on state- and union-
negotiated medical schemes.
A fourth theme is significant change in labor market policy and structures, with both
the state and employers in many countries either promoting or turning a blind eye to
ineffective monitoring of legislative protective and collective agreements, as increased
cost reduction and flexibility are sought, with a consequent deterioration in employ-
ment standards, social protection, and rising informalization and casualization in labor
320   Horwitz and Ronnie

markets. Examples include the decline of regional, centralized bargaining structures in

the building and construction industry in South Africa.
Bahadur (2004) notes a relationship between the African Growth and Opportunity
Act and sweatshop conditions. The African Growth and Opportunity Act is a US act
passed in 2000 offering preferential access for certain African exports. It reflects a philo-
sophical shift in the United States’ approach to Africa stemming from a policy of “trade
not aid” (Bahadur, 2004, p. 39). Some thirty-­seven sub-­Saharan African countries qual-
ify to export to the United States under the act. One result is a switching of Malawian
exports, previously destined predominantly to South Africa, to the United States. In a
number of cases, working conditions have deteriorated, for example, increased over-
time up to twenty-­seven hours weekly in Lesotho and repression of trade union rights
and, with little enforcement of labor laws with high unemployment in sub-­Saharan
Africa, the bargaining power of unions in this sector is compromised. In South Africa,
over sixty thousand retrenchments have occurred in the clothing industry, a result
largely of cheap imports from lower-­cost producers in Asia. A well-­organized and
soundly led union, the South African Clothing and Textile Workers Union, has strug-
gled to fight this trend. One initiative that has some employer support is a “buy South
Africa” campaign to try and preserve jobs.
These industry examples reflect the increasingly precarious nature of employment
and flexible labor markets in most African countries. This is important for HRM. Even
in South Africa, arguably with a strongly protective Labour Relations Act (1995), institu-
tionalized Labour Court, and statutory Conciliation Mediation and Arbitration
Commission, as well as minimum standards legislation in the form of the Basic
Conditions of Employment Act (1997) and arguably the strongest union movement on
the continent, precarious, non-­standard work has increased while formal standard work
has declined (Du Toit & Ronnie, 2014).
The combined effects of globalization, trade policies, new technology, capital mobil-
ity, new managerial practices, in some cases hostile labor market policies, and poorly
implemented labor relations legislation have served to place trade unions in Africa
largely on the defensive, even as ILO initiatives seek to establish dispute resolution
machinery in several African countries. Kalula (2003) argues in this regard that labor
laws in southern Africa do not consider the social realities of countries in the region,
with their changing labor markets. He submits that labor law reflects Western models
“borrowing and bending” legal reforms seeking adherence to ILO standards, sometimes
transplanting inappropriate legal precepts focusing on formal-­sector standard employ-
ment, ignoring the bigger reality of a dramatically increasing informal sector. He states
that “the vast majority are left out,” arguing that “labour law is a sharp instrument of
social policy. Labour market regulation must strive to influence work beyond the formal
sector narrowly defined. Mutual rights and obligations in the workplace remain impor-
tant, but employment law must be part of an agenda for alleviating poverty”
(Kalula, 2003, p. 57) and developing human capital for the continent. According to the
Cranet survey (Table 14.3), employers state that negotiations with trade unions have
 Human Resource Management in the African Context   321

Table 14.3.  Negotiations with trade unions (South Africa)

2004/5 2009/10 2014/15

24% 74% 87%
n = 378 n = 191 n = 121

Source: Cranet (2004/5, 2009/10, 2014/15), South African data.

increased since 2004/5 in South Africa. As in other countries, union density increases
have tended to be stronger in the public sector.
In Africa, the HRM and industrial relations agenda will have to increasingly concern
itself not only with managerial–working class relations, but also with a growing and
socially excluded underclass, along with the impacts of new digital technology
(Horwitz, 2016). Traditional trade union contestation and power-­conflict models may
be inappropriate, as are traditional distributive forms of collective bargaining based on
an adversarial tradition. In Africa, union and employer strategies will need to increas-
ingly focus on human resource development. Joint collaboration in the workplace will
be vital for effective competition in the marketplace.

Conclusion

There is a need to go beyond a narrow confine and examine organizational HRM strate-
gies and responses to privatization, globalization, and regionalization. Adams et al.
(2016, pp. 1–2) note, “With the exception of compensation and industrial relations prac-
tices which are largely localised, HR systems of MNCs in African countries such as
Ghana are transferred to subsidiaries with minimal adaptation to contextual realities.” It
is necessary to extend cross-­national/comparative research both within Africa and in
other emergent or developing economies. There is a need for practical research on perti-
nent issues such as (1) the changing nature of the psychological contract as the labor
market becomes increasingly segmented between standard and nonstandard employment
patterns; (2) organizational justice; (3) trust, organizational, and work commitment and
workplace cooperation; (4) HRM practices and service delivery in changing markets;
and (5) HRM strategies for attracting, motivating, and retaining talent. An examination
of the relationships between these issues and employee work outcomes is necessary in
view of the impact of international competitiveness on African organizations and (6)
how HRM policies and practices are recontextualized and adapted when transferred
from Western or regional MNCs to their operations abroad.
Further empirical work on normative socio-­cultural constructs such as ubuntu and
complex emerging tents of African management approaches, their diversity, and their
efficacy are particularly worthy of exploration. The rapidly advancing new technologies
322   Horwitz and Ronnie

of the gig economy also represent an enormous research and practical challenge for
managers and unions with regard to the changing nature of work and how this affects
policy choices and HRM practice. Potential impacts on the structure of labor markets,
trade union influence, workplace flexibility, and precarious work on a continent with
high unemployment, a paradoxical oversupply of unskilled labor, and a shortage of
skilled labor are critical. Equally, this poses large challenges to governments and organi-
zations in the area of human resource development, which is fit for purpose and effec-
tively aligned with emerging trends in new technology and workplace change. Africa is
certainly not immune to the effects of the changing world of work and offers a veritable
social laboratory for HRM and social science research.

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 chapter 15

H um a n R esou rce
M a nagem en t i n th e
M iddle E ast

Washika Haak-­S aheem and Tamer K. Darwish

This chapter focuses on human resource management (HRM) in the Middle East.
We review the myriad lists of terms and geographies that have been used to describe
the Middle East region (e.g., Middle East, Middle East/North Africa, Southwest
Asia, Arab world) and compile a broad definition of the Middle East. This was not
an easy task because there are no specific borders that specify the Middle East
region in particular, since the latter refers to a sociopolitical and cultural area
(Zahra, 2011).
To begin, we eliminated what the Middle East is not. Therefore, we decided not to
include the Maghreb nations and societies of non-­Arabic racial descent. For the pur-
pose of the overall focus of this chapter, we offer the following societies as our exhaus-
tive list of the Middle East: Bahrain, Egypt, Kuwait, Iraq, Jordan, Lebanon, Oman,
Qatar, Palestine, Saudi Arabi, Syria, and United Arab Emirates (UAE). Table 15.1 sum-
marizes some of the economic, cultural, and demographic characteristics of the
region.
Although the Middle East context enjoys great geographical and economic sig-
nificance, coupled with a unique institutional setup, there is limited literature on
HRM in the Middle East. The context has been largely overlooked in prior work and
there are few comprehensive and systematic reviews (however, see Metcalfe, 2008,
Haak-­Saheem & Festing, 2020). This chapter seeks to explore the importance of the
Middle East’s unique institutional and cultural context for HRM and its implica-
tions for theory and practice. To do so, we first examine the relative impact of con-
text on HRM in general, before looking at several examples of some of the Middle
Eastern countries. The chapter concludes with a number of important areas for
future research.
Table 15.1.  Key demographic, cultural, and economic characteristics
Country Population Government Percentage of Ethnic groups Labor forces, by Language Religion Gross
type immigrants to occupation domestic
total population product per
capita

Bahrain 1.5 million Constitutional 48% (mainly Bahraini 46%, Agriculture: 1% Arabic (official), Muslim 73.7%, $49,000
monarchy economic Asian 45.5%, other Industry: 32% English, Farsi, Urdu Christian 9.3%, Jewish 0.1%,
migrants, e.g., Arab 4.7%, African 1.6%, Services: 67% other 16.9%
expatriates) European 1%, other 1.2%
Egypt 99.4 million Presidential 0.3% Egyptian 99.7%, Agriculture: 11.7% Arabic (official), Muslim 90%, Christian 10% $12,700
republic other 0.3% Industry: 34.3% Arabic, English
Services: 54%
Kuwait 3 million Constitutional 69% (mainly Kuwaiti 30.4%, other N/A Arabic (official), Muslim 74.6%, $65,800
  monarchy economic Arab 27.4%, Asian 40.3%, English widely Christian 18.2%, other and
migrants, e.g., African 1%, other 9% spoken unspecified 7.2%
expatriates)  
Iraq 38.6 million Federal N/A Arab 75–80%, Kurdish Agriculture: 21.6% Arabic (official), Muslim 95–98% $16,700
parliamentary 15–20%, other 5% Industry: 18.7% Kurdish (official), (Shia 64–69%,
republic Services: 59.8% Turkmen Sunni 29–34%),
Christian 1% other 1–4%
Jordan 10.8 million Parliamentary 30% (mainly Jordanian 69.3%, Syrian Agriculture: 2% Arabic (official), Muslim 97.2%, $9,200
constitutional migrant workers 13.3%, Palestinian 6.7%, Industry: 20% English (widely Christian 2.2%,
monarchy and refugees) Egyptian 6.7%, Services: 78% understood among Buddhist 0.4%, Hindu 0.1%,
Iraqi 1.4%, other 2.6% upper and middle Jewish <0.1
classes)
Lebanon 5.5 million Parliamentary 20% (mainly Arab 95%, Armenian 4%, Agriculture: 39% Arabic (official), Muslim, 54.0%, Christian 40.5%, $19,600
republic migrant workers other 1% Industry: N/A French, English, Druze 5.6%, other 0.1%
and refugees) Services: N/A Armenian
Oman 4.7 million Absolute 46% (mainly Arab, Baluchi 54%, South Agriculture: 4.7% Arabic (official), Muslim 85.9%, Christian 6.5%, $46,000
monarchy economic migrants,Asian 36%, African 2%, Industry: 49.6% English, Baluchi, Hindu 5.5%, Buddhist 0.8%,
e.g., expatriates) other 8% Services: 45% Swahili, Urdu, Indian Jewish <0.1%, other 1%,
dialects unaffiliated 0.2%
Palestine 5 million Presidential N/A N/A N/A Arabic (official) N/A $3,020
Qatar 2.44 million Absolute 88% (mainly Non-­Qatari 88.4%, Qatari N/A Arabic (official), Muslim 67.7%, Christian 13.8%, $124,100
monarchy economic migrants,11.6% English commonly Hindu 13.8%, Buddhist 3.1%,
e.g., expatriates) used as a second folk religion <0.1%, Jewish
language <0.1%, other 0.7%, unaffiliated
0.9%
Saudi 34.2 million Absolute 38.1% (mainly 88% (mainly economic Agriculture: 6.7% Arabic (official) Muslim citizens are 85–90% $54,500
Arabia monarchy economic migrants,migrants, e.g., expatriates) Industry: 21.4% Sunni other (includes Eastern
e.g., expatriates) Services: 71.9% Orthodox, Protestant, Roman
Catholic, Jewish, Hindu,
Buddhist, and Sikh)
Syria 19.4 million Presidential N/A Arab ~50%, Alawite ~15%, Agriculture: 17% Arabic (official), Muslim 87%, Christian 10%, $2,900
republic Kurd ~10%, Levantine Industry: 16% Kurdish, Armenian, Druze 3%  
~10%, other ~15% Services: 67% Aramaic, Circassian,
French, English
United 9.9 million Federation of 87.7% (mainly Emirati 11.6%, South Asian Agriculture: 7% Arabic (official), Muslim 76%, Christian 9%, $68,600
Arab monarchies economic migrants,59.4% (includes Indian Industry: 15% English, Hindi, other (primarily Hindu and
Emirates e.g., expatriates) 38.2%, Bangladeshi 9.5%, Services: 78% Malayam, Urdu, Buddhist, less than 5% of the
Pakistani 9.4%, other 2.3%), Pashto, Tagalog, population consists of Parsi,
Egyptian 10.2%, Filipino Persian Baha’i, Druze, Sikh, Ahmadi,
6.1%, other 12.8% Ismaili, Dawoodi Bohra Muslim,
and Jewish) 15%

Sources: CIA World Factbook (2020); World Bank (2019); Worldometer (2020).
330   Haak-Saheem and Darwish

Human Resource Management in the

Middle East: Does Context Matter?

There is limited existing research and literature on management in general and HRM in
particular in the Middle East. Many prior empirical works and textbooks do not even
recognize the region (Iles, Almhedie, & Baruch, 2012). In the same line, Zahra (2011)
states that most of the research on the region remains anecdotal, case study based, nor-
mative, and conceptual. There also seem to be a lack of comprehensive reviews and
understanding in relation to HRM issues in the Middle East context (see Haak-­Saheem
& Festing, 2020). Regardless of the recent political turmoil and conflicts, the Middle
East is a context of increasing geographical and economic significance, which challenges,
and could add great value to, extant HRM research and provide notable lessons and
implications for theory and practice.
On the one hand, the wider Middle East context is branded by the indulgence of
poverty and the existence of great wealth, high levels of uncertainty and of stability, and
a significant rate of illiteracy coinciding with notable educational attainment (Iles
et al., 2012). There are also significant differences in relation to the economic status of
the Middle Eastern countries, with national economies ranging from the oil- and gas-
exporting states such as Saudi Arabia, the UAE, Kuwait, Qatar, Oman, and Bahrain to
those that lack basic natural resources, such as Syria, Jordan, Palestine, Lebanon, Yemen,
and Sudan. The region is also highly diverse in relation to its political systems (Afiouni,
Ruël, & Schuler, 2014).
On the other hand, there are many similarities among the Middle Eastern countries;
for instance, they are predominantly Islamic countries and share similar values and con-
ventions, norms, and cultural traits. The majority of these countries speak the same
Arabic language and are broadly understandable to each other, and they adopt a rela-
tively similar educational curriculum. Many of the borders in the region were drawn by
colonial powers and few are long established or fit local cultural or religious divides
within Islam very comfortably. This makes it an interesting and unique ground for HRM
research because these resemblances could contribute to shaping relatively similar insti-
tutional settings across the region. There is a need to investigate the context-­specific
nature of HRM in the Middle East, given the growing interest of both researchers and
practitioners in the region (Budhwar & Mellahi, 2016).
Dewettinck and Remue (2011) argue that there is a tradition of HRM research based
in the contextual paradigm. This paradigm suggests that HRM practice outcomes are
strongly influenced by the context in which they occur. From this perspective, the adap-
tion of a best practice approach is rather a myth than a reality (Brewster, Mayrhofer &
Farndale,  2018). Investigating the impact of contextual factors on HRM attracts
increased attention among scholars (Afiouni et al.,  2014; Singh, Wood, Darwish,
Fleming, & Mohammed,  2019). As argued by Whetten (2009), when the results are
largely different, context-­sensitive applications of Western-­derived theories have the
 Human Resource Management in the Middle East   331

potential to not only stimulate new insights, but also make theories more context-sensitive.
But we may also need new emic theories, derived from the region itself, to understand
the relevance of locally based HRM (see “The Cultural Perspective” for a discussion of
wasta, for example). In other words, context can inform theories and further enhance
their subsequent utility.

Institutional Perspective of Human

Resource Management

The institutional perspective provides one platform for understanding the context of
HRM in the Middle East. This theoretical approach focuses on the role of social organi-
zations as external forces shaping the policies and practices of companies. It offers a
theoretical basis for analyzing a number of fundamental issues facing organizations in a
particular environment. The primary argument is that most businesses operate under
social influences and pressures to adopt the practices that are appropriate for their envi-
ronments (see Chapter 3 for a discussion of institutional perspectives).
In seeking to establish the relationship between institutional arrangements and
HRM policies and practices, Budhwar (2000) shows that HRM practices are context
specific and that national HRM practices are determined by both culture-­free and
culture-­bound factors. In other words, HRM policies and practices utilized in orga-
nizations in a particular context are likely to be influenced by both institutional and
cultural arrangements.
More recently, considerable attention has been given to the impact of institutions on
HRM and the way in which key HRM practices are still embedded in the respective
institutional environments (Haak-­Saheem & Festing, 2020; Sparrow, 2012; Vaiman &
Brewster, 2015). Institutional theory argues that organizational decisions, policies, and
practices are not only the result of rational decision-­making processes aimed at maxi-
mizing effectiveness, but also influenced by the institutional context in which they
operate (see, e.g., DiMaggio & Powell, 1983; Kostova, 1999). Meyer and Rowan (1977)
characterized organizations as institutionally formed entities that must, to ensure
survival, comply with the rationalized and institutionalized expectations of their
environment and adopt expected structures and management practices. In this view,
existing literature (e.g., Afiouni et al., 2014; Haak-­Saheem & Festing, 2020) highlights
the indigenous management constructs and models valid for the Middle East region
and their impact on the management of human resources. DiMaggio and Powell (1983)
argue that organizations adopt different practices through three different processes of
isomorphism: coercive, mimetic, and normative. The national business system
approach (Whitley, 1994) suggests that national institutional configurations are resilient
and organizational-­level practices within individual nations are path dependent, reflect-
ing particular sets of historical circumstances (Whitley, 1999).
332   Haak-Saheem and Darwish

National Business System

The national business system approach represents a platform to explain country-­specific

particularities in HRM. Consequently, the characteristics of organizations, patterns of
organizational practices, including HRM, and interactions with other social actors are
seen as reflecting different models of capitalism (Whitley, 1998). In contrast to other
institutional approaches, such as varieties of capitalism (Hall & Soskice, 2001), national
business systems theory accords much more attention to the relative role of the state
and, more specifically, the central role of the developmental state (Whitley,  1994).
However, research on the characteristics of national business systems in the context of
Middle Eastern countries is rather limited (for an exception, see Haak-­Saheem &
Festing,  2020), and its link to HRM has often been ignored. Afiouni and colleagues
(2014) emphasize the need for further research in order to suggest ways in which com-
panies in the region align their HRM practices with their business strategies while
accounting for external institutional realities. Given the limited knowledge about
the key characteristics of a firm’s HRM design and structure and its embeddedness
within certain institutional arrangements, this chapter focuses on three elements within
national business systems theory, namely, centralization, coordination and control, and
education and training systems.

Centralization, Coordination, and Control Systems

Centralization, coordination, and control systems emphasize the hierarchal level
at which economic activities and resources are usually coordinated and controlled
(Whitley, 1994). Regarding HRM and institutional logics, centralization, coordination,
and control systems reflect and are reflected by existing laws, rules, and regulations
within a particular national environment. In the context of the Middle East, governments
play an authoritarian role and provide strong developmental visions, active market inter-
ference, and a pragmatic approach to economic and social development. For instance,
while the effect of governments on the decisions of organizations in advanced economies
is restricted, many organizations in the Middle East are owned partially or fully by the
government. In such cases, the government is anything but “hands off ”: THe strategic
direction of the government regulates the decisions of the businesses at the highest level
and thereby influences market mechanisms. The system has been described (Evans, 1995)
as an “embedded economy.” A. J. Ali (1995) describes the political economy in the Middle
East as “Sheikho-­capitalism,” noting the power and influence of the government in man-
agement decisions. Recent research on HRM in the Middle East (Haak-­Saheem &
Festing, 2020) empirically supports the notion of the central role of the government.
Contrary to market economies, where control over resources is decentralized to private
firms and, in theory at least, left to the market (Whitley, 1994), in the Middle East the
government often takes the lead over business decisions across the region.
 Human Resource Management in the Middle East   333

Education and Training Systems

As Whitley (1994) argues, education and training systems matter when explaining
distinctive characteristics of a national business system. The education system in the
Middle East region has often been described as underdeveloped and incapable of meet-
ing future human resource needs (Forstenlechner & Rutledge, 2011; Kapiszewski, 2001).
Harry (2007) argues that while education systems in other parts of the world have
focused on equipping young people with appropriate skills and competencies, the edu-
cation system in many of the Arab countries has focused mainly on developing national
identity, and the fundamentals of higher education and research have been often
ignored (Forstenlechner & Rutledge, 2011). Moreover, despite some investment, educa-
tion systems across the region have remained underdeveloped. Although the number of
universities is increasing rapidly, the relevance of education to the workplace has not yet
improved significantly (Marmenout & Lirio, 2014). Across the Middle East, the educa-
tion system is unable to nurture the advanced technical, managerial, and professional
skills required by modern economies (Kapiszewski, 2001).
The World Bank (2018) reported that the schooling system is generally of low quality
and basic skills are not learned. At the same time, there is a pervasive mismatch between
skills taught in schools and those required in the job market. Accordingly, firms in the
Middle East state that inadequate labor skills, both technical and soft, delay or even
­hinder their growth (World Bank, 2018).
While a large number of countries in the Middle East suffer from unemployment and
inadequate education and training systems, the wealthy petrostates of the Arabian Gulf
have overcome these challenges by acquiring skills and competencies via the interna-
tional labor market. The Gulf Cooperation Council (GCC) constitutes six countries,
namely, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE. Since the discovery
of oil and gas, these countries aimed to undergo rapid economic and social transforma-
tion. As reflected in their governmental agendas, such as the UAE Vision 2030, the ulti-
mate goal is to create modern and stable economic and social structures with a high
standard of living, rooted in deep Islamic values.
Further, the government across the GCC states applied an economic developmental
model that strongly emphasizes market liberalism and economic openness, embracing
globalization while at the same time refraining from challenging the traditional neo-
patrimonial leadership structure in the country (Hvidt, 2009). Furthermore, expatriates
in the GCC states form the majority of the population. For instance, recent research
reveals that 99 percent of the employees in the private sector are foreigners in the UAE
(Al Waqfi & Forstenlechner, 2014). Similarly, in Oman, the majority of the private sec-
tor’s workforce are expatriates (Glaister, Al Amri, & Spicer, 2019). Therefore, the domi-
nance of the international workforce across a wide range of jobs constitutes a unique
contextual challenge that needs to be addressed through education and training
reforms. As noted, the rapid economic and social development has created a large
demand for foreign employees. Given the rapidly emerging economy of the Arab Gulf
states and their demographic and social characteristics, the nature of the jobs offered to
334   Haak-Saheem and Darwish

expatriates differs significantly from the nature of jobs offered to domestic employees.
As a result of lucrative compensation packages and attractive living standards, the Gulf
has been able to attract a range of individuals with different knowledge, skills, and abili-
ties (Haak-­Saheem & Brewster, 2017). While the local population tends to seek employ-
ment in the public sector, a large number of positions in the private sector are occupied
by expatriates. Assigned and self-­initiated Western (mainly European and North
American) expatriates are employed in strategic positions, followed by self-initiated
Arab, Indian, and other expatriates in professional and middle managerial roles (Haak-
Saheem & Brewster, 2017). And at the lower end of the employment market, the “hid-
den” expatriates, as they have been called (laborers mostly from such countries as
Pakistan, Bangladesh, Indonesia, Nepal, and the Philippines) can be found. To reduce
the reliance on foreigners, governments across the GCC have attempted to enforce
localization policies (Al-­Ali, 2008), including, for example, Emiratization in the UAE
(Forstenlechner & Mellahi, 2011). Across the GCC countries, there are localization poli-
cies in place to reduce reliance on foreigners and increase local participation in the
workforce.
In summary, similar to other emerging countries, the fragmented business systems in
the Middle East are characterized by high direct control (Whitley, 1999). Rather than the
private sector, the governments take the lead to push the developmental agenda further.
Ownership structures enable firms to cooperate, overcome lack of trust, access financial
resources, and overcome opportunistic behavior (Whitley, 1994).

The Cultural Perspective

Earlier research assessing the impact of culture on management practices in the region
agreed that the general business environment is characterized and dominated by family-
oriented working relationships and Islamic cultural values as markers of a distinct busi-
ness environment (Ali, 1995; Rice, 1999). However, the “culturalists” have not generally
studied the Middle East, certainly not in any detail. But clearly, culture exerts a profound
influence on HRM practices (Demirbag, Collings, Tatoglu, Mellahi, & Wood, 2014) (see
Chapter 2 for a discussion of cultural perspectives on HRM). Arising from sociocul-
tural values that are rooted deeply in Middle Eastern Islamic and tribal traditions,
­cultural values and societal attitudes in relation to management and work in the region
are different from those found in other parts of the world (At-­Twaijri, 1989). Human
resource management practices are shaped by guidelines set out by Islam (Mellahi
& Budhwar, 2010).
Islamic views on labor begin with a fundamental argument that secular work should
not be differentiated from religious duties. As indicated by Bazargan (1980), the Quran
states that work is an essential activity because it leads toward spiritual growth in this
world and an intrinsic path to prosperity in the hereafter. The major cultural and social
features in the Middle East that have influenced HRM policies and practices can be
 Human Resource Management in the Middle East   335

attributed to two main factors: the influence of religion and the influence of tribal family
traditions. Islam is considered a comprehensive religion that covers political and social
aspects of individual behavior. Moreover, it offers an ethical framework for business and
management (Hickson & Pugh, 1995).
The Islamic work ethic encourages hard work, which is considered a virtue through
which sins can be eliminated, a source of financial independence, and a means of
achieving personal growth, self-­fulfillment, self-­respect, and satisfaction (A. Ali, 1988;
Yousef, 2001). Practically, the impact of Islam on HRM decision-­making can be seen, for
example, in the month of Ramadan, in which Muslim employees may attend work for
shorter hours or are entitled to Haj leave (an annual Islamic pilgrimage to Makkah
[Mecca], a mandatory religious duty for Muslims that must be performed at least once
in their lifetime). It can also be seen on a day-­to-­day basis in the physical separation of
male and female employees.
In the Middle East, HRM practices are often influenced by the dominance of tribal
societal structures such as the use of wasta as a mean to get hired, promoted, or retained.
Wasta is a concept that summarizes the personal and collective nature of the Middle
Eastern societies (Al-­Ramahi, 2008): It is a personal exchange system between members
of society that is entrenched in the tribal structure of the country, creating a form of
favoritism that provides individuals with advantages not because of merit or right, but
because of who they know (Aldossari & Robertson,  2016; Cunningham & Sarayrah,
1994). Wasta is called different things in Western societies. Although the extent of the
use of wasta varies between Arab countries, it permeates many aspects of life in the Arab
world (Kilani & Sakijha, 2002). In most Arab countries, getting a job without wasta can
be a difficult experience, particularly, but not only, for higher-­status jobs (S. Ali, Raiden,
& Kirk, 2013). Thus, the social status and networks of an individual have a higher weight
in professional success than skills or competencies. From this perspective, interpersonal
relationships are critical. More specifically, because of weak legal protection or the
absence of large regulated markets, organizations in many Middle Eastern countries
must rely on such relationships to ensure access to critical resources (Hutchings & Weir,
2006; Peng & Luo, 2000).
Given the diversity and the rapid changes within the region, values and norms are
subject to the prevailing dynamics. Thus, despite many similarities, HRM across the
Middle East does not operate under a single unified set of rules. For example, while
employment relationships are impacted by the presence of labor unions in some Arab
countries, such as Lebanon, the government in the UAE restricts the establishment of
any trade unions. However, there is a general understanding of the need to diversify and
develop economic structures across the region to achieve and sustain economic and
social development. Taking the opportunities and challenges in the Middle Eastern
countries together, their environment and context can be seen as distinct from that of
most other countries or regions (Sidani & Al Ariss, 2014). While it is critical to under-
stand the impact of institutions and culture on HRM, one should not neglect the global
trends shaping HRM in the region. First, the increased presence of multinational cor-
porations, through foreign direct investment, has impacted existing organizational
336   Haak-Saheem and Darwish

practices across the region. Second, there are ambitions to, and considerable support for,
moving away from traditional HRM policies and practices to be better equipped for
global competition. Third, there is immense pressure in many Middle Eastern countries
to deal with challenges such as unemployment or regional migration.

Human Resource Management in the

Middle East: A Look to the Future

As stated earlier, HRM research in the Middle East remains relatively limited, and cer-
tainly more work needs to be done to reach a better understanding of the institutional
features of the region and the relative impact of context on HRM practice. Recent
research (see, e.g., Elbanna, Abdelzaher, & Ramadan, 2020) argues that despite the call
to extend and advance theories that take account of the changes in the Arab world, the-
ory extension has been weak. In this section, we offer a number of directions for future
research, which could be useful for HRM scholars and practitioners who are interested
in the region.
First, although there has been a growing interest in and increasing research on HRM
in the Middle East, this has largely focused on specific countries such as the UAE and
Saudi Arabia (see, for example, Abaker, Al-­Titi, & Al-­Nasr, 2019; Aldossari & Robertson,
2016; Haak-­Saheem & Brewster,  2017; Haak-­Saheem, Darwish, & Al-­Nasser,  2017;
Haak-­ Saheem & Festing,  2020; Haak-­ Saheem, Festing, & Darwish,  2016; Harbi,
Thursfield, & Bright, 2017), while overlooking others such as Yemen, Sudan, Palestine,
and Iraq. Hence, a more balanced and comprehensive research agenda remains one of
the key challenges facing researchers seeking to understand the different contextual fac-
tors and unique institutional arrangements in the Middle East and their relative impact
on HRM practice. Future work could also consider cross-­country-­level analysis, which
in turn would provide opportunities for greater generalization for results across the
region. This will also help to push the research agenda forward in relation to HRM in the
Middle East.
Second, large parts of the region (e.g., Syria, Iraq, Yemen, Palestine, and Libya) have
been suffering from political turmoil and conflict; this has caused a high level of
uncertainty in these contexts (e.g., high unemployment, slow economic growth, lower
foreign investment, weak corporate governance, migration, and brain drain).
Research in such situations is obviously difficult (see Wood, Cooke, Demirbag, &
Kwong, 2018) and remains very limited and fragmented, but without it, we can know
little about HRM policies and practices in contexts of high uncertainty. Examples of
issues that could be explored are the impact of social and political unrest on expatri-
ates and their performance; how contexts with high uncertainties impact the opera-
tions of multinational enterprises; deployed HRM practices in such contexts; and
the significant increase of skilled labor emigration and the impact of the latter on
 Human Resource Management in the Middle East   337

HRM planning and firms’ performance. This is an important area of research and it
offers interesting challenges for future work. Regardless of the associated risk, such
contexts can also offer valuable business opportunities for local and multinational
organizations (see Miller,  1998) (see Chapter 7 for a discussion of HRM within
terrorism-­ridden contexts).
Third, and related to the above point, some of the relatively safer Middle Eastern
countries have also been affected by the political and social unrest that occurred in
the Middle East; one outcome was the influx of refugees faced by some countries,
which has added a huge economic burden to far-­from-­rich places such as Jordan,
particularly on their employment, education, and health sectors. Jordan is currently
reeling under the effects of the refugee crisis. A large number of refugees living in
Jordan have migrated from Syria, Palestine, Iraq, and Libya because of political
unrest in these countries. Currently, Jordan has the world’s second largest proportion
of refugees in comparison to its population—eighty-­nine refugees for every thousand
inhabitants (United Nations High Commissioner for Refugees, 2018). The influx of
Syria’s refugees and its resulting impact on the Jordanian context demands deeper
investigation. For instance, it would be interesting if future work could explore how
HRM practices in the all-­important health sector are influenced by the upheaval
caused by the extraordinary circumstances of the refugee crisis. Given the challeng-
ing budget constraints in such situations (Ministry of Health, 2017), hospitals must
augment their efficiency/effectiveness levels, and effective HRM could make a signif-
icant contribution here.
Fourth, another important area could be the “hidden expatriates,” particularly in the
emerging Arab Gulf states where expatriates comprise a significant percentage of the
labor market, with locals being in a minority (see, e.g., Haak-­Saheem,  2016; Haak-
Saheem & Brewster, 2017). While research on expatriates has been growing, some cate-
gories have been overlooked. These include several menial and manual jobs, as well as
lower-­level office jobs that are filled by people who come from south or east of the Arab
Gulf states (e.g., Pakistan, India, Nepal, and Bangladesh). They have been largely
ignored in expatriation research, perhaps because of the focus of most HRM specialists
on high-­status individuals (see Haak-­Saheem & Brewster, 2017). These people meet all
the expatriation criteria and are a significant percentage of the workforce, particularly in
the Gulf region. Like other expatriates, these people can neither settle in most Middle
East countries nor apply for citizenship. They are there for a limited time and they are
subject to labor rules and conditions in these countries. We believe this is an interesting
area of research, and future work could advance the notion of hidden expatriates
because there is still much to learn about this particular group of expatriates and their
situation, management, and contributions.
Fifth, more research is also required on indigenization policies in the Middle East,
with a particular focus on multinational enterprises operating in the Arab Gulf states
(these policies are often called Saudization, Emiratization, Qatarization, Kuwaitization,
etc.). In response to concerns for domestic and regional stability, and to ensure
locals benefit more from resource windfalls, the various Gulf states have all introduced
338   Haak-Saheem and Darwish

workforce localization regulations. Multinational corporations operating in the Gulf

region face strategic and regulatory pressures (see Forstenlechner & Mellahi, 2011; Haak-
Saheem & Festing, 2020; Harry, 2007; Mellahi, Demirbag, & Riddle, 2011; Niblock &
Malik, 2007; Williams, Bhanugopan, & Fish, 2011) to replace at least some of their
expatriate staff with local Arabs. However, despite localization policies being more
aggressively promoted in the outcome of the Arab Spring in 2011, MNCs operating in
these countries have made, at best, very uneven progress in workforce localization. This
may make future operations in the countries in question more challenging and, indeed,
undermine the stability that makes domicile possible. Hence, future work could closely
examine and explain why indigenization policies have proven so difficult and tease out
the implications of the latter for theory and practice.
Sixth, in emerging market settings, like the Middle East, it is unlikely that the
Western style of HRM (hard or soft) will lead to the same performance results found
in mature markets; hence, it is most likely that a distinct HRM model may be emerg-
ing in the Middle East context where institutional arrangements are fluid and less
developed (see Darwish, Singh, & Wood, 2016; Webster & Wood, 2005). Future work
could examine which contours of the most effective emerging HRM model in the
Middle East institutional context may generate superior performance results for firms
across different sectors. Moreover, more sectoral comparative work would also be
helpful, particularly in resource-­rich countries such as the Arab Gulf states. As the
“resource curse” theory (Auty, 1993) suggests, firms in such contexts could struggle to
compete and might face serious challenges to achieve superior results as long as they
operate outside the oil and gas sector (see Auty,  1993; Darwish, Mohamed, Wood,
Singh, & Fleming,  2017; Singh, Darwish, Wood, & Mohamed,  2017). Future work
could collect research evidence from the Arab Gulf states, which could help in devel-
oping a specific archetype of HRM practice in resource-­centered national economies
and further identify the context-­specific features for each of these states (see Darwish
et al., 2017).
Finally, existing literature on HRM in emerging markets and the Middle East argues
that people management practices will maintain distinct features often associated with
higher levels of communitarianism and with authoritarian/paternalistic management
approaches being alleviated by strong informal networks and flexibilities (see Darwish
et al., 2016; Jackson, Amaeshi, & Yavuz, 2008; Webster & Wood, 2005). The latter would
suggest that sets of effective HRM practices encountered in the Middle East context may
not correspond to the identifiable bundles of practices that are perceived to secure com-
petitiveness for Western firms operating in developed markets (Darwish et al., 2016;
Webster & Wood, 2005). Hence, the question remains whether strong informal net-
works and ties, local values and conventions, and connections (wasta) in the Middle
East context can provide a coherent alternative to more formal institutions necessary to
secure competitiveness and success (see Al-­Hasan & James; 2003; Darwish et al. 2016;
Hancke, Rhodes, & Thatcher, 2007). More work is needed to understand whether a
distinct and effective HRM archetype that is more integrated with local institutional
realities can be found in the context of the Middle East.
 Human Resource Management in the Middle East   339

Conclusion

This chapter aims to provide insights into institutional and cultural factors surrounding
HRM in the Middle East. Although the institutional perspective is pertinent in theoreti-
cal discussions, this chapter underlines the need to pay more attention to create a better
understanding about the factors shaping HRM in the region. In general, HRM in the
Middle East is influenced by Western practices, but at the same time, it is shaped by its
unique institutional features. Our discussion is in line with the core notion in the litera-
ture on comparative capitalism, which states that firm-­level HRM policies and practices
cannot be widely adopted across different contexts (see Hancke et al., 2007; Whitley,
2010). Our arguments highlight the importance of the need to understand the extent to
which uneven and loosely coupled institutional arrangements—a common feature of
Middle Eastern countries—mean that complementary sets of rules and bundles of HRM
policies and practices present in mature markets are less likely to deliver the desired
results in this region. Unlike firms in other institutional settings, those in the Middle
East are facing, depending on the specific country, either unemployment and rapid pop-
ulation growth or a shortage of skills leading to the importation of labor. Additionally,
the political instability in many Middle Eastern countries has resulted in an increased
movement of people across the region. HRM specialists in particular could usefully
contribute to the debate on appropriate policy frameworks designed to aid the integra-
tion and employment of refugees. However, most organizations are characterized by
limited skills and competencies for managing their businesses and people effectively.
Hence, HRM scholarship could offer concepts and frameworks to support policy makers
and practitioners. The coordination between the interests of government, nongovernment
agencies, organizations, and individuals is critical for improving HRM in the region.
In summary, we identified change dynamics and organizational upheaval, which led
us to believe that, while there is indeed an appetite for adopting best practices, openness
and flexibility can also enable HRM specialists to develop, restructure, and change HRM
activities rapidly (Tayeb, 1998). In this quest, we are most concerned about the long-
term impact of the HRM with short-­term perspectives on rapidly changing institutions.
More critically, HRM practices are built on fragile, interdependent, and uncertain con-
ditions, and they are not grounded in deep foundations prevalent in most developed
countries.

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 chapter 16

H um a n R e sou rce
M a nagem en t i n Asi a

Fang Lee Cooke, Vivien T. Supangco,

and Neil Rupidara

Asia is the most populated and diverse continent in relation to the political regimes,
institutional arrangements, economic systems, cultural traditions, and levels of eco-
nomic and social development across its nation-­states. With a rich and long history that
runs to several thousand years, many developing countries in Asia (e.g., China, India,
Vietnam, and Malaysia) have, since the 1980s, opened up their economies and acceler-
ated their economic development, with relatively high growth rates accompanied by
institutional reforms. While large, privately owned companies have been the key stake-
holders in the Japanese and Korean economies, China’s economy is still dominated by
state-­owned enterprises in key industrial sectors. The manufacturing industry has been
the driver for China’s economic development since the 1980s, while in India, informa-
tion communication technology and information communication technology–enabled
offshore business process outsourcing have been the main driving force of the economy
since the 1990s. Vietnam is catching up with China as a manufacturing country, whereas
Thailand and the Philippines are increasingly taking a greater share of the offshore busi-
ness process outsourcing. Despite their varying positions in the global value chains
across industrial sectors, developing Asian countries have commonly experienced a
sharp rise in education levels and living standards, with a concomitant growth in con-
sumer power and demands.
Culturally, East Asian societies such as China, Japan, and Korea remain influenced, to
various degrees, by Confucian values, characterized by paternalism, diligence, and work
centrality. Buddhism is widely practiced in southeastern and southern nations like
Thailand, the Philippines, and Sri Lanka, whereas Islamism underpins many of the
or­gan­i­za­tional practices in Bangladesh, Malaysia, Indonesia, and Pakistan. India, in
comparison, has more complexity than other Asian nations in its racial, ethnic, religious,
and social classes (e.g., caste system) and diversity (cf. Cooke & Kim, 2018; Khanna, 2007;
Sitalaksmi & Zhu, 2010; Witt & Redding, 2014, for more detailed discussions).
346   Cooke, Supangco, and Rupidara

This chapter reviews key characteristics and developments in human resource

management (HRM) in Asian countries against the backdrop of their rich historical
features and the rapidly changing landscape on many fronts. It takes stock of what has
been researched in the HRM field and the theoretical perspectives underpinning it. The
chapter also identifies implications for HRM practices and future research. It is impos-
sible to cover in one chapter, even briefly, the vast amount of material and the political,
economic, and social diversity across the continent. Simplifications and omissions of
important countries and issues are inevitable, and some countries may receive more
coverage than others, which reflects the authors’ research experience rather than a
deliberate promotion of certain countries over and above the others. We also wish to
note that although many scholarly studies of HRM have been published in the native
languages of the countries researched, this chapter reviews mainly literature published
in the English language. Hence, the omission of important indigenous insights has been
inevitable, although most of the authors of the English literature that we review in this
chapter are Asian by origin.

Characteristics of Human
Resource Management in Asian
Countries

The examination of HRM systems, policies, and practices in Asia needs to be situated in
the broader context of institutional and economic reforms and, consequently, labor
market changes, notably the heavy erosion of lifelong employment (e.g., in Japan and
China) and the sharp rise of informal employment in East Asia (e.g., in Korea, China)
(Cooke & Brown,  2015), and the persistent dominance of informal employment in
India—approximately 84 percent of the workforce, according to the International
Labour Organization (2019). This suggests that a large, and increasing, proportion of
workers are employed under precarious conditions with limited voice or social security
protection. The bulk of the research on HRM in Asian countries has drawn data from
formal employing organizations and, increasingly, has focused on professional occupa-
tional groups and knowledge workers to understand their work-­related behaviors. This
body of research has been underpinned by a rich source of theoretical perspectives,
including, for example, institutional theory, political economy, labor economics, cultural
perspectives, critical management perspectives, and organizational psychology. While
earlier studies have focused on the macro influences of HRM (e.g., institutional,
­economic, and sociocultural factors), there is growing interest, since the early 2010s,
in the micro foundations of organizations, exploring the mechanisms that link HRM
practices with employee perceptions, behaviors, and organizational outcomes. More
recently, there is a discernible trend for HRM research in Asia to follow developments in
 Human Resource Management in Asia   347

the West quite closely, through the adoption of sophisticated research design to capture
the multilevel mechanisms, processes, interactions, and outcomes of HRM.

Institutional and Economic Reforms as the Driving Force

for Changes in Human Resource Management
While many Asian countries have been transitioning toward a more modern and sys-
tematic approach to HRM, this has largely been triggered by institutional and economic
reforms at the national level—often as a result of a crisis or the need to open up the state-
planned economy after a long period of stagnation that marred the country with
poverty. These include, for instance, the 1992 Japan asset price bubble (Demaestri &
Masci, 2003); the 1997 Asia financial crisis that gripped many countries in East Asia and
Southeast Asia (Pempel, 1999); the adoption of the open-­door policy in China in 1978
(Huan, 1986); and the economic liberalization officially launched in India in 1991 (BBC
News, 1998).
In Indonesia, for example, changes in the legal system regulating industrial relations
and HRM were stimulated by labor law reform between 1998 and 2006 (Rupidara &
Darby, 2017; Rupidara & McGraw, 2010; Tjandra, 2016). The reform has not only improved
the general conditions of employment relations (e.g., minimum wage, freedom to
unionize, social security), but also, to some extent, positively affected work practices
within organizations (Rupidara & Darby,  2017). The reform has thus resulted in an
improved climate for further developments in business, particularly HRM practices.
Since the late 1990s, HRM in Indonesia has been transforming itself from a mainly
administrative function into more strategic roles equipped with advanced systems and
practices. This has particularly taken place in large firms and drawn a major demarca-
tion from the practices of micro and small and medium-­sized firms. Habir and
Rajendran (2008) observed that this transformation started after the severe crisis that
hit Indonesia in 1997, although the evident postcrisis turnaround might have in fact
overshadowed a much longer-­term transformation that had been underway but was not
well recognized, with the exception of a few studies (e.g., Bennington & Habir, 2003;
Rupidara & Darby, 2017; Sutiyono, 2007).
Rupidara (2017) described HRM in Indonesia as a changing field of practice that is
highly isomorphic. New HRM ideas are acquired from the external environment, chan-
neled by means of human and nonhuman actors into the field, and then adopted by
HRM actors within firms. The HRM actors are those who aspire to improve the HRM
systems of their firms. The adopted systems are usually modified to meet specific
demands of the organizations. This phenomenon means that different organizations are
alike in elements of their HRM practices. In addition to HRM actors within firms, busi-
ness consultants, academics, and other managers have also been identified as involved
in such institutional evolution (Rupidara & Darby, 2017). However, it is important to
understand that the field of practice of HRM in Indonesia is segmented, with HRM in
348   Cooke, Supangco, and Rupidara

large firms much better established than that in the small and medium-­sized firms that
constitute the bulk of the business (Rupidara & Darby, 2017).

Continuing Distinctiveness of Human Resource

Management Systems in Asia
Despite major institutional and economic reforms, extant research shows that HRM in
Asian countries remains distinct and is influenced by contextual factors at various
levels. For example, Budhwar, Varma, and Patel (2016) analyzed the macro-, meso-, and
micro-­level factors that shape the HRM philosophy, programs, policies, and practices in
Asia in light of the convergence and divergence debate. Similarly, Rowley, Bae, Horak,
and Bacouel-­Jentjens (2017) adopted a multilevel analytical framework and outlined the
theoretical trends that reflect distinctive political, institutional, economic, and cultural
features of a nation at specific development stages. Rowley et al. (2017) illustrate their
analysis with four interesting and insightful examples: yongo and informality in HRM
in Korea; guanxi in the context of performance appraisal in China; the role of humor
in relationship building by leaders in China and the United States; and human factors in
virtual teamwork in Taiwan, Vietnam, and Indonesia. Rowley et al. (2017, p. 1393) con-
cluded that “HRM systems in the Asia Pacific region” remain rather heterogenic,
informed by “social ties, informality, and interpersonal trust,” with “no trend toward
global convergence.” While hybrid systems have emerged at the local level as a result of
the adoption of “best practices,” other HRM practices “tend to diverge” (Rowley et al.,
2017, p. 1393). A consistent finding from authors of the country chapters of HRM in Asia
(Cooke & Kim,  2018) is change and continuity, in a similar vein to that argued by
Budhwar et al. (2016) and Rowley et al. (2017). While changes have been triggered by
economic globalization and the transfer of HRM, philosophy, and practices across
countries and industrial sectors, institutional and cultural factors are seen to still have a
strong hold that shapes HRM practices in many nation-­states.
It is interesting to note that not all institutional traditions are homegrown. For
instance, the colonial legacy of the education system in the Philippines is a strong insti-
tutional factor that influences its HRM practices. While most textbooks at the primary
and high school levels are written by Filipinos, at the tertiary education levels, most are
still American textbooks. Such exposure to the American educational system has facili-
tated the transferability of Western HRM practices in the Philippines, where the HRM
departments in firms enjoy a higher status than their counterparts in the United States
and Canada (Galang, 2004). Moreover, results of the 2014/15 Cranet survey (of larger
firms) reveal that the United States and the Philippines have a similar profile in the fol-
lowing aspects: more than 90 percent of responding organizations in each country have
HRM departments; nearly 70 percent of respondent organizations have HRM heads on
the board; and HRM heads in each country are recruited from human resource special-
ists outside the organization. Around 90 percent of organizations have mission state-
ments and business strategies, with over 40 percent of HRM heads in the two countries
 Human Resource Management in Asia   349

being involved in the strategic formulation process at the outset. Moreover, responsibili-
ties in recruitment and selection, pay and benefits, and workforce expansion and reduc-
tion lie almost equally in the HRM department in consultation with the line management,
and in line management in consultation with the HRM department (Supangco, 2016b).
The two countries diverge in the following ways: Close to 80 percent of respondent orga-
nizations in the United States have written diversity statements, while only 45.6 percent
of respondent organizations in the Philippines have the same. In addition, responsibility
on issues in industrial relations rests with the HRM department in the case of the United
States, but in the Philippines, it rests with the HRM department in consultation with line
management (Supangco, 2016b).

The Influence of Societal Cultural Values in Workplace

Behavior in Asia
According to Hofstede (1991, p. 5), “Culture is the collective programming of the mind
which distinguishes the members of one group or category of people from another.” It
describes groups of individuals who experience the same environment and thus share
thoughts, feelings, and behavior (Hofstede, 1991). Individuals learn to display similar
patterns of behavior in response to their perceptions, which are based on what is shared
as important. These shared perceptions thus influence what are seen as problems and
how they are addressed in organizations, including the HRM policies and practices that
are adopted by an organization. In describing culture, Hofstede (1980) identified four
dimensions, namely, power distance, individualism, uncertainty avoidance, and mascu-
linity; this was later expanded to include Confucian work dynamism, now long-term
orientation (Hofstede & Bond, 1988), and indulgence versus restraint (see Chapter 2 for
a discussion of cultural perspectives).
Cultural perspectives are a major theoretical underpinning for many of the earlier
studies of HRM and management practices in Asia (e.g., Z. Chen & Francesco, 2000;
Hundley & Kim,  1997; Miah & Bird,  2007; Ralston, Holt, Terpstra, & Yu,  1997;
Warner, 2010). Distinct cultural values displayed in workplace behavior include obedi-
ence to one’s superiors (e.g., Branine, 2005) and paternalism, which combines strong
discipline, paternalistic authority, and benevolent concern for the welfare and well-
being of the employees and their families (H. Y. Chen & Kao, 2009). However, H. Y. Chen
and Kao (2009) argued that, in the Taiwanese context, an autocratic leadership style is
positively related to job stress and negatively associated with job satisfaction and the
physical and psychological well-­being of employees. Hui, Law, Chen, and Tjosvold
(2008, p. 147) observed that the “values of harmony and face continue to influence
Chinese management” and that open conflicts “are often diffused to avoid face-­to-­face
confrontation.” Indeed, the significance of a positive relationship between superiors and
subordinates and among colleagues cannot be emphasized enough (e.g., Cheung, Wu,
Chan, & Wong, 2009). While the benefits of supervisory support in enhancing individual
350   Cooke, Supangco, and Rupidara

employees’ psychological outcomes may be generic in most societies, this quality of the
relationship is arguably more important in workplace relationships in the Chinese
societies.
Paternalism and collectivism are seen as distinctive cultural characteristics that influ-
ence the way people are managed and interact with each other at work in Asian societies
(e.g., Bae, Chen, & Rowley, 2011; Lin, Leung, Savani, & Morris, 2017). However, societal
cultural traditions in developing Asia are being diluted as the countries develop eco-
nomically and have become more open to the influence of foreign cultures, aided by
information communication technology. These new developments have led to changes
in their work ethics and expectations (Ghosh & Chaudhuri, 2009; Nankervis, Cooke,
Chatterjee, & Warner, 2013; Cooke & Kim, 2018). Young employees are reported to be
more eager to succeed, less willing to endure hardship, more assertive of their rights and
interests, and less loyal to their employers. Equally, employers have become more cost-
oriented, in part to deal with heightened competitive pressures. As marketization deep-
ens, wealth disparity increases, and workplace relationships become more transactional
in nature; the relationship between labor and capital/management has worsened in
many workplaces, leading to a rising level of labor disputes, for instance, in China and
India (Lee, Ng, & Lansbury, 2020).
Although institutional and cultural perspectives are often treated as distinct theoreti-
cal lenses in studying HRM issues, the role of societal cultural values in shaping work-
place behavior can be examined from an institutional angle. In some Asian societies
(and, indeed, other parts of the world), religious bodies are highly influential institu-
tions, and religious and cultural values form an important part of the institutional gov-
ernance of community, business, and social behavior. Institutional logics (Thornton,
Ocasio, & Lounsbury, 2013) specific to particular societies and communities are embed-
ded in the HRM philosophies, policies, and practices of organizations. For instance,
Abu Bakar, Cooke, and Muenjohn’s (2018) study of job engagement in the Malaysian
finance sector reveals that religiosity plays an important role in work engagement,
through high internal control and consciousness, work ethics (i.e., work as moral obli-
gation), and a positive mindset (e.g. being proactive, positive, and happy) cultivated by
practicing the Islamic religion. In Islamic and Buddhist societies, religious practice may
be institutionalized through daily activities of the organization and individual employ-
ees, and HRM practices, such as training, may be used to reinforce certain religious
values so as to shape employees’ attitudes and behaviors.
The influence of societal culture on workplace behavior may be further illustrated
with the Philippines as a country example. The Philippines scores 94 in power distance,
which means that society accepts the unequal distribution of power (Hofstede Insights,
2018). Studies on Filipino values also underscore the importance of deference to author-
ity, be it in the family or society. Leaders must be accorded respect and obeyed, and they
are even feared by some (Bulatao, 1973). Data from the Cranet survey conducted in the
Philippines in 2014/15 (Supangco,  2016b) show that only 41.6 percent of respondent
companies involve HRM in strategy formulation at the outset, indicating that HRM is
not yet recognized as fitting for inclusion in the executive management level. However,
 Human Resource Management in Asia   351

inasmuch as HRM is considered the authority on HRM-­related matters, in consultation

with line managers, it is mainly responsible for policy decisions on recruitment and
selection, training and development, pay and benefits, and industrial relations.
Workforce expansion is taken care of by line management in consultation with the HRM
department. In addition, in managing performance, it is a common practice that super-
visors and supervisors’ superiors provide data in performance appraisal, rather than
peers or subordinates, which clearly reflects high power distance in society.
The Philippines scores 32 in individualism versus collectivism, which identifies the
Philippines as a collectivist culture. In collectivist cultures, importance is placed on being a
member of and committed to a group that takes care of the individual; thus, loyalty to
the group is expected (Hofstede Insights,  2018). The group that is considered most
important to Filipinos is the family. It is a source of security and support. Family mem-
bers make sacrifices for the benefit of other family members. It is common for parents to
work long hours or even out of the country, braving harsh and uncertain conditions as
well as homesickness to provide for the family and send their children to school. In addi-
tion, it is common for an older sibling to help with family expenses, including the educa-
tion of younger ones, even forgoing marriage until the younger siblings are done with
school (Bulatao, 1973). Evidence of the influence of this dimension of culture is indi-
cated in recruitment, evaluation of training programs, and pay and benefits. The two
most common methods of recruiting individuals are recruitment from within and
employee referrals. The former allows members of the organization (in-­group) to move
up the ladder or into better opportunities within the organization. While employee
referral may limit the applicant pool to individuals known by the employees, employees
preselect those who they know will fit the job and the culture of the organization. In
addition, in evaluating training effectiveness, most organizations rely on informal feed-
back from employees (88.0 percent) and supervisors (89.9 percent), which is prevalent
in a collectivist culture (Supangco, 2016b). However, it appears that pay and bonuses are
still predominantly based on individual performance. Meanwhile, the most popular
four benefits are family oriented, including maternity leave, paternity leave, parental
leave, and private healthcare schemes. Other family-­oriented benefits that organizations
in the Philippines provide employees with include rice subsidy, family days, and exten-
sion of benefits such as health and insurance to family members, among others.
The Philippines scores 64 in masculinity, making it a masculine society. This means
that the society places importance on achievements and success (Hofstede Insights,
2018). To Filipinos, achievement in school and later in one’s career is a means to improve
one’s economic condition. Success is not, however, intended for one’s self, but for the
betterment of one’s family (Bulatao, 1973). Evidence of the influence of this dimension of
culture may be found in incentive schemes, where the focus is on individual performance.
The Philippines’s score on uncertainty avoidance is 44, which places its culture as hav-
ing a low level of uncertainty avoidance. In such cultures, schedules are more flexible,
deviance from norms does not create tension, and changes and innovation are more
welcome (Hofstede Insights, 2018). Filipinos venture into the unknown with the bahala
na attitude. Some researchers interpret this as fatalism, when is taken to mean “come
352   Cooke, Supangco, and Rupidara

what may” or “if it is destined to happen, it will happen” (Bolstrom, 1968; Hennig, 1983).

However, Lagmay (1993) argues that bahala na, when taken from the culture bearers,
means that while the speaker accepts the situation for the moment, their tolerance for
ambiguity and trust in themselves affords them the confidence, fortitude, flexibility, and
resiliency to face any uncertainty (Lagmay, 1993). Such an attitude enables Filipinos to
take calculated risks (Jocano, 1993), especially in situations where the future or outcome
is not completely known (Lagmay, 1993).
In contrast, the Philippines score 27 in long-­term orientation, which means that
Filipinos subscribe to norms and traditions and prefer quick results (Hofstede Insights,
2018). This result may be understood in the context of society’s tolerance for uncertainty.
To the extent that Filipinos are comfortable about the uncertain future, efforts are
focused on what is now. The influence of this dimension is reflected in the low preva-
lence of stock options, which encourages an outlook toward a long-­term stay among
employees.
The Philippines scores 42 in indulgence, identifying it as a restrained society, where
basic desire for enjoyment is controlled rather than immediately gratified. Restrained
societies tend to be pessimistic and do not focus on leisure time (Hofstede Insights,
2018). Filipinos are taught to be patient and make sacrifices for others. One must forgo
one’s own dreams to help family members (Bulatao, 1973). The influence of this dimen-
sion is seen in the preference of employees for extending benefits, such as education and
health insurance, to members of the family. In addition, employees, in general, do not
resist overtime work beyond reason, because it is paid at premium rates and it allows
employees to legitimately stay in the office to avoid rush-­hour traffic, especially in Metro
Manila and other urban centers.

Gender Inequality
In most Asian countries, women’s labor market participation rate is lower than that of
men, despite continuing economic growth, decreasing fertility rates, and increasing lev-
els of education, and a higher proportion of women than men are found in informal
employment, in some countries significantly more so than in others (Asian Development
Bank, 2015). It is important to note that the level of gender equality is not necessarily
positively associated with the level of economic development of a nation-­state. For
example, in the Global Gender Gap Report 2018 (World Economic Forum, 2018), the
Philippines ranked 8th, Thailand 73rd, Vietnam 77th, Sri Lanka 100th, and Malaysia
101st; the four largest economies trail behind, with China 103rd, India 108th, Japan 110th,
and Korea 115th. The report measures the share of women with the same level of access
as men on the economic, education enrollment, health and survival, and political
empowerment fronts. It is clear that there is a pronounced gender disparity in employ-
ment within Asia, as well as between Asia and the other regions of the world. It is also
important to note that women within the same country may face different levels of
opportunities and challenges based on their place of birth and their marital status. For
 Human Resource Management in Asia   353

instance, rural migrant women in China encounter a higher level of labor market and
workplace discrimination than their urban counterparts, whereas in Japan and Korea,
married women are more likely to be found in nonstandard/regular employment
because of the fiscal system that rewards men as the household head and because of
discrimination (Cooke & Brown, 2015).
In the Philippines, the most gender-­equal country in Asia, according to the above
ranking, the lower labor force participation rate of women compared to that of men is
attributed to caregiving responsibilities at home, differences in access to credit, and gen-
eral institutional and market failure (World Bank, 2012). Yet, for women who decide to
engage in paid work, their employment rate (94.2 percent) is slightly higher than that of
men (93.4 percent). Moreover, the average basic pay received by women is higher
(P390.68) than that of men (P370.79). A cursory look at the data for the Philippines
reveals that women work 1.22 percent longer than men, and among those in the labor
force who have college degrees, 50.7 percent are women ( Philippine Statistics Authority,
2016). Moreover, a study on career success among Masters of Business Administration
students reveals that the total compensation does not vary with gender, nor does it for
the number of levels below company president and the degree of career satisfaction that
an employee has (Supangco, 2011). This scenario gives a positive signal to women who
desire to participate in the labor market. These indicators of employment in the
Philippines have implications for HRM practices in organizations in relation to both the
quantity and the quality of the job candidates (Supangco, 2016a).
The relatively higher level of gender equality in employment in the Philippines may,
in part, be explained by its legal origins. The Labor Code of the Philippines, enacted in
1974, provides the legal framework for HRM practices in the Philippines. Given the fact
that the country was a colony of the United States from 1898 to 1946, American laws
underpinned the Labor Code of the Philippines (the Code hereafter), which aims to
promote employment, ensure industrial peace, and afford protection to labor (Pangalangan,
2010). The code provides the following salient features: nondiscrimination in employ-
ment; the right to security of tenure, self-­organization, and collective bargaining; the
resolution of uncertainties in implementation; a preference for labor over management
in case of doubts in the implementation and interpretation of its provisions; and man-
dates that legal uncertainties in this regard must be resolved in favor of labor. However,
there are areas of the HRM function where the Labor Code is silent or allows manage-
ment discretion in the development and implementation of policies and practices. These
areas are HRM planning, recruitment and selection for local organizations, performance
management, and training, except for the provision that disallows discrimination
against women availing of training opportunities, scholarships, and seeking promotion
(Supangco, Los Baños, & Ocampo, 2017). Thus, organizations have the latitude to define
many HRM practices as they see fit, making HRM practices in these areas varied.
Given the talent shortage problem encountered by many Asian countries as a result of
population aging (e.g., Japan), migration (e.g., Malaysia, Thailand, the Philippines), and
retention problems (e.g., China and India), female/family friendly and equitable HRM
practices should be adopted to attract more female talent to the workforce.
354   Cooke, Supangco, and Rupidara

Variations of Human Resource Management across

Ownership Forms in Asia
Economic reforms in many developing Asian countries have led to the diversifica-
tion of ownership forms, from state-­owned domination in countries such as China and
Vietnam, toward a private ownership that consists of domestic firms, foreign joint ven-
tures, and wholly foreign ownership to various extents (Shen & Cox, 2018). Ownership
characteristics and firm legacies associated with them differentiate HRM across these
ownership forms.
For instance, the concept of HRM, a foreign import, has only been adopted in China
and many other developing Asian countries since the late 1990s. However, a large num-
ber of domestic firms still operate in a traditional personnel management mode with
little strategic planning or HRM capability. In state-­owned firms, the HRM department
acts mainly as the implementer of HRM policies that are formulated and imposed by the
state (employer). In domestic private firms, human resource managers tend to play the
administrator’s role, following instructions from the boss. Indeed, lack of professional
management is often a criticism of Chinese family-­owned businesses, in which the own-
ers run the business and make all the decisions, with little consultation of those who
work for the firm. It is in the foreign-­funded multinational corporations (MNCs) and
the high-­tech large, private firms that HRM is considered most systematic and sophisti-
cated, resembling that of Western practices (Nankervis et al., 2013; see also Cooke & Kim,
2018, for other Asian countries).
Human resource management in Indonesia has been transforming from merely an
administrative function into a more professional, if not yet strategic, role. This has been
happening at mostly large firms, including subsidiaries of MNCs, as reported by
Rupidara and Darby (2017). Within large firms, HRM principles or policies toward, for
example, high performance have been of greater concern and fulfilled by the adoption
of comprehensive HRM systems from MNC parents or by buying them from profes-
sional service or consulting firms. This includes the adoption and operation of e-­HRM
systems (e.g., Bondarouk, Schilling, & Ruël, 2016). However, observations of conversa-
tions among HRM professionals in some mailing lists of professionals show that changes
have also recently been happening in smaller domestic firms in Indonesia. In contrast,
HRM practices in the public sector show that patronage is still the main logic, not effec-
tiveness or efficiency (e.g., Blunt, Turner, & Lindroth, 2012).

Key Challenges to Human Resource Management in Asia

Extant research has identified a number of challenges to HRM in Asia that are affecting
individual countries to various extents. First, skill shortage has been a bottleneck for
development, in part because of population aging (e.g., Japan) and talent emigration
(e.g., Malaysia). While governments have been taking actions to attract overseas talent
 Human Resource Management in Asia   355

to repatriate, these actions have not had a major effect (Cooke, 2021). As all nations are
adopting an innovation-­oriented strategy to improve their competitive advantage, each
is facing different challenges. In Japan, it is the aging workforce and the limited staff
mobility (displacement and upward mobility) that stagnate workforce innovativeness
because of the lack of new blood. This deficiency is, however, compensated by employee
loyalty, endurance, and resilience, which are some of the formidable qualities of the
Japanese workforce (and the nation) that few other nations could rival. By contrast,
China and India are not short of young talent, but retention has been a major HRM
problem.
Second, there are generally limited employee HRM practices oriented to improving
employee well-­being and resilience (e.g., Cooke & Kim,  2018). Stress management
counseling services and organizational support are only available in a small number of
firms, often foreign MNCs and joint ventures. While productivity and innovation have
been the key priorities of Chinese and Indian flagship firms, these are often achieved at
the expense of employees’ well-­being through work intensity (including long working
hours) and high levels of performance pressure; in Japan, deaths arising from overwork
are often reported. By contrast, in countries with a strong religious culture, such as
Malaysia and Indonesia, religiosity has been an integral part of improving employees’
mental well-­being, HRM philosophy, and practices at the workplace, as discussed earlier.
Further country-­specific challenges are evident in Indonesia. As a nation with the
fourth largest population in the world, a couple of challenges confront most organiza-
tions. The first relates to capitalizing on the growth of the productive workforce, a phe-
nomenon called the demographic dividend or bonus (e.g., Hayes & Setyonaluri, 2015).
Between 2020 and 2030, the population of working-­age Indonesians will be higher in
proportion than its population of non-­working-­age individuals, and thus the de­pend­
ency ratio will be at its lowest. This demographic condition may accelerate economic
growth. This, however, will be quite a challenge, considering the skills gap between what
can be provided by formal education and training and what is required by the labor
market. Positive impacts of the demographic bonus phenomenon will depend on the
ability of important stakeholders to improve and tap into the quality of the workforce,
which includes the establishment of appropriate educational and employment policies
and programs at the macro level, and HRM practices at the micro level, to stimulate
higher performances of the workforce. Because of the time factor or the characteristic of
longer-­term effects of HRM policies and practices on firm performance, now is the time
to redesign HRM policies and practices at various levels and types of organizations in
response to the phenomenon. The government of Indonesia, for example, has been
actively working on linking and matching vocational training programs with the needs
of different industries (e.g., “Government Continues,” 2018). A second challenge facing
Indonesia is associated with the effective integration of technology, particularly, but not
limited to, information technology for effective HRM. Bondarouk et al. (2016) have
shown that some companies in Indonesia, particularly around the capital city of Jakarta
where large firms are concentrated, have adopted sophisticated e-­HRM systems to
improve operational HRM efficiency. However, these companies are considered only a
356   Cooke, Supangco, and Rupidara

small proportion of the total population, which lacks such luxury. It is questionable,
therefore, how effective the adoption and effective use of e-­HRM within a small proportion
of Indonesian firms is in supporting the challenge of tapping into the demographic
bonus.

Most Researched Aspects of Human

Resource Management in Asian
Countries

Research on HRM in Asian countries has proliferated since the 2000s. For example,
a comprehensive search and screening of journal databases, including Emerald,
EBSCO, SAGE, Springer, Taylor & Francis, Web of Science, and Wiley, shows that
nearly 3,000 English journal articles have been published on HRM in China (broadly
defined to include organizational behavior and some employment relations topics),
over 1,100 articles on India, over 600 articles on Japan, and over 700 articles on
Korea. While these findings are not exhaustive, they indicate the pool size of the
studies, the majority of which were published since the 1990s. There is a clear trend
that research interest has shifted from looking at the earlier functional HRM prac-
tices from a cultural lens, often informed by qualitative methods, toward micro-level
organizational behavior studies with quantitative or mixed methods, often in a rather
decontexualized manner. Commitment and leadership have been popular topics.
For example, a quick search on the article title shows that in the Korean context there
are over 70 articles on leadership and over 60 articles on commitment, compared
with 20 or so articles on financial rewards (pay, compensation, and benefits).
Similarly, in the Chinese context, there were over 300 articles on leadership and
nearly 100 articles on commitment, but fewer than 70 articles on financial rewards. It
is interesting to note that transformational leadership appears to be the most popular
type of leadership for research in the Chinese (45 of 300 plus leadership studies) and
Korean contexts (16 of 70 plus leadership studies).
Reflecting the broader trend of rapid development in the field of leadership research
in general, leadership has attracted substantial research interest as an organizational
behavior phenomenon in the Asian context. Earlier studies of leadership in the Chinese
context have focused on the role of Chinese culture on leadership style and how the
influence of culture is being diluted as China continues to open up. Ralston, Egri,
Stewart, Terpstra, and Yu’s (1999) influential study is an example. More recent studies
have expanded to cover a broad range of aspects linking the impact of leadership behav-
ior and other organizational management issues. For example, Bai, Li, and Xi (2012)
established the effects of dual-­level leadership on employee trust. Similarly, Ou et al.
(2014) examined leadership at two levels, focusing on the effect of humble leadership on
empowering behavior. Leadership and creativity are also an important strand of leadership
 Human Resource Management in Asia   357

research in the Chinese and Indian contexts, reflecting in part the countries’ eagerness
to catch up. For example, Zhang and Bartol (2010) and Kundu, Kumar, and Gahlawat
(2019) linked empowering leadership to employee creativity in the Chinese and Indian
contexts, respectively, whereas Song, Gu, and Cooke’s (2019) study revealed the positive
effects of high-­involvement work systems and shared leadership on creativity in Chinese
research and development teams through a multilevel study.

Future Research Avenues

Despite the rapidly growing number of studies of HRM in Asian contexts, these research
efforts have been shaped by research interests and capacity, as well as logistical factors.
As such, considerable research gaps remain and present fruitful opportunities for future
research. We highlight some of them in this section as an indication rather than an
exhaustive prescription.

Recruitment and Selection

Although recruitment and selection is an important HRM function, limited attention
has been paid to this theme compared with other topics, such as leadership in the Asian
context. While recruitment and selection have been included in studies of HRM practices,
for example, as a bundle of the high-­performance work practices, relatively few studies
exist that carry out an in-­depth investigation into what may be the unique practices and
challenges in Asian countries and what generic characteristics may be found. This is a
fruitful avenue for future research. Some informative prior studies can be a basis for
further research. For example, Baum and Kabst (2013) identified some interesting cross-
national differences in what features of employment conditions may attract potential
employees, with implications for firms operating in China, India, Germany, and Hungary.
Kang and Shen’s (2013) study revealed that South Korean MNCs tend to adopt the poly-
centric as well as the mixed approach of being polycentric and ethnocentric in interna-
tional staffing and points out that South Korean MNCs have paid inadequate attention
to expatriates’ career development and the personal and family issues that emerge from
expatriation and repatriation. Y. L. Zhang and Lin (2016) highlighted a growing phe-
nomenon in firms’ hiring practices in China: looking for employees with social networks
that are deemed beneficial to enhancing the firm’s performance, because those with
good social networks are more able to attract resources such as customers. Compared with
other major Asian economies, firms in India appear to pay more attention to employer
brandings in attracting talent (e.g., Banerjee, Saini, & Kalyanaram,  2019). There is,
therefore, considerable scope for advancing research on recruitment and selection in
Asian countries in terms of, for example, employers’ recruitment strategy, techniques,
selection processes, and their effectiveness and impacts.
358   Cooke, Supangco, and Rupidara

Training and Development

Training and development has been a relatively popular research topic in HRM in Asia.
However, similar to recruitment and selection, this topic has been increasingly studied
as part of several HRM practices. As such, there is limited in-­depth knowledge about the
nature, type, level, and impact of training and development provisions in different con-
texts, as well as variations across national settings, industrial sectors, ownership forms,
and groups of employees. A handful of studies have shed light on this, to some extent
reflecting HRM concerns of particular national contexts. For instance, employee per-
formance and HRM effects have been a main research focus in the Chinese context. Li,
Huang, Liu, Zhu, and Cai (2012) examined the relationship between employee training
and firm performance. Tian, Cordery, and Gamble (2016) revealed that both supervisor
and peer support are crucial in leveraging the benefits of training from employees. In
Japan, population aging and the need for new skills and a growing number of nurses for
home care have attracted research on the training of nurses (e.g., Gospel, 2015; Takizawa,
Takahashi, Takai, Ikeda, & Miyaoka, 2017). There is scarce literature on training for a
workforce with diverse needs; two studies on India fill part of this important gap.
Sankardas and Rajanahally’s (2015) study examined skills training for young adults with
special needs for transition into employment. Similarly, Kulkarni and Scullion’s (2015)
study shed light on talent management activities of disability training and placement
agencies in India. These studies provide insights into the role of key institutional actors,
or the lack of it, in developing human capital critical for the development of India,
because the country needs a more skilled workforce and aspires to adopt an inclusive
approach to development. More research efforts can be directed into other developing
Asian countries to explore how key institutional actors may work together with employ-
ing organizations to develop workforce capability through tailored training efforts.

Financial Reward
Financial reward (wage payment and benefits) in Asia has been studied from various
angles and intellectual perspectives. It is by far the most important aspect in the employ-
ment relationship between the firm and employees and one of the most challenging
HRM functions, as evidenced in an increasingly high level of staff turnover and labor
disputes concerning pay, notably in China, India, and Vietnam (e.g., Cooke & Kim, 2018;
Lee et al., 2020). However, given the centrality of financial reward as part of the HRM
function in Asian countries, research on this topic has not been as vibrant as could be
expected, perhaps in part because of the difficulty in obtaining data. In recent years,
research interest has been more on executive pay and that of knowledge workers/super-
visors, rather than pay practices for the lower-­level employees and their impact. For
instance, He and Fang (2016) examined subnational institutional variations in executive
pay across China. Similarly, Peng, Li, and Markóczy (2015) uncovered factors that may
unleash or constrain the human capital of chief executive officers in relation to their
 Human Resource Management in Asia   359
.

remuneration. Chan and Hempel (2016) examined the role of pay on supervisors’ cre-
ativity and performance. A small number of broader-­level studies have been interesting.
For instance, Guo, Tian, Han, Johnson, and Zhao (2016) turned their attention to a topic
that affects millions of Chinese workers, but has not received sufficient attention in
HRM research—factors determining workers’ participation in pension insurance.
Sengupta and Yoon (2018) examined the moderating effect of pay dispersion on the
relationship between employee share ownership and labor productivity. There is clearly
much more that could be examined in this area, from the macro and micro levels and
from the lenses of labor economics, organizational behavior, and social justice.

Performance Management and Employee Well-­Being

Since the 2000s, there has been a major growth of research interest in unpacking which
HRM practices (e.g., high-­performance work practices, high-involvement work prac-
tices, and high-­commitment work practices) may contribute to enhancing individual
and organizational performance (Kaufman, 2015). However, the primary focus has been
on how HRM can contribute to organizational success, rather than which HRM prac-
tices will enhance employee well-­being (Cooper, Wang, Bartram, & Cooke,  2019;
Guest, 2017) and lead to organizational sustainability. Much less attention has been paid
to the potential negative impact of high-­performance work practices on employees’
well-­being in the Asian context, where the level of work intensity is high in countries
such as Japan, Korea, China, and India, as noted earlier. Many research questions can be
explored. For example, how do individuals cope with increasing work demands in the
absence of a well-­developed, employee-­oriented HRM system? What impact does this
have on the employees and their career choices? What is the dark side of a demanding
job/career in Asian contexts? How do characteristics of work–life conflict and inter-
ventions differ across Asian societies, and what impacts do these have on family care
responsibilities and parenting decisions?

Diversity Management
Asian societies are diverse, some more so than others. However, the concept of diversity
management has hardly featured in HRM in East Asia in practice. For example, research
on equal opportunity and diversity in the Chinese, Japanese, and Korean contexts has
largely focused on gender (mainly female) equality (e.g., Kato & Kodama, 2018; Ouyang,
Lam, & Wang, 2015). This narrow focus may reflect the relatively homogenous nature of
the population in terms of ethnicity and religious beliefs. In comparison, there is a
higher proportion of research on diversity issues in the Indian context, albeit still very
small in relation to the number of HRM studies in general. The coverage of diversity is
also broader than that found in East Asian countries. For example, Rao (2012) investi-
gated the impact of religion in Indian workplaces, whereas Kulkarni, Boehn, and Basu
360   Cooke, Supangco, and Rupidara

50
45
40
35
30
25

lam
a

ia
R

ar

es

Au a

nd

of
or
in
di

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p.
ala
ne
In
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Ch

ap
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a
sa

ail
a la
pp

Re
et

J
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ya

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1990 2000 2010 2020 2030

Figure 16.1.  Median age of the labor force (years), 1990–2030. International Labour Organization
(2019, p. 17).

(2016) examined workplace inclusion of persons with disabilities by comparing prac-

tices in Indian and German MNCs. Again, there is much scope for expanding diversity
research in Asian contexts, including East Asian societies, to examine, for example, men
in female-­dominated occupations and organizations, older workers, migrant workers,
workplace bullying associated with demographic differences, and sexuality and work-
place inclusion.
Workforce diversity varies considerably in nature and extent across Asian economies
and requires a greater level of policy and managerial attention than there has been to
date. It is desirable for economic achievements to be underpinned by improved levels of
equal opportunity and social justice; for example, the need to deploy and manage older
workers effectively will become a pertinent issue for Asian countries in the near future.
According to the International Labour Organization 2018 modeled estimation
(International Labor Organization, 2019), the median age of the workforce in the most
advanced Asian economies will be above forty, with some (Korea and Japan) even
approaching fifty by 2030 (see Figure 16.1). Workforce aging is not only an HRM issue
for employing organizations, but also an important issue with strong social policy impli-
cations for national governments. More research efforts can be placed in this area to
provide evidence to inform policy and practice.

Conclusion

This chapter provides a broad overview of characteristics, challenges, and trends of

HRM in Asia in both research and practice. There is a growing trend for positivist HRM
studies of hypothesized organizational conditions and individual behaviors, at the
expense of in-­depth qualitative studies of the motivations, actions, and interactions
of social groups and outcomes in specific organizational settings. We argue that the
 Human Resource Management in Asia   361

understanding of people management in workplaces must take into account a range of

institutional, cultural, organizational, and individual factors. We also argue that HRM
research needs to be engaged with real and live issues that are confronting employing
organizations and individuals, with the aim of adding social value and extending our
intellectual horizon.
It is clear that Asian countries are advancing at a rapid pace in their economic devel-
opment, powered by growing technological competences. However, each nation-state is
confronted with a different set of HRM challenges, ranging from skills shortages to
workforce aging, informalization of employment, changing expectations and behavior
of the workforce, and so forth. As nation-­states around the world are engaging in policy
debate on the future of work that is driven by digital innovations, with profound impli-
cations for skill requirements, work organization, and employment modes, few Asian
countries seem to have an HRM policy in place that is human-­oriented, to support their
people through future work transitions (International Labour Organization,  2019).
There are many aspects of HRM in Asian countries that remain underexplored, and
many new phenomena are emerging that are confronting nation-­states, organizations,
individuals, and their families. All of these present fruitful avenues for future research
endeavors to advance our intellectual understanding and to facilitate policy and mana-
gerial efforts.

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 chapter 17

Con v ergence i n
H um a n R e sou rce
M a nagem en t

Wolfgang Mayrhofer, Chris Brewster,

and Katharina Pernkopf

An Effort Worthwhile? Putting

Convergence into Context

Although contested, context is definitely no stranger to human resource management

(HRM) research and practice. One of the seminal works defining HRM (Beer, Spector,
Lawrence, Quinn Mills, & Walton, 1984) pointed out the importance of including con-
text (“situation”) when trying to understand HRM and its outcomes. In the more than
three decades since then, various models and frameworks have emerged that explic-
itly assign context an important place in their conceptual architecture (e.g.,
Brewster, 1995; Budhwar & Sparrow, 2002a; Gooderham, Mayrhofer, & Brewster, 2018;
S.E. Jackson, Schuler, & Jiang, 2014; Paauwe, 2004; Paauwe & Farndale, 2018). Together,
they form important building blocks of the contextual view of HRM, challenging the
universalistic perspective that seeks the “holy grail” of best HRM practices that fit most,
if not all, organizations and situations (Brewster & Mayrhofer, 2019). Arguably, com-
parative HRM (Brewster, Mayrhofer, & Farndale,  2018) is the strand of the HRM
­discourse where contextual issues are most visible and important, since analyzing
commonalities and differences of HRM in different contextual settings is one of its
constitutive elements.
A closer look at the HRM models and frameworks that include context as an impor-
tant element reveals a curious gap, namely, that of time. While time is implicit in some of
the models (a “dynamic business environment”), it is only in the comparative contextual
framework of HRM (Gooderham et al., 2018) that its architecture explicitly acknowledges
368   Mayrhofer, Brewster, and Pernkopf

the conceptual importance of time. To be sure, this relative invisibility of temporal

aspects in research is not specific to HRM. Calls for acknowledging the importance of
time and its better integration into theory building and empirical research abound in
HRM-­related areas such as career studies (Gunz, Lazarova, & Mayrhofer, 2020) and
expatriate adjustment (Hippler, Brewster, & Haslberger,  2015), as well as in broader
organization studies (Mitchell & James, 2001; Ofori-­Dankwa & Julian, 2001; Shipp &
Fried, 2014a, 2014b; Sonnentag, 2012; Whipp, Adam, & Sabelis, 2002). Including time
leads to a question that goes beyond snapshot views of how various aspects of context at
different levels relate to HRM: How do these relationships and their effects develop as
the years go by?
This question—and the inevitably linked question of whether we see convergence in
developments over time—is at the heart of this chapter. This is more than an academic
issue. The growth of globalization from the 1980s onward and the political and economic
developments in Europe, and particularly within the European Union, illustrate that
what happens over time at various societal levels matters. Whether we see the emergence
of a common model of doing politics and economics, managing organizations, and,
within that, managing relationships with employees and their representatives (Baldry,
1994; Cressey & Jones, 1995; Due, Madsen, & Jensen, 1991) is of vital interest for policy
makers, trade unions, employees, management, and broader society. We address
convergence in three steps. First, we examine different conceptual views about what
convergence means in different theoretical traditions and discourses. Second, based on
this examination, we offer an overview of the conceptual and empirical evidence about
how HRM develops in different contextual settings over time, considering what we
know and what is still open for speculation. Third, we outline some promising options
for future research at the conceptual, empirical, and practical levels.

An Unknown Beast? Historical Roots

and Multidisciplinary Background

We place our examination of conceptual views on convergence and how it has been
operationalized in a broader perspective of its historical roots and disciplinary anchor-
ing. We take economics as our point of departure and note that the debate about the
speed and extent of convergence between different economies has a long history (for an
overview of historicist thinking and its limits, see Goldthorpe, 2009). In the twentieth
century, Veblen’s (1994) early convergence hypothesis in his discussion of imperial
Germany, England, and the Industrial Revolution is often considered the starting point
for the economic convergence debate (B. Ward, 1971), although this kind of thinking at least
“goes back to the Scottish Enlightenment and the publication of an essay by David
Hume in 1742 [and t]he ensuing ‘rich country–poor country’ debate between David Hume
on the convergence side and Josiah Tucker on the non-­convergence side” (Elmslie,
 Convergence in Human Resource Management   369

1995, p. 207). More recently, convergence or divergence has dominated the debate in
different time-­periods, depending on political and economic developments and leading
theoretical perspectives. Viewpoints range from bold forecasts of industrialism taking
over and bringing national institutions into a common shape (Kerr, Dunlop, Harbison, &
Myers,  1960) or, much later, robotization and artificial intelligence having the same
effect (Fleming, 2019; Ford, 2016; Susskind & Susskind, 2017) to, in between, outright
and pejorative dismissal of convergence theory as being “clumsy” and “old fashioned”
(Giddens, 1973, p. 21) and arguments that it “it just hasn’t happened, isn’t happening, and
isn’t going to happen without serious changes in economic policies in developing coun-
tries” (Pritchett, 1996, p. 43)—or efforts at substituting convergence for divergence at the
center of the debate (Rojek, 1986).
Convergence is an ongoing topic historically and part of various disciplinary
conversations. A few cases demonstrate the broad range of disciplines dealing with this
issue: in economic and regional studies, the developmental path of Japan in terms of
similarities and differences between Japanese and Western organizations (Dunphy,
1987); patterns of convergence and divergence of a number of industrialized nations
between 1960 and 1988 based on various macro-­ environmental variables (Craig,
Douglas, & Grein, 1992); the Chinese reform period of 1978–1998 and the varying speed
of convergence to per capita gross domestic product equilibrium during different stages
of political and economic reform between 1978 and 1998 (Kawakami, 2004); the con-
verging development of major Indian states in a period of economic growth and liberal-
ization between 1980 and 2005 (Birthal, Singh, & Kumar, 2011); the role of human capital
in the convergence across states of the United States of America in the postbellum
period from 1880 to 1950 (Connolly, 2004); country-­specific developments toward the
growth rate of the world technology frontier (Aghion, Howitt, & Mayer-­Foulkes, 2005);
income per capita convergence (see Solow’s, 1956, well-­known neo-­classical growth
model); the long-­term economic development and convergence in state-­planned econ-
omies; and per capita incomes across European regions (Quah, 1996). Specific analyses
focus on topics such as the convergence of productivity (Baumol, Nelson, & Wolff, 1994),
economic policy development (Unger & Van Waarden, 1995), European pay bargaining
(Walsh, 1995), and worldwide changes in employment systems (Boyer et al., 2001).
Convergence also plays a role in psychological, management, sociological, political,
and demographic studies. Topics include more confined subjects such as symbolic
convergence theory (Bormann,  1996; Bormann, Cragan, & Shields,  2001; Zanin,
Hoelscher, & Kramer,  2016), arguing that in rhetorical communities such as small
groups or organizations, a common symbolic consciousness emerges that contains
motives for human action, shared meanings, values, and emotions; organizational
evolution (Tushman & Romanelli, 1985); the (non)emergence of a uniform type of firm
despite common market forces and political developments in Europe (Whitley &
Kristensen, 1996); the development of the US gender earnings gap over four decades
and different generations (Mandel & Semyonov,  2014); or the (dis)similarity of
intergenerational class mobility patterns (Erikson, Goldthorpe, & Portocarero, 1983).
Other works address broader issues, such as the converging or diverging development
370   Mayrhofer, Brewster, and Pernkopf

of governments’ activities (Moon, 1987), state policies (Bennett, 1991), business systems

and capitalisms (Crouch & Streeck, 1997), societies (Inkeles, 1998), effects of industrial-
ism on societies (Form, 1979), and analyses of the underlying forces for convergence
(Klingler-­Vidra & Schleifer, 2014).

And What Exactly Is It? Constitutive

Elements of Convergence Analyses

Focusing in on HRM and trying to better understand the convergence analyses included
reveals three major issues. First, some studies use convergence simply as a synonym for
similarity between the units analyzed. This is the case for specific studies, for example,
on actors in HRM development (Garavan, Heraty, & Morley,  1998), HRM practices
(Al-Horr & Salih, 2011), cognitions of HRM specialists (Budhwar & Sparrow, 2002b),
and mood and personality (G. J. Meyer & Shack, 1989). Similarly, convergence is used in
an everyday manner to denote the “coming closer together” of concepts and schools of
thoughts, for example, of career development theories (Savickas & Lent,  1994); of
marketing and HRM (Pollock, 1995); of HRM, organizational development, and human
resources development (Gillon, Braganza, Williams, & McCauley-­Smith, 2014); and of
different elements of HRM (McClendon, 2006).
Second, there are a number of similar labels and underlying conceptualizations in
use, an example of the idea that adding new terms allows for a focus on a new area of
work, or at least excuses the researcher from reading the previous work that used the old
labels—the “jangle fallacy” (Kelley, 1927, p. 65, see also Shaffer, DeGeest, & Li, 2016,
p. 105), as it has been called. Absolute, conditional, and club convergence stress the role of
initial conditions and characteristics of the unit of analysis, for example, a country, and
whether the occurrence of convergence is independent of the initial conditions (“abso-
lute”), independent as long as structural characteristics are identical (“conditional”), or
requires identical structural characteristics as well as similar initial conditions (Galor,
1996). Converging divergencies (Boyer et al., 2001; Katz & Darbishire, 2002) alludes to
the fact that at different levels of analysis, both convergence and divergence can occur
simultaneously. Hybridization, or its trendy fake-­English equivalent “crossvergence”,
emphasizes the combination of two at least partly opposing forces, for example, capitalist
ideology and national culture, either synergistically or at least in a “melting pot style”
into a new frame (Anakwe, 2002; Horwitz, Kamoche, & Chew, 2002b; Chung, Sparrow,
& Bozkurt, 2014; Ralston, Gustafson, Cheung, & Terpstra, 1993; Ralston, Holt, Terpstra,
& Kai Cheng, 1997; S. Ward, Pearson, Entrekin, & Winzar, 1999). It also refers to the
change of the unit of analysis, for example, organizational logics (Spicer, 2006), when
transferred into another setting over time. Even hybridization has deliberate (headquarters-
influenced) and emergent (subsidiaries-­led) variations of HRM (Fan, Xia, Zhang, Zhu, &
Li,  2016). Transvergence points toward a creative interpretation and combination of
forces such as national culture, market, and technological opportunities (Gupta &
 Convergence in Human Resource Management   371

Wang, 2003; Milikić, Janićijević, & Cerović, 2012). Evolutionary convergence highlights

that the combination of elements, for example, various governance models or economic
systems, takes time but ends up (Darwinism style) with the best aspects of these elements
(Chan, Luk, & Xun Wang, 2005). Hard versus soft convergence (Warner, 2000, 2002) dif-
ferentiates between a more strict (hard) and a more relative (soft) variant of similarity
or, for that matter, difference (divergence). Bounded convergence (Yeung, Warner, &
Rowley, 2008), similar to soft convergence, takes into account the fact that despite
similarities, for example, because of globalization pressures, distinctive national charac-
teristics are linked with the unit of analysis, such as HRM systems. Double convergence
points to the fact that a comprehensive analysis often has to include more than one unit
of analysis, for example, the comparison of the private and public sectors in one country
and in the public sector between countries (Bach & Bordogna, 2011).
This plethora of labels indicates that the development of the units of analysis such as
HRM policies and practices in different contextual settings over time leads, in a nutshell,
to the following questions (Inkeles, 1998; Unger & Van Waarden, 1995):

• How is convergence conceptualized and measured?

• What are the units of analysis, which dimensions are included, and what is
compared with what?
• Which time span does the analysis cover?
• Why does convergence occur/not occur; that is, what is the theoretical reasoning
and what are the underlying mechanisms?

Third, these questions point toward the constitutive elements of convergence analyses,
the issue to which we turn next.

Conceptualization and Measurement of Convergence

Based on previous work (Mayrhofer, Brewster, Morley, & Ledolter, 2011; Mayrhofer, Müller-
Camen, Ledolter, Strunk, & Erten, 2002) and starting with the simple notion of comparing
two units of analysis, we suggest applying four criteria to identify what emerges as a result.
Direction refers to the route the various units take over time, that is, whether they go in the
same or in opposing direction(s). Difference denotes whether the differences between the
units of analysis (or, for that matter, the chosen yardstick) become smaller, become larger,
or stay the same. Level concerns the extent to which the values change over time, for
example, how much the percentage of organizations using a specific HRM practice in a
country changes. Temporality addresses whether the comparison is made once, in a
snapshot (static) analysis, or over several points in time (dynamic). Combining these four
criteria leads to the following classification (see Figure 17.1). Note that “extent” (Farndale,
Brewster, Ligthart, & Poutsma, 2017) adds valuable information to all four development
constructs. While not necessarily part of the constituting characteristics, it signifies the
distance between (dis)similar states/developments.
372   Mayrhofer, Brewster, and Pernkopf

Construct Direction Difference Level Temporality Illustration

(Dis) Similarity -- -- -- Static
Stasis Same Stable Constant Dynamic
Directional convergence Same Stable Changing Dynamic
Final convergence Same/opposing Decreasing Changing Dynamic
Divergence Same/opposing Increasing Changing Dynamic

Figure 17.1.  Development constructs and their characteristics.

When an analysis makes a static snapshot comparison between units of analysis,
using the term similarity (or dissimilarity) would ensure that this is not confused with
convergence issues. As a single point in time analysis, obviously development over time
is not visible. Using convergence or divergence to equate to similarity or dissimilarity in
such a case is misleading. In all other cases, observations at several points in time
(dynamics) exist. Stasis occurs when the respective values for the units of analysis stay at
a constant level and the difference between the units remains stable. Directional conver-
gence ensues when developments move in the same direction, up or down, increase or
decrease, and the differences remain broadly stable. An example is the analysis of HRD
practices in Australia between 1996 and 2009 showing a decreasing overall level of
HRD sophistication (McGraw & Peretz, 2011). Final convergence emerges when the
differences between the units of analysis decrease. It comes in two forms: the level
change can go in the same direction (up/down) but with the unit that exhibited the
direction more at the start (higher/lower) moving that way more slowly, so that the units
end up more similar at the end of the temporality than at the beginning. Examples for
these different forms of convergence in European countries that are somewhat overlapping
in practice include the use of compensation practices (Farndale et al., 2017), the assignment
of HRM responsibilities to line management, and forms of communications with
employees (Mayrhofer et al., 2011). Divergence occurs when, contrary to final conver-
gence, differences increase. This is apparent when phenomena move in different
directions or when phenomena move in the same direction but the unit exhibiting that
direction most at the beginning moves in that direction most strongly. An example of
divergence occurs when comparing the developments between Finland and Norway in
three core areas of HRM, that is, distribution of HRM responsibilities between line
management and HRM specialists, employee development, and the ratio between
the number of HRM specialists and the total number of employees. In all these areas,
differences between the two countries become larger (Mayrhofer et al., 2011, pp. 61ff.).
The measurement of convergence is a separate issue that is far beyond the limits of
this chapter. Suffice it to say that there are a number of contributions from different
disciplines that deal with different aspects of this issue (e.g., Kaufman, 2016; Quah, 1993).
Recent developments also allow us to go beyond measuring means in different forms
and go beyond univariate data to include configurations of variables—multivariate by
definition—that cannot be captured with a univariate frequency distribution.
The classification of various forms of stasis/convergence/divergence responds to the
calls made in a number of contributions on convergence for more clarity of the concept
 Convergence in Human Resource Management   373

(Kaufman, 2016; McGaughey & De Cieri, 1999; Pudelko, Fink, Carr, & Wentges, 2006).

However, it does not cover two additional criticisms that address the importance of
clarifying the units of analysis and the point of reference for the comparison, as well as
the time span of the comparison. We turn to those issues next.

Unit of Analysis and Comparison Reference Point

Choosing the unit of analysis is crucial in any study effort, but arguably even more
important in comparative efforts over time (for different options at the level of societies
see, e.g., J. Meyer, Boli-­Bennet, & Chase-­Dunn, 1975). Such a choice determines whether
one can find only one of the developments mentioned previously—stasis, directional
convergence, final convergence (in two variants), or divergence (again in two variants)—
or whether these developments can occur at the same time but are related to different
units of analysis. A monodimensional analysis can reveal basic facts, for example, an
analysis of HRM in larger private-­sector firms in thirteen European countries between
1992 and 2004 shows directional convergence for two HRM practices, employee
rewarding and employee communication (Mayrhofer et al., 2011).
If, however, the units of analysis increase in number and/or in subdimensions and are
contextualized, the picture changes. Different comparisons will yield different results; in
the overall analysis, any kind of combination of developments is possible. The emergence
of hybridization testifies to that. The Mayrhofer et al. (2011) study is a good example. It
shows that beyond employee rewarding and employee communication, the picture is
much more diverse. Similarly, Milikić et al. (2012) report that the developmental path of
HRM in Serbia compared to “Western” HRM over a twenty-­year period has the charac-
teristics of hybridization.
Related to selecting the units of analysis is the specification of the reference point for
the comparison. The most frequent option in current empirical work is to simply use the
various units of analysis in relationship to each other. Depending on the theoretical rea-
soning, this can be with or without defining one of these units as the yardstick. For
example, on the one hand, when pursuing the question of whether HRM in a specific
country or region has converged toward Western or US HRM, the latter clearly is the
implicit or explicit yardstick (as, e.g., in Rowley, Bae, Horak, & Bacouel-­Jentjens, 2017).
On the other hand, when looking at developments in various European countries, no one
country is per se the given benchmark (as, e.g., in Poutsma, Ligthart, & Veersma, 2006).

Time Span Covered

Of similar importance is the choice of the time span for the analysis. As Kaufman (2016)
convincingly shows, selecting the time span for convergence analyses is crucial.
Choosing the right time span depends on theoretical, pragmatic, and data analytical
reasoning. Theoretically, the basic question of the analysis as well as the theoretical
374   Mayrhofer, Brewster, and Pernkopf

framing allows the building of an argument for a specific time span. For example, if one
is drawing on neo-­institutionalist thinking (e.g., Greenwood, Oliver, Sahlin, & Suddaby,
2008) and is interested in the effects of the common market in Europe on HRM in
European organizations, choosing the time between 1986 and 2000 might be appropriate.
The first date is linked to the Single European Act of 1986 that revised the Treaties of
Rome “to complete the internal market (an area with no internal borders and in which
there is free movement of goods, persons, services and capital) by 1 January 1993”
(https://eur-­lex.europa.eu/legal-­content/EN/TXT/?uri=LEGISSUM:xy0027; accessed
January 4, 2019); the latter allows a reasonable period of time to show the effects of the
changes on the institutional setting. If one is interested in the effects of digitalization and
market forces, with the same theoretical frame, a time span of 1995 to 2005 might seem
appropriate because it covers the rise and fall of the dot-­com industry.
In pragmatic terms, the availability of adequate data sets is also an important factor
for conducting comparative analyses. For example, the Cranet studies (Parry, Farndale,
Brewster, & Morley,  2020; Parry, Stavrou, & Lazarova,  2013) offer data for different
points over a quarter of a century, enabling, and limiting, consequent analytical efforts.
Finally, here, in relation to data analysis, various analytical methods for tracking devel-
opments over a number of years have specific requirements in terms of type, amount, and
spread of data across different points in time. Likewise, limited time spans might fail to
identify subsequent changes of direction and miss anomalies (McGaughey & De Cieri, 1999).

Explanations and Mechanisms

The final constitutive element of convergence analyses—beyond the conceptualization
and measurement of convergence, the unit of analysis and the comparison reference
point, and the time span covered—are the explanations and mechanisms behind the
occurrence of convergence. Three basic streams of thought feed the theoretical reasoning
when building arguments for or against convergence in HRM.
First, functionalist arguments come in different shapes and forms, but usually support
converging developments and are often linked to forces of globalization. Referring to trans-
action cost economics, advocates argue “that there is one best organizational form for firms
that have similar or identical transaction costs” (Hollingsworth & Boyer, 1997, p. 34). From a
different angle and referring to the effects of industrialism on society, Kerr et al. (1960) sug-
gested that techno-­organizational imperatives, in particular modes of production and dis-
tribution, lead to similar social structures and to societies resembling each other more and
more (see also Form, 1979). Galbraith (1967) also contends that the modern human’s “area
of decision is, in fact, exceedingly small” and that “the imperatives of organization, technology
and planning operate similarly, and . . . to a broadly similar result, on all societies” (p. 336).
Second, various forms of institutionalist thinking (Greenwood et al., 2008; Wood,
Brewster, & Brookes, 2014) point to the importance of institutions for explaining how
individuals, organizations, and other social systems such as nations develop. Theories of
comparative capitalism (G. Jackson & Deeg, 2008) argue that the importance of national
 Convergence in Human Resource Management   375

business systems (Whitley, 1999) and different varieties of capitalism (Amable, 2003;

Hall & Soskice,  2001) underscore differences in the modern world of globalization
(Guillén, 2001) and institutional change (Djelic & Quack, 2003). Leaning more toward
convergence is the institutionalist argument that similar institutions around the globe,
multinational corporations in particular, but also such bodies as the United Nations, the
World Bank, and the World Trade Organisation, tend toward creating similar behavior
at the individual, organizational, and societal levels. This may be at the level of rhetoric
or in terms of strategy, structure, and processes (DiMaggio & Powell, 1983; J. Meyer &
Rowan, 1977). The use of world systems theory also enables an argument for the occurrence
of either convergence and divergence (Rugman, 2000) or the simultaneous occurrence of
both (Peacock, Hoover, & Killian, 1988).
Third, cultural theories (e.g., Hofstede, 1980; House, Hanges, Javidan, Dorfman, &
Gupta, 2004; Schwartz, 2010) argue for ongoing differences or maybe even divergence.
Regional and national cultures have substantial differences in values and norms and, it is
argued, the differences are long-­lasting. They resist the converging forces of market or
production logics.
Linked to the respective theoretical reasoning, different mechanisms are responsible
for the emergence of convergence. Cost-­efficiency, socialization, and in-group/out-group
behavior and isomorphism can serve as examples from the three streams of thinking
just outlined.

Anything out There? Conceptual and

Empirical Evidence of Convergence
(or Not) in Human Resource Management

Having set the stage by putting convergence into a broader frame, briefly outlining its
historical importance and multidisciplinary anchoring, and clarifying its constitutive
elements, we now turn to the question of evidence—or the lack of it—for converging
developments in HRM. We first highlight a number of contributions that make a
conceptual argument. Based on a systematic review of the literature, we then present the
available empirical evidence.

Conceptual Reasoning
A number of contributions, based on different kinds of reasoning, argue for convergence.
Arthur and Hendry (1990) and Begin (1992) point toward the dynamics of free interna-
tional markets and expect globally converging HRM systems. Budhwar, Varma, and Patel
(2016) discuss HRM in the Asia-­Pacific region and suggest directional convergence in a
number of areas, in particular the evolution of the HRM function and movement toward
formalizing HRM departments. With a focus on selection practices, Heh Jason, Huo, and
376   Mayrhofer, Brewster, and Pernkopf

Nancy (2002) are convinced that convergence in this area is nearly inevitable. Looking at
employee voice and work engagement issues, Kwon, Farndale, and Park (2016) present
factors at the level of national culture, organizational climate, and leader–member
exchange that influence convergence toward best practice in employee voice.
Most of the conceptual reasoning, however, develops at least a two-­sided argument.
Yongsun, Chow, and Vance (2011) emphasize the interplay between local institutional
forces and globalization and show that divergence, convergence, or hybridization in
international HRM practices can occur. Cunningham and Rowley (Cunningham &
Rowley, 2007) use cultural theory to analyze the relationship between Western HRM
and HRM in China in small and medium-­sized enterprises. They argue that a combina-
tion of Western practice and a distinctively Chinese HRM approach might evolve (for
similar conclusions beyond small and medium-­sized enterprises, see Warner,  1993).
Specifically analyzing developments in the Asia-­Pacific region, there have been several
arguments not for one specific trend, but for several simultaneous trends in HRM and
employment relations (Bamber, Park, Lee, Ross, & Broadbent,  2000; Rowley,  1998;
Woodiwiss, 1998; see also Sheldon, 2002).
A number of contributions do not address explicitly, or address only in passing,
convergence/divergence, but refer to—mostly future—developments between/within
world regions and countries, for example, related to the (dis)similarity of HRM practices
in Europe and the United States (Brewster, 2004), the United Kingdom and the United
States (Strauss, 2001), the Middle East (Yeo, 2014), or the diffusion of South-­East Asian
work/HRM practices to African countries in the light of globalization forces (Horwitz
et al., 2002b) and to developments in Asia (Rowley, 1998; Warner, 2009).

Empirical Evidence
Compared to other areas of HRM research, studies of convergence of different facets of
HRM are comparatively rare. To give an example, an August 2018 literature search in the
EBSCO Business Premiere Database (all subdatabases included) with the keywords
“converg*” and “HRM or human resource management” in the abstract yielded slightly
fewer than two hundred articles in academic, peer-­reviewed journals covering a span of
thirty-­two years (1986–2018). (The same search, but adding performance* instead of
converg*, leads to double that number in 2017 and 2018 alone). That notwithstanding,
over the past decades some empirical evidence has been gathered to improve our
understanding of convergence in HRM across the globe.
In principle, the existing studies could be grouped according to several criteria:

• Focus, for example, HRM in total, HRM bundles, single HRM practices, values;
• Theoretical reasoning, for example, economic theory, cultural theory, institutional
theory;
• Data used, for example, cross-­sectional, longitudinal (in particular, panel or trend),
survey, case study; and
 Convergence in Human Resource Management   377

• Level of social aggregation, for example, individual, organization, region, country,

world region.

We will use the latter set of criteria as the primary means for structuring the material
since it is a well-­established differentiation in organizational theory and behavior. We
start with the individual level and then proceed to higher levels of social complexity.
A caveat in advance of discussing the empirical findings should be noted by the reader:
As outlined, authors use the term convergence very freely and, in our opinion, sometimes
only partially adequately, especially when using cross-­sectional data. Often, they use it
as an equivalent of “similar” or the like. By and large, we follow the dictum of the quoted
authors without always being fully convinced by it.

Individual-­Level Studies
Studies taking the individual as the major point of reference, looking for convergence,
and relating it to HRM are rare. There are studies of humor among students in the
United States versus China (Yang, Kitchen, & Bacouel-­Jentjens, 2017); of the values and
attitudes of employees (Alexashin & Blenkinsopp, 2005; Woldu, Budhwar, & Parkes,
2006); of attitudes toward money, material possessions, and saving of Chinese versus
Caucasians in Australia, China, and Canada (Tung & Baumann, 2009); and of the views
of lower managers, supervisors, and senior employees in national and state agencies on
(un)ethical standards and behavior in six Asia-­Pacific countries, South Korea, Taiwan,
Mainland China (Shanghai, Beijing), Malaysia, and India, and in four US states, Florida,
Oregon, Utah, and Washington (West, Beh, & Sabharwal, 2013), but these are all cross-
sectional studies.

Organizational-­Level Studies
Studies at the organizational level focus on multinational companies (MNCs) and their
foreign subsidiaries. Two issues are particularly prominent in the research: the compari-
son between indigenous companies and MNC subsidiaries and the relationship between
the local setting and “global” HRM. We deal with them in turn.

Human Resource Management of Multinational Companies versus

Indigenous Companies
It is not surprising that HRM of MNCs versus indigenous companies has been the sub-
ject of a number of studies, given that the role of MNCs may be significant for the local
economies. Studies examine similarities and differences between indigenous companies
and MNCs’ subsidiaries. There are more cross-­sectional studies claiming to be able to
comment on convergence: Amante (1995) looks at HRM practices of foreign-­owned
firms (Japanese, Western, Chinese) in the Philippines and finds indications of adapting
to local standards and practices; Choy and Jain (1987), looking at Japanese parent com-
panies and their Singaporean subsidiaries plus indigenous companies from Singapore,
378   Mayrhofer, Brewster, and Pernkopf

find similarities and practices contingent on the local setting; Ip (1999) compares state-
owned, collectively owned, and foreign-­owned companies in the Shenzhen Special
Economic Zone in China and finds both similarities and differences in their HRM prac-
tices; Tregaskis and Brewster (2006) look at the HRD practices of indigenous companies
and MNCs’ subsidiaries in the United Kingdom and Ireland and diagnose hybridiza-
tion; Ayentimi, Burgess, and Brown (2018) compare MNC subsidiaries and indigenous
firms in Ghana to reveal some similarities, but also substantial differences.
A second group of studies draws on data sets that allow a longitudinal research
design. In a two-­wave interview study of indigenous companies and foreign MNC
subsidiaries in China and their HRM practices before and after the onset of the global
economic crisis in 2008, Jaussaud and Liu (2011) find convergence, but also signifi-
cant remaining differences, especially in recruitment and selection, compensation,
and work–life balance. McGraw and Peretz (2011) analyze HRD practices of indige-
nous Australian companies and subsidiaries of MNCs with their headquarters over-
seas between 1996 and 2009, using the Cranet data set. They show directional
convergence, that is, both groups of companies moving toward a decreasing overall
level of HRD sophistication, but no final convergence, with indigenous companies
operating at a lower level. Focusing on HRM practices of predominantly Australian
and predominantly overseas-­owned organizations in Australia, McGraw and Harley
(2003) use the Australian Workplace Industrial Relations Survey data from 1990 and
1995. They find significant differences in HRM/Industrial Relations (IR) practices
and caution against overstated claims of automatic convergence resulting from
­globalization pressures.

Human Resource Management of Multinational Companies and the

Wider Local Context
Human resource management of MNCs and the wider local context is a long-­standing
theme in various research traditions (see the arguments in Pudelko & Harzing, 2007;
Quintanilla & Ferner, 1994), but this area includes, to our knowledge, only studies of a
single point in time.
Another group of studies looks at the HRM of MNCs in a single country. Newenham-
Kahindi (2011) analyzes the HRM practices of the Tanzanian subsidiary of one US and
one South African bank with cross-­sectional data. He sees both similarities and differ-
ences between the subsidiaries and how they take the local context into account.
Ayentimi, Burgess, and Dayaram (2017) look at various subsidiaries of MNCs in Ghana
in a single-­point-­in-­time case study approach. They diagnose a strong role of the corpo-
rate headquarters (“country-­of-­origin-­effect”) and less influence of the host country’s
context and, hence and therefore, suggest a tendency toward convergence. Finally,
focusing on one of the icons of globally operating companies, Royle (1995) discusses the
extent to which McDonald’s company culture converges with the respective societal cul-
ture in the United Kingdom and in Germany. He shows that societal culture cannot be
completely negated, but argues that in such a company there is constant pressure for
convergence.
 Convergence in Human Resource Management   379

Regional and Sectoral Studies

Some studies look at regions and sectors with regard to the development of various fac-
ets of HRM. Linked to the changing status of Hong Kong in 1997 after the handover to
China, White, Druker, Luk, and Chiu (1999) look at the Hong Kong Special
Administrative Region and compare it with the neighboring Guangdong province.
Focusing on pay policies and wage determination, and based on cross-­sectional data,
they argue for growing similarities (convergence).
In terms of economic sectors, the public sector has attracted some interest. Sotirakou
and Zeppou (2005) focus on Greece and whether European public administration sys-
tems serve as a role model that the Greek counterpart follows. They state that converging
toward a European model requires HRM to focus on continuity, competence, and com-
mitment as essential soft organizational capabilities. Boyne, Jenkins, and Pools (1999)
compare private- and public-­sector HRM in the United Kingdom based on a cross-
sectional survey of managers in both sectors and conclude that the differences between
them are decreasing.

Country-­Level Studies
Country-level studies constitute the great majority of available empirical evidence on
convergence. They range from single-­country studies to multicountry comparisons.
Single-­C ountry Studies
This group of studies zooms in on specific aspects of a country’s HRM situation. Shaw
(2005), for example, argues on the basis of a cross-­sectional case study that Motorola
University China is driving convergence in Chinese HRM. In a two-­wave study, ten years
apart, Huang (2016) looks at the development of the Chinese automotive sector, includ-
ing its HRM. He shows converging tendencies in pay strategies that center on market
orientation, job values, competence, and individual and company performance. Keizer
(2009) uses retrospective analysis to analyze changes in Japanese employment practices
resulting from the introduction of performance-­related pay and nonregular employ-
ment, identifying some convergence and some retention of specific Japanese elements.
Horwitz, Browning, Jain, and Steenkamp (2002a) look at post-­apartheid South Africa
and the influence of globalization and technological developments on HRM practices.
Using cross-­sectional data, they claim to detect the increasing influence of these global
forces but, at the same time, the continuing importance of local institutional arrange-
ments. Including a variety of HRM practices, Poór, Karoliny, and Farkas (2007) compare
Hungary with other countries in Central and Eastern Europe and with other European
countries and find similarity in a number of areas and a change in Hungary compared to
previous times, though there are no data to support the latter empirically.

Two-­C ountry Comparisons

Horwitz et al. (2006) examine the HRM of knowledge workers in South Africa and
Singapore, finding similarity of motivational and retention measures, but differences in
380   Mayrhofer, Brewster, and Pernkopf

attracting employees. Comparing HRM in banks in Sweden and the United Kingdom,
Holden (1996) found that while Swedish workers felt more involved at the workplace,
they expressed a similar degree of organizational estrangement to their British counter-
parts. He explains both commonalities and differences by drawing on wider divergent
and convergent forces that influence organizations, for example, economic changes and
societal structures. Schröder, Muller-­Camen, and Flynn (2014) analyze age policies in
Germany and the United Kingdom and find similarities and differences because of insti-
tutional arrangements: THey argue that industry-­specific factors contribute to some
convergence between the two countries. Mroczkowski and Hanaoka (1997) analyze down-
sizing practices in Japan and the United States and suggest a pattern of international
best practice. A review of empirical studies of convergence in HRM, focused on various
aspects of managerial employment in Australia and the United Kingdom, finds both con-
vergence and divergence (Lansbury & Bamber, 1991).
Multicountry Comparisons
The largest group of studies contains multicountry comparisons that use either cross-
sectional or longitudinal data. We will deal with them in turn.

Cross-sectional  Cross-­sectional studies have either a global coverage or a focus on

certain regions, mostly Europe. Globally, Carr and Pudelko (2006) find more convergence
in the area of HRM than in strategy or finance, but they have no longitudinal data.
Pudelko (2005) finds that HRM managers from Germany, Japan, and the United States
would prefer a hybrid model close to the existing German one. Looking across the
globe and at various aspects of HRM and management, Batt, Holman, and Holtgrewe
(2009), in examining call centers in a large-­scale and sophisticated study of seventeen
countries, find similarities in the technologies used, the organizational characteristics
of the call centers, and the markets in which they operate—but differences in work
organization, HRM practices, and collective representation. Sparrow, Schuler, and
Jackson (1994) find both similarities and differences and caution against a premature
diagnosis of convergence by emphasizing the importance of the respective culture and
society that employees and organizations are embedded in. The IHRM Best Practices
Consortium finds universal, regional/country clusters, and country-­specific approaches
to HRM (Von Glinow, Drost, & Teagarden, 2002).
A second group of studies focuses on the situation in Europe. Özçelik and Aydınlı
(2006) compare strategic HRM between Germany, Spain, and Turkey and find
commonalities with regard to the strategic role of HRM. Clark and Pugh (1999) identify
three common elements of similarity: conviction about the importance of HRM, the
devolution of HRM issues from a national level to the organizational and line-
management level, and a mutually reinforcing link between HRM strategies and corpo-
rate strategies. Brewster and Tregaskis (2003) contrast employment practices in
Germany, Spain, and the United Kingdom and find some similarities, but emphasize the
important role of institutional factors in each country that shape organizational
responses and the adoption of employment practices.
 Convergence in Human Resource Management   381

Longitudinal  These single-­point-­in-­time studies provide no evidence of convergence

or divergence. But there are studies that have taken place over time. With one exception,
all available longitudinal studies in this area come from the Cranet database (for an
overview on Cranet, see the introduction to this handbook and www.cranet.org). The
available studies put emphasis on different aspects of HRM. Taking a broad view of
HRM, Poutsma et al. (2006) use Cranet data from 1995 and 2000 to look at HRM
bundles of various calculative and collaborative HRM practices in nine European
countries. The analysis shows substantial effects of country-­specific institutions and of
the country of origin of MNCs. However, foreign-­owned MNCs, in particular US-based
MNCs, moderate country-­specific institutional effects. Likewise, taking a broad segment
of HRM, Mayrhofer et al. (2011) compare HRM configuration and HRM practices in
thirteen European countries between 1999 and 2004 using Cranet data. They find
countries moving in the same direction, but no final convergence toward a common
model. Farndale et al. (2017) use eight European countries and Australia to look at the
Cranet data set between 1999 and 2010 to compare HRM practices that are, to different
degrees, institutionally constrained: compensation and wage-­bargaining level practices
(strong constraint) versus contingent employment, training, and direct information
provision practices (weak constraint). Applying a graded conceptualization of
convergence/divergence, they find substantial support for the importance of the kind of
market economy (liberal versus co-­ordinated) on the degree of convergence of HRM.
Targeting contingent employment practices, Tregaskis and Brewster (2006) analyze
five European countries between 1991 and 1999 based on Cranet data. They do not find
any evidence of final convergence and point toward the importance of organizations’
institutional embeddedness as a constraining factor for converging developments. Also
looking at contingent forms of employment, but including monitoring and rewarding
individual performance, Gooderham and Brewster (2008) use Cranet data for the
period between 1992 and 1999. While they find some indication of convergence toward a
“US-­model,” they also show that the country and the institutional environment are
important moderating factors.
Nikandrou, Apospori, and Papalexandris (2008) use Cranet data when looking
at training and development in eighteen European countries between 1994 and 1999.
They find some support for convergence through being in the same country cluster, but
also find different speeds of development. Goergen, Brewster, Wood, and Wilkinson
(2012) analyze investment in training between 1991 and 2005 in eighteen European
countries using Cranet data. They show specific national realities and underscore the
existence of clusters of practices and institutions.
Researching forms of employee voice, Brewster, Brookes, Croucher, and Wood (2007)
use Cranet data from Germany and Sweden and the United Kingdom between 1991 and
2005. Their analysis shows only limited evidence of directional convergence for
individual voice models and that collective voice is still important, especially in larger
organizations. Goergen, Brewster, and Wood (2009) analyze the development of trade
union membership and influence in European countries between 1995 and 2005 based
on Cranet data. They point toward the national legal tradition as the strongest indicator
382   Mayrhofer, Brewster, and Pernkopf

for union strength that, in turn, suggests considerable path dependence. In a three-
country study (two points in time) in the Netherlands, Sweden, and the United Kingdom
on voice and participation in the first two years of an acquisition, Edwards and Edwards
(2015) show the strong and lasting effects of national environments on employee
perceptions and the upholding of differences.
Three studies focus on devolvement of HRM to line managers in European countries,
both using Cranet data and looking at the time between 1990 and 2000. Neither
Mayrhofer, Müller-­Camen, Ledolter, Strunk, and Erten (2004) nor Larsen and Brewster
(2003) find empirical support for convergence. Brewster, Brookes, and Gollan (2015) use
Amable’s (2003) categories of comparative capitalisms and Cranet data from thirty-­two
countries collected in 2008/9 to compare with previous findings. Around half of the
organizations assign HRM responsibilities to the line, and organizations appear to have
considerable latitude in making choices in this area. Organizations in the Nordic
economies are most likely to assign responsibilities for HRM to the line, and those in the
liberal market economies are the most likely to keep HRM centralized in the HRM
department. In any economy, larger organizations, unionized organizations, and
those with strategically positioned HRM departments are the least likely to allocate
responsibilities for HRM to the line. Differences between countries prevail.

Comparison to Ideal-­Typical “Western/US Ideal Human Resource

Management”
A final group of studies from different regions in the world could be integrated in the
more generic logic of varying social complexity, but they have a strong common theme:
THey compare national or regional HRM to an external standard, usually some kind of
ideal-typical concept of HRM, often labeled Western or US. The ideal-­typical Western
HRM model—whatever that exactly is—constitutes the point of reference for a num-
ber of studies. Regardless of the empirical insight gained, the prominence of such stud-
ies deserves some attention. Generally, they seem to be a way of smuggling some form
of universalism into the discussion under the guise of Western, usually meaning US/
Anglo-­Saxon, models of HRM (see Chapter 8 for a discussion of the Anglo-­Saxon
model of HRM). Such models rarely define what exactly the Western model is, thus
limiting any potential comparison or understanding of convergence, and in most cases
are not strictly longitudinal convergence studies, but—with few exceptions—snapshot
comparisons between the empirical reality of the relevant subject and some kind of
assumed ideal.
In Africa, Anakwe (2002) looks at Nigerian HRM and compares it to Western HRM
practices. She diagnoses similarities, differences, and crossvergence. The bulk of the
studies look at various regions or countries within Asia, the strong external forces that
HRM there must face (Rowley, 1997), and how far these countries develop their own
approaches vis-­à-­vis Western HRM approaches (Rowley, 1998). For example, in Oman,
Khan (2011) offers an analysis of the background to Oman/the Gulf Cooperation
Council countries and what this means for establishing HRM compared to an Anglo/US
type of HRM. He sees neither convergence nor divergence but argues for a middle-of-
the-­path approach. Putting the insight of various studies together, Rowley et al. (2017)
 Convergence in Human Resource Management   383

conclude there is no tendency toward global convergence, but that HRM systems in Asia
are diverse. Because of the specifics of the regions, for example, in relation to the role of
trust, (in)formality, social ties, and religion, HRM remains distinct, with emerging
hybrid forms of HRM mixing local/regional and “universal” models. Rhodes, Walsh,
and Lok (2008) analyze the implementation of the balanced scorecard in the Indonesian
central bank. Compared to Western standards, leadership styles, organizational culture,
and various HRM practices do make a difference. Cunningham and Rowley (2008)
focus on small and medium-­sized enterprises in China to see whether they adopt
Western HRM practices. They give an overview of various studies of Chinese companies
and diagnose mixed findings. For Korea, Horak (2017) analyzes recruiting practices and
the role of yongo, that is, informal social networks, for recruiting. Compared to Western
HRM, they argue that Korea is in a state of soft convergence since these yongo
relationships still play an important role. As with the studies of Pakistani vhartan bhanji
(Saher & Mayrhofer, 2014), Arab wasta, and Chinese guanxi (Hutchings & Weir, 2006),
the problem for scholars assessing their impact is that there are no equivalent studies of
informal social networks in the West (e.g., the grandes écoles, ivy league, or the UK
private school “old boy” networks—note the sexist terminology and practice), leaving
us facing the danger of implying that such networks only operate among less developed
societies and unable to draw any serious conclusions about convergence.
Within Europe, Festing (2012) takes a detailed and well-­founded look at HRM in
Germany and describes the similarities and differences of the German model vis-à-vis
other European models and the US model. She diagnoses both similarity and difference.
Milikić et al. (2012) report on various studies over a twenty-­year period on HRM in
Serbia. Changes do not follow a convergence or divergence path compared to Western
HRM, but rather have characteristics of hybridization.

What Does It All Mean? Taking Stock

and Looking at the Future of Human
Research Management Convergence
Research

Clearly, time is a critical factor in HRM. Things change at both the micro and the macro
level. However, despite the arguments that we have addressed for convergence, we
should be cautious about assuming that they are changing in any particular or con­sist­
ent direction. The notion of convergence (and divergence, stasis, and hybridization) is
complex and multifaceted, raising issues such as convergence of what? toward what? over
what time span? and in which cases? Hence, simplistic questions about convergence, or
the extent of it, threaten to take us into blind alleys. In reality, there are elements of
convergence, divergence, stasis, and hybridization present in nearly all aspects of HRM
in nearly all circumstances.
384   Mayrhofer, Brewster, and Pernkopf

We continue to believe that the debate about convergence is a valuable one, focusing
as it does on the effect of time and the importance of, and change in, dominant models.
But it must be a nuanced debate based on clear and appropriate evaluations of
comparable units of analysis, levels of analysis, and time span. Fortunately for those of
us who are interested in nationally comparative HRM, it is clear that, except perhaps at
the level of rhetoric of certain kinds of companies and among certain kinds of less
critical academics, we are far away from any kind of final convergence. There remains a
need to understand the different models of HRM that exist throughout the world.
There are databases that can be exploited to examine convergence in HRM further,
and we encourage such work. There is much about the way that HRM ideas are spread
across the globe that we do not understand and that we need to understand much better.
For the future, we suggest that focused efforts, concentrating on particular topics or
subjects within HRM, or changes in specific practices rather than general statements
about policies, or developments within specific areas of the global economy, are what are
needed most.

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 section 3

SE C TOR A N D
ORGA N I Z AT IONA L
I N F LU E NC E S
 chapter 18

H um a n R esou rce
M a nagem en t i n th e
M u lti nationa l
Con text

Neil Rupidara

The field of human resource management (HRM) has been on a significant upward
­trajectory, becoming an increasingly complex area of investigation, not only encompassing
the micro-level aspects of managing people within organizations but also now covering
macro institutional factors. In addition, the mechanisms underpinning cross-boundary
processes of diffusion, adoption, and implementation of ideas, along with variations in
the preferred models of management concerning people and organizations across the
globe, have received increasing attention from scholars. In particular, there has been a
rapid growth of the subfield of international HRM (IHRM), an area of study that was
still in its infancy in the 1980s but can now be argued to be reaching maturity (Collings,
Wood, & Caligiuri, 2015; Laurent, 1986). As part of this subfield, Cooke, Wood, Wang,
and Veen (2019) suggest that there has been a substantial increase in the parallel body of
knowledge focused explicitly on HRM in multinational enterprises (MNEs) and the
extent to which they standardize or localize practices in their geographically dispersed
locations. Indeed, in many respects, given the paucity of research into HRM in public,
intergovernmental, and nongovernmental international organizations (see Brewster &
Cerdin, 2018), the story of IHRM has largely been the story of MNEs (Kaufman, 2007).
Against the backdrop of this evolving body of knowledge, this chapter focuses on
aspects of our knowledge base on HRM in MNEs. We take the particular context of
MNE subsidiaries operating in Asia, specifically in Indonesia, as our focus. The study of
HRM in MNEs in the Asian context, particularly in the developing Asian countries,
remains a significantly underrepresented area in the HRM literature, which, like most
management studies, has been unduly influenced by a concentration on the WEIRD
(Western, educated, industrialized, rich, and democratic) countries (Henrich, Heine &
398   Rupidara

Norenzayan, 2010). The WEIRD countries are a small proportion of all the countries in
the world. The Asia/Pacific region is booming economically in a way that much of
the developed world ceased to do some time ago. Within the region, Indonesia is one
of the more interesting emerging economies in the world, with a gross domestic product
growth of 5.1 percent in 2017, and ranks as having the sixteenth biggest gross domestic
product in the world. The country, the largest economy in Southeast Asia, has 267 mil-
lion inhabitants, with a gross domestic product per head of around USD$4,120.5 per
annum. Alongside the BRICS countries (Brazil, Russia, India, China, and South Africa),
in 2010, Jim O’Neill of Goldman Sachs popularized the concept of the MINT countries
(Mexico, Indonesia, Nigeria, and Turkey, an acronym coined by Fidelity Investments) as
countries that have very favorable demographics and interesting economic prospects.
Despite its interesting economic prospects, however, Indonesia receives little attention
from the academic community as a research context, particularly in the international
business and most especially the HRM field.
Examining specific contexts such as Indonesia provides a distinct but complemen-
tary picture to the North American and European perspectives that have historically
dominated scholarship on HRM (cf. the argument for the European perspective in
Dickmann, Brewster, & Sparrow, 2016). Since the study of HRM in MNE subsidiaries in
Asian developing economies has received little attention heretofore, studies in and from
that context reveal how multinational firms deal with different contextual factors, in
particular when formulating their policies, practices, and preferred approaches for
managing people effectively. To provide some background to our particular contextual
focus, we begin the chapter with a brief overview of the development of HRM in general
and particularly in the context of HRM in MNEs.

Recent Developments in Human

Resource Management

Three research streams have emerged from mainstream HRM research that particularly
underscore the development of HRM studies since the 1990s and that are especially
illuminating, namely, content-focused strategic HRM research (perhaps the most
dominant line of thinking in HRM studies to date); emerging process-oriented HRM
studies; and international HRM as a specific line of inquiry. The first, the body of work
on strategic HRM, has particularly, since Huselid’s seminal study published in 1995,
concentrated on the links between HRM, strategy, and firm performance, although, of
course, alongside other relevant variables. The resource-based view/theory represents
the dominant theoretical perspective in this stream, arguing that HRM is a source of
sustained competitive advantage (Barney, 1991; Boxall, 1996; Boxall, & Steeneveld, 1999).
The resource-based view is built on four assumptions: first, human talent is valuable
(Collings, 2015); second, it is rare (Michaels, Handfield-Jones, & Axelrod, 2001); third, it
 Human Resource Management in the Multinational Context   399

is not easily imitated; and fourth, it is nonsubstitutable or, at least, not easily substituted.
The resource-based view also assumes that talented people are more likely to leave the
organization and go to competitors (Brymer & Sirmon,  2018; Groysberg, Lee, &
Nanda, 2008), even if the evidence for their success in another environment is limited
(Groysberg, 2012), move into the “gig” economy (Daniel, Di Domenico, & Nunan, 2018),
or set up as entrepreneurs in their own right. This explains why, in turn, such workers
cost more (Cappelli, 2008; Gardner, 2005). Taken together, it is argued, this means that
these talents need careful management (Morris, Alvarez, & Barney, 2018).
This approach later built the importance of a systems perspective, and thus the contri-
bution of different types of HRM systems to organizational performance at different levels
and in relation to other factors, into its arguments (Arthur, 1994; Arthur Boyles, 2007;
Becker & Huselid, 1998; Boon, Den Hartog, & Lepak, 2019; Chadwick, Super, & Kwon,
2015; Chow, Teo, & Chew, 2013; Den Hartog & Verburg, 2004; Edwards & Wright, 2001;
Guthrie, 2001; Huselid, 1995; Jiang et al., 2012; Lewin, 2001; MacDuffie, 1995). Although
there has been a significant increase in the volume of HRM studies on the relationship
of HRM systems and firm performance, scholars have also noted substantial critical
assessments (Kepes & Delery, 2007; Paauwe, Wright, & Guest, 2013), such as whether it is
the whole system or specific elements of it that generate the impact, the need for a better
understanding of and more evidence for different internal fit of HRM systems, and
whether studies are sensitive to the time factor in measuring the impact of HRM systems
on overall firm performance. Further, there is a significant lack of understanding of HRM
processes and mechanisms of influences within and external to HRM systems (Festing &
Eidems, 2011; Rupidara & McGraw, 2011). This includes process aspects on the side of
systems construction and the work of the ­systems, including how they affect percep-
tions of employees regarding the practices of HRM that in turn affect the behavior and
performance of employees (Wright & Nishii, 2008).
The second stream emerged as a response to the tendency to overemphasize content
aspects of the way scholars explain the effects of HRM on firm performance. Various
authors have therefore called for greater attention to be paid to HRM processes as a
neglected dimension in HRM research (Bowen & Ostroff, 2004; Brewster, Mayrhofer, &
Smale,  2016, Monks & McMackin,  2001; Paauwe,  2004; Rupidara & McGraw,  2011;
Sanders, Shipton, & Gomes, 2014). The process school could be divided into two sub-
groups, namely, those who focus on the construction of HRM systems (Monks &
McMackin,  2001; Rupidara & McGraw,  2011) and those who study how the systems
work or are implemented (Monks et al., 2013).
The third stream relates specifically to IHRM. According to Dowling and Welch
(2004), IHRM consists of several substreams: studies of human behaviors in organiza-
tions using an international perspective; comparative studies of HRM/industrial
relations systems across countries; studies of HRM systems in multinational companies;
and also studies in the overlapping areas of the three domains. Although this is the
stream that will be elaborated further in this chapter, it is worth emphasizing here that
the MNE substream in particular has been a melting pot for knowledge development of
various research agendas, given that it has focused on the uniquely rich and complex
400   Rupidara

setting of MNEs. Thus, although we have seen that HRM research has developed out of a
contestation of competing ideas in different streams of thinking, there have been some
overlapping agendas across the streams too. For example, the rise of the strategic IHRM
literature (e.g., Schuler, Dowling, & De Cieri, 1993) has impacted the agendas of research
in strategic HRM (Minbaeva & De Cieri, 2015) and later of the process school (Rupidara
& McGraw, 2011), drawing connections to the context of MNEs.
Against the backdrop of these developments, this chapter focuses particularly on the
third substream of IHRM—and HRM—in the MNE context specifically. However, it
also includes some aspects of strategic HRM and process-oriented HRM that overlap,
because it deals with the process of developing HRM systems within the MNE context.
In so doing, it not only deals with micro and meso aspects of managing people within
organizations, but also considers macro factors influencing systems development
(Rupidara & McGraw, 2011). This work is also enriched by the use of different theoretical
lenses in HRM studies (see, e.g., Brewster, Mayrhofer, & Smale,  2016; Rupidara &
McGraw,  2011; Wright & McMahan,  1992), particularly by employing organizational
institutionalism in explicating aspects of strategic HRM thinking. Before we proceed to
the section on HRM in MNEs, we first provide a brief assessment of the literature on
multinational companies as a context.
Again, we note that developing country perspectives remain underrepresented in the
existing body of HRM knowledge (cf. Napier & Vu, 1998; Ozbilgin, 2004), even among
multinational company research. Existing knowledge has been mainly constructed
from the perspective of developed economic settings, for example, in Europe, Australia,
Singapore, Korea, and, particularly, the United States and Japan (Ferner,  1997). This
means that perspectives and experiences from the developed economies have domi-
nated the diffusion of HRM research and ideas across the world, although there has
been a growing impetus on MNE research in major emerging economies such as China
(Bjorkman & Lu,  2001; Bjorkman & Xiucheng,  2002; Farley, Hoenig, & Yang,  2004;
Li, 2003), India (Paul & Anantharaman, 2003; Sharma, Budhwar, & Varma, 2008), and
other emerging market economies (Horwitz & Budhwar, 2015) (see Chapter 6 for a dis-
cussion of the emerging market context). Research in and from developing countries,
however, is still lagging behind, although it could offer alternative perspectives on how
to understand HRM issues in general and the process of configuring HRM systems in
particular. The opportunity for this research to offer a perspective from the specific
context of the developing and transitional economy of Indonesia may also add to the
existing body of knowledge in the field of strategic IHRM.

Multinational Enterprises
as a Research Context

Multinational enterprises have now become the most dominant players in the global
economy (cf. Léonard, Pulignano, Lamare, & Edwards, 2014; McGraw, 2004). Besides
 Human Resource Management in the Multinational Context   401

constantly growing in numbers of head offices and subsidiaries, based, for example, on
the Forbes Global 500 list 2017, seventy-one MNEs dominate the list of the one hundred
strongest world economies. This not only shows how increasingly powerful MNEs are,
but also underscores their attractiveness as specific contexts for HRM research. The
complexity of MNEs’ organizational mechanisms are continually increasing. To signify
the phenomenon, an interesting pictorial of this remarkable economic “creature” would
be a giant octopus, with tentacles that symbolize the multibusinesses and regions or
branches of operation and a head symbolizing the central part that controls the actions
of the branches.
The operation and structure of MNEs have evolved from being relatively simple to
being highly complex over time, and they have increasingly attracted the attention of
scholars, particularly over the past forty years or so. The growing complexity of MNE
organizations has in particular arisen as a result of firms’ managerial responses to
increasing global opportunities and their abilities to internalize and develop resources
that support the expansion of operations into multiple environments worldwide (see,
e.g., Malnight, 2001; Westney & Zaheer, 2001). Despite the different paths taken, we now
see the existence of highly interconnected organizations that distribute roles and
resources across national boundaries and institutional fields, facilitated by complex
relational mechanisms inside the multinational network, that is, between the headquar-
ters and their subsidiaries; and also outside to institutions in the external environment.
This highly complex state of organizing has created an increasing challenge for HRM
specialists in relation to facilitating the effective management of the MNEs, including
at the subsidiary level, and this opens up fertile research domains, including the study of
HRM in MNEs.

Human Resource Management in

Multinational Enterprises: A Brief
General Overview

Human resource management in MNEs has generally been developing through an

exploration of the relationships and interactions between headquarters and their sub-
sidiaries and an examination of how they deal with various internal and external factors
in the home and host countries (Brewster, Mayrhofer, & Smale, 2016). Based on such a
dyadic approach, two dominant models can be proposed. First, there are HRM systems
that show the dominant role of the headquarters—“ethnocentric” strategies as they have
been called (Perlmutter, 1969). The model is characterized by the unidirectional transfer
of HRM policies and practices, and expatriate controllers, from the headquarters to
their subsidiaries. This model shows a tendency toward converging standardized
practices across the multinational chain.
402   Rupidara

The second model depicts a condition where more autonomy is given to the
s­ubsidiaries in developing HRM systems within the host country unit. This
­autonomous subsidiary model provides enough room for the local development of
HRM systems where HRM ideas, as much as ideas in marketing and operations, can
be generated locally by the subsidiaries and may diverge from the strategies of the
headquarters. This may create more conformity of HRM practices with national envi-
ronments. To some extent, this is bound to occur as a result of institutional forces
such as local ­legislation, tradition, and expectation (Rupidara & Darby, 2017), creat-
ing some form of hybridization of HRM (Chung, Brewster, & Bozkurt, 2020). As the
opposite of the first model, this would possibly lead to the divergence of and more
localized HRM practices within the multinational chain.
Hypothetically, there is a possible third model where balanced roles and contributions
between the headquarters and their subsidiaries are exercised. Benoy and Morley (2020)
have recently argued that Indian MNEs pursue a balanced exchange of value with their
subsidiaries by creating centers of excellence to innovate, create new knowledge, and
build a hybrid network This style places equal emphasis on the value addition and value
extraction by the parent through headquarter–subsidiary interpersonal relations vested
in mutual trust and empathy, thus facilitating a better alignment to the broader goals of
the multinational chain. Whatever approach is favored, it can, however, be understood
that there would be varied degrees of influence between the two sides in the different
models across MNEs. In addition, given the power relationships, it would be difficult to
have a perfectly balanced set of influences between headquarters and subsidiaries. This
model, therefore, could not stand as a viable and comparable model to the first two.
Whatever the model, MNEs commonly encounter and become more aware of ­different
institutional forces and pressures within the countries in which they operate. This
increases the complexity of choosing cross-border strategies and operational practices.
Appropriately balancing the different forces is therefore a ubiquitous challenge for all
managers in MNEs, including HRM managers (Deephouse, 1999; Kostova & Roth, 2002).

Human Resource Management in

Multinational Enterprises Operating in
Asian Developing Countries: A Focus on
the Configuration Process of Human
Resource Management Systems at the
Subsidiary Level

Having provided an overview of the body of work on aspects of HRM in MNEs in general,
we now turn to the specific example of HRM in MNEs in the Asian developing country
context of Indonesia. The focus here is more on the process of MNEs constructing their
 Human Resource Management in the Multinational Context   403

HRM systems at the subsidiary level, looking at macro institutional environment factors
(macro model) and micro process factors (micro model). This section is based on results
from a detailed study conducted by Rupidara and colleagues, aspects of which have been
recently reported by Rupidara (2018, 2019), Rupidara and Darby (2017), and Rupidara
and McGraw (2011).
A macro conceptual model of the configuration process of HRM systems within
multinational subsidiaries in Indonesia has been developed by Rupidara and McGraw
(2011). A modified version of the model is presented in Figure 18.1. The model illustrates
how the institutional environment provides pressures, through mimetic, coercive,
and normative isomorphic mechanisms, to influence the process. Empirical findings
have supported the general phenomenon of isomorphic influences within the
Indonesian HRM field and within organizations more generally (e.g., Rupidara &
Darby, 2017). Case studies conducted at three multinational subsidiaries of foreign
MNEs operating in Indonesia (i.e., CoCement, CoInsure, CoTobacco) also show how
in various ways HRM actors within the firms are dependent on HRM ideas supplied
from the outside environment and thus shows the connectivity of actors inside and
outside firms (Rupidara, 2018).
As similar HRM ideas are diffused through different channels within the Indonesian
HRM field, similarities in elements of HRM systems across companies are inevitable.

Global HQ

Other
Regional HQ multinational
networks
Global ideas Global ideas
Strategic imperative
and/or mimetic
Other isomorphism within MNC
subsidiaries
Wider institutional
environment
National institutional
environment
Professional networks
or organizations Other
multinational
Subsidiary A subsidiaries

HRM actors
as embedded
agency Mimetic
Mimetic & normative
isomorphism isomorphism
Organizational mechanisms
Third party, e.g., Local firms
consulting firms;
Educational
organizations

Coersive isomorphism Coersive isomorphism

Local regulations and

agencies

Figure  18.1. Macro model of human resource management (HRM) systems configuring

­proc­ess within multinational corporation (MNC) subsidiary. HQ, headquarters. Modified from
Rupidara and McGraw (2011).
404   Rupidara

The model postulates various possible links and relationships amid different organizations,
such as the headquarters and subsidiaries within the multinational chain, peer compa-
nies, consultants, and regulators. Included in the network of relationships are human
actors inside those firms, particularly those within the multinational subsidiaries who
develop the HRM systems. Included also are the relationships between organizational
actors, their institutional contexts, and their regulative, normative, and cognitive
institutions, all operating within multinational environments. Those relationships are
possibly parts of a yet more complex network of relationships that may not be easy to
define beforehand. These multiple connectivities are important in understanding the
diffusion and adoption of different, sometimes conflicting, ideas from and into differ-
ent organizations within and across fields. At critical junctures, they then influence the
decisions taken by HRM actors in the process of configuring HRM systems, particularly
within multinational subsidiaries.
The macro model places a central role on HRM actors, with the support of their
counterparts inside and outside the organizations, in mediating the different pressures
or influences in working through and managing the process. An important role is played
by HRM actors, although the potential or actual agentic behavior of actors must be
understood in the light of their institutional embeddedness.
Although strongly supported by empirical evidence, the macro model could not
cover information concerning the detailed micro aspects of the process. This is related
to the actual and continuing activities that define how HRM actors configure the HRM
systems within multinational subsidiaries. The model therefore requires extended
explanations from the micro process aspects that are lacking. The micro process model
as depicted in Figure 18.2 captures a sequence of events in the HRM configuration proc­
ess that are connected to the macro mechanisms that have been part of the macro model.
This model was constructed based on the experiences of three multinational subsidiar-
ies (i.e., CoCement, CoInsurance, and CoTobacco), supported also by an additional
comparative case study in InMonebank that is documented by Rupidara (2018, 2019).
The ultimate parent companies of the three multinational subsidiaries are located in
different countries, although all were originally Indonesian companies. CoCement is a
German (65 percent) and Indonesian (35 percent) joint venture, CoInsure is co-owned by
Australian (80 percent) and Indonesian (20 percent) interests, and CoTobacco was an
Indonesian company acquired by a US tobacco company (98 percent). Table 18.1 provides
additional information of the case organizations.
The micro model shows that the configuration process of HRM systems in the MNEs
under study can be understood as a series of actions. It is, first, a result of actors’ responses
to different external challenges and internal problems (e.g., corporate crisis and owner-
ship change) that urge a rethinking of corporate identity. Efforts to reinterpret corporate
identity, as perceived by the HRM specialists and/or other relevant managerial actors, are
followed by early interactions with and therefore adoption of new worldviews, particu-
larly about HRM. This is done either at the corporate or at the HRM functional level,
but later followed by an internal reconfiguration process within the HRM function.
The (re)configuration processes are endorsed by various mechanisms that bring
 Human Resource Management in the Multinational Context   405

Table 18.1.  The characteristics of the case organizations

  Indonesian public
MNC A: MNC B: institution D:
CoCement CoInsure MNC C: CoTobacco InMonebank

Industry Cement Insurance FMCG/Tobacco Banking and

monetary policy
and regulation
Current dominant Germany Australia (80) United States (98) Indonesia
parent nationality (65.19)
(% share,
approximate)
Former parent Indonesia Indonesia and Indonesia Indonesia
nationality its foreign
partners
Acquisition year 2001 2007 2005 —
No. of employees 5,000s 300s + 5,000s 30,000s 6,000s
agents

Note: MNC, multinational corporation.

Macro/institutional
influences and
mechanisms

External connectivity
and its mechanisms

Corporate identity Adoption of “new” Adoption of HRM

and challenges worldviews ideas or models

Crisis, ownership
change, etc. Enactment of new
HRM ideas and
models

The configuration of
HRM systems

Figure 18.2.  A micro process model of the configuration of human resource management

(HRM) systems. Modified from Rupidara (2019).
406   Rupidara

external ideas into organizational realms, particularly through the interconnectivity

of actors. As the case study multinational subsidiaries show some similarity of big ideas,
such as performance-based management, that make up the elements of their HRM sys-
tem (see Rupidara, 2018), this also shows the connectivity between actors and institu-
tionalized ideas. Various institutional mechanisms are involved here, and they have
already been depicted in the macro model (Rupidara, 2017). Overall, this shows that
HRM systems are configured as a response to firms’ strategic challenges. The micro
model as presented in Figure 18.2 has been slightly modified from its previous version,
where macro/institutional influences and mechanisms are added and the micro model
is connected to the macro model.
The study shows that organizations have their mechanisms to link and allow them to
tap into external knowledge sources that exist in their immediate or extended environ-
ment (Rupidara, 2017, 2018). Furthermore, some organizations have better mechanisms
in reaching out to distant sources of ideas. The uses of consulting services to tap into the
knowledge stocks of the consulting firms is an example of this. The particular case of
CoTobacco, where most of the ideas adopted were coming from the headquarters and
where the headquarters itself had access to a global consulting firm, shows how a
national subsidiary has access to global ideas. With such far-reaching networks, they
have virtually expanded their organizational and even institutional field boundaries.
This may have a significant implication in the understanding of an institutional field,
which can be expanded or widened, from the subsidiary standpoint.
This research among MNE subsidiaries located in Indonesia reinforces the fact that
the mimetic pressures on managers (Chai, Fang, & Yang, 2019; DiMaggio & Powell, 1983)
mean that organizations tend to copy other organizations in the identification and
implementation of certain practices. They therefore tend to be dependent on externally
supplied ideas (Grigoriou & Rothaermel, 2017). The connectivities with other organiza-
tions and to rich idea–supplying fields (where knowledge-producing organizations are
voluminous) are thus important. The case studies reveal the role of third-party organi-
zations such as consulting firms and academic institutions, multinational parent firms,
and even their HRM professional peers acting as channels or carriers supplying HRM
ideas into the firms. Rupidara and Darby (2017) document the roles of these parties in
introducing new HRM standards and practices in the context of Indonesia in general
and in the case companies in particular. In the case of CoCement, for example, an HRM
specialist acknowledged the critical role of consultants in the development of
HRM systems (Rupidara, 2018). Being located within a fertile and isomorphic field that
has abundant relevant ideas is thus very important for the mimicking organizations. The
ability of HRM actors to tap into the stock of knowledge stored or carried by other actors
in the connected fields is also crucial.
This research, particularly in the case study of CoCement, shows that the adoption of
new ideas is not necessarily always directly implemented or enacted into daily routines
of HRM practices. A new practice (i.e., performance-based career management) sug-
gested by a consulting firm employed by CoCement was postponed because of its
incompatibility with its culture of seniority as a former family-oriented company.
 Human Resource Management in the Multinational Context   407

Companies sometimes postpone, or reinterpret and adjust, ideas in the implementation

phase for a number of reasons, such as cultural or identity mismatches.
The configuration process is described as a two-level process, as depicted in
Figure 18.1. The model shows that the configuration process is a result of corporate iden-
tity rebuilding. The process, however, also reinforces an ongoing construction of corpo-
rate identity in signaling an aspiration of a new image of the companies to be
better-performing firms, particularly in managing their people. For companies such as
CoTobacco, it is important to build strong employee branding through advanced and
consolidated HRM systems. With regard to the general Indonesian HRM field, not
many firms have reached same the level of sophistication in their HRM systems as the
case study companies and, at the same time, have concerns about employee branding.
Such good practice or understanding may, however, be diffused in the field and stimulate
adoption of ways of managing HRM systems because the HRM field is highly isomorphic.
This implies that macro institutional mechanisms would in turn work at the field level
to diffuse ideas and lead to further adoption. Here, we can see that both aspects of the
institutional environment and internal firm-specific factors are, in combination, working
to shape the nature and direction of HRM in MNEs.
We argue that the integration of macro and micro models, according to the events
and conditions captured in this research, is the best representation of the complex
configuration process of HRM systems in societies such as Indonesia. Building on this
general conclusion, we now turn to some implications for future research.

Directions for Future Research

Various institutional influences are identified in this research, for example, regulative
changes in the Indonesian industrial relations system, increasingly influential profes-
sional norms, and the diffusion of new cultural–cognitive frameworks, that indicate an
evolution of institutional rationalities within the Indonesian HRM/industrial relations
field. Within the regulatory/industrial relations system, Rupidara and McGraw (2010)
have extensively discussed the evolution of the logics of the system to understand its
historical developments. Since the institutional field of HRM has a significant influence
over the decisions and actions within firms, a similar analysis would therefore be needed
to understand the evolution in the field of any specific organization. This is related to the
reciprocal evolution of ideas, both in the academic and in the professional or practical
realms that influence the constant development of the logic(s) that drive the HRM field.
This research has captured some aspects of the development, particularly in the recent
past, but a longer timeline analysis could give a better understanding of the dynamics of
the wider institutional field of HRM. A more comprehensive understanding than this
research has revealed would therefore be provided.
Although not documented here (see Rupidara & Darby,  2017), this research also
reveals that there is a phenomenon of increased actors’ interactions and involvement in,
408   Rupidara

thus leading to the emergence of, various professional HRM groups, and further studies
of such interactions among HRM actors would be worth pursuing. The HRM profes-
sional groups emerged in the late 2000s and have become a vehicle for Indonesia’s HRM
professionals to share and discuss related issues to their profession, including regulatory
frameworks and new practices. This was mainly accomplished through emailing list
groups, but some have now turned to WhatsApp or Facebook groups. The circulation
and discussion of HRM ideas take place within the circles of HRM professionals, later
leading to the adoption of similar ideas and eventually similar practices across firms.
Building on these ideas, Rupidara (2019) has identified a number of prospective
research propositions that could stimulate future research. First, in light of the increas-
ing isomorphism of the field of HRM, he suggests that “the higher [the intensity] and the
wider the [scope of] connectivity of a firm to external sources of HRM ideas, the more
likely the firm will be to have more diverse [or rich] elements of HRM systems adopted
from its environment” (modified from Rupidara, 2019, p. 237). The suggestion therefore
is that future research should pay more attention to the fact that as HRM systems
contain multiple elements, the configuration of such systems within a multinational
subsidiary will involve different sources of ideas from its environment. The immediate
environment of a multinational subsidiary is within the multinational chain, within the
national environment, or a combination of both. Beyond such a boundary, future
research should also be aware of the potential multiple connectivity of firms to sources
of ideas outside the immediate environment. Human resource management actors
within companies may develop various linking mechanisms to different sources of ideas
they identify as beneficial for the development of HRM systems. In some cases where
companies have higher levels of complexity along their multinational networks (including
reverse transfer of HRM ideas and greater mobility of human resources), the complexity
of the process must be anticipated, in particular, an appreciation of the institutional
pressures confronting the companies. All in all, this shows the importance of multilevel
and multiactor approaches in HRM in MNE research to capture the dynamics of the
process of configuring HRM systems.
A second possible research proposition identified by Rupidara (2019, p. 238) focuses
on unraveling aspects of the relationship between isomorphism, corporate identity, and
the configuration of HRM systems. Here, he proposes that “the more diverse the ideas
that are accumulatively adopted and the more constantly the configuration process is
conducted, the more solid the HRM systems and the firmer the identity of the firm
would become.”
Future research should pay more attention to internal mechanisms within firms that
work in certain way(s) to combine multiple ideas that are adopted but then reassembled
into a cohesive whole that generates greater alignment in the system. It may not be a per-
fectly aligned system, and all systems need constant processes of (re)alignment, but the
aim is to achieve the best alignment possible to secure better performance. The dynamic
process of blending HRM ideas and therefore elements of HRM systems is viewed here
as part of the ongoing construction of a firm’s broader aspirational identity. External
ideas were adopted in accordance with that aspirational identity. The Indonesian case
 Human Resource Management in the Multinational Context   409

studies research reported in this chapter shows how firms reconstructed their identity
in seeking a greater legitimacy, that is, by becoming more similar to firms they con-
sidered as ones on which to model themselves. Future research could therefore pay
attention to the way firms handle the relationships between these factors. This would
particularly apply to lower-ranked firms that aspire to climb the ladder and become
better-performing firms.
Third, considering the potential of the existence of conflicting ideas diffused in an
HRM field and into a firm’s organizational boundary during the configuration process,
Rupidara (2019, pp. 238-239) further proposes that “the higher the level of diffusion of
conflicting ideas into an organisational field such as HRM, the more likely it is that the
firms within that field will feel and experience challenges to their identities and will
change their identity according to the higher legitimate reference as perceived by the
HRM or related actors.”
Future research examining such identity switching should pay attention to several
factors in relation to firms’ decisions to do so. First, we need to understand the trigger-
ing factors to identity change, for example, external pressures and/or internal crisis. The
triggering factors would in some ways connect the firms to other organizations that
would bring external, sometimes conflicting, ideas from the institutional environment
into the firms, as they seek solutions to increase firm performance or handle crisis. The
differing ideas would lead to different responses the firms might need, because they are
received and interpreted by different internal actors within the firms. As different
responses arise, internal dynamic relations of power and influence among the actors
would come into play. This will certainly result in a decision to be made to raise the
firms’ legitimacy, but the process is worthy of observation in order to understand
the detailed picture of the configuration process of HRM systems.

Conclusion

This chapter has focused on aspects of HRM in the specific context of multinational
MNEs operating in Indonesia. Employing both process and institutional perspectives to
understand HRM in MNEs, it has explicated elements of how HRM systems within sub-
sidiaries of MNEs, particularly in developing country contexts in Asia, are constructed
and operate. Employing secondary analysis of published and unpublished materials,
various multilevel contextual factors influencing the practices of HRM in MNE subsid-
iaries have been unearthed, with a view to providing an understanding of HRM in an
under-research context and to stimulating further research in the field of HRM in MNEs
in unique institutional environments.
As a point of departure for the model emanating from the research reported in the
chapter, an overview of the scholarly work on the development of HRM in MNEs was
presented. A key focus has been on generating insights into the specific process of con-
figuring HRM systems within multinational subsidiaries located in Indonesia. It is
410   Rupidara

hoped that this will stimulate more research, both on Indonesia as a context for research
and on the influence of MNE subsidiaries on the framework for HRM in the Indonesian
context. In particular, we need a stronger emphasis on the process dimensions of HRM,
specifically in the context of developing countries, and in Asia in general. Such research
in the developing country and transitional economy context would enrich our under-
standings of various process dimensions of how HRM are developed and run. Not only
would these understandings help HRM practitioners of MNEs operating in Asia and
researchers who have interests in studying HRM in context, but also they would help all
research to have or develop more holistic understandings of HRM, particularly around
its various process dimensions. The particular advantages attached to a greater emphasis
on process aspects include how and why firms come to reconfigure their HRM systems,
the detailed process of the configuration, including understanding the connectivity of
HRM ideas and sources of the ideas, and therefore institutionalized ideas, and the
dynamic relations of various actors involved in the process.
Some conceptual and empirical themes of idea diffusion, isomorphism or mimesis,
social identity of firms, linking or connectivity mechanisms, and the potential of a wid-
ening of an institutional field have been generated from the study. Most are not new, but
together they may enrich future, deeper investigations on HRM processes as well as
content-oriented studies.
This chapter has also shown and therefore stimulated the use of multilevel and
multiactor (Mäkelä, Ehrnrooth, Smale, & Sumelius, 2013) or multiple stakeholder (Beer,
Boselie, & Brewster, 2015) perspectives in the study of HRM in an MNE setting. Not only
is the connectivity of headquarters and their subsidiaries presented, but also various
actors within firms and within an institutional field have been identified as being partic-
ularly salient in the process of configuring HRM systems, at the multinational subsid-
iary level in particular. Such research findings indicate a need to go beyond the typical
bipolar framework of headquarters–subsidiary relationships and to take more dynamic
views of studying HRM in the MNE context. We need to recognize the use of other pos-
sible sources of ideas or influences through, or facilitated by, multiple connectivities of
actors and their possible linkages to globally institutionalized ideas. Further, there is a
need to embrace a more balanced and comprehensive perspective in our understanding
of the complex and difficult tasks of managing HRM in multinational subsidiaries and
in MNEs in general, particularly in the configuration of the HRM systems of multina-
tional subsidiaries operating in geographically dispersed and contextually unique
environments.

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 chapter 19

H um a n R esou rce
M a nagem en t i n
a Pu blic-Sector
Con text

Peter Leisink, Rick T. Borst, Eva Knies,

and Valentina Battista

There is a modest but growing recognition of the impact of context on the design and
implementation of human resource management (HRM) among HRM researchers
(Paauwe & Boselie, 2007; Pudelko, 2006; Sparrow, 2009), particularly among scholars
studying HRM in a public-­sector context (Burke, Noblet, & Cooper 2013; Knies, Boselie,
Gould-­Williams, & Vandenabeele, 2018; Vandenabeele, Leisink, & Knies, 2013). These
scholars are sensitive to context for a variety of reasons. First, as international
HRM scholars, they face the very question of how the concept of public sector is under-
stood and the vast differences in services that are provided as public services in various
national contexts (Brewster, Boselie, Leisink, & Alfes,  2016). Because of these
differences, the following section will explain how the concept of public sector is used
here. Second, public-­sector HRM scholars have indicated the distinctiveness of the
public-­sector context because of public values and civil service rules that are
characteristic of how public organizations operate and manage their staff. This
contextual distinctiveness is not recognized by the dominant generic approach to HRM,
which takes business organizations as its frame of reference (Boselie, Dietz, &
Boon, 2005). However, a range of countries in Europe, North America, and Australasia
has undergone more than three decades of New Public Management (NPM) reforms
with the aim of tackling what were regarded as the inefficiencies of the traditional
bureaucratic model that required managers to adhere to civil service rules and prevented
the orientation toward results that is typical of private-­sector organizations (Goldfinch
& Wallis,  2009; H.  Rainey & Chun,  2005). These ongoing reforms have stimulated
416   Leisink, Borst, Knies, and Battista

scholarly interest in the impact the reforms have had on the extent to which typical
features of the traditional bureaucratic model endure (Hammerschmid, Van de Walle,
Andrews, & Bezes, 2016; Meyer & Hammerschmid, 2010; Pollitt & Bouckaert, 2017).
Public personnel policies in the era of the expansion of the welfare state were
primarily oriented toward fairness, employee well-­being, and good relations with trade
unions, rather than being driven by a rational management interest in improving
organizational performance (Farnham & Horton, 1996). The emergence of HRM in the
public sector was itself seen as a result of NPM (Boyne, Jenkins, & Poole, 1999). Initially,
there were no indications of a shift in public personnel policies in the countries where
NPM had an influence (Boyne et al., 1999). However, NPM reforms could have had a
lagged impact. In addition, there are countries where NPM has had less or no influence.
Therefore, it is relevant to analyze the context of public-­sector organizations and the
characteristics that theoretically may be assumed as distinctive and having an impact on
the design and implementation of HRM in the public sector. This will help to interpret
information regarding the question: To what extent is HRM in public organizations by
2020 different from that in private-­sector organizations?
The following section will describe how we understand and apply a contextual
approach in a public-­sector context. The remaining sections will focus on three
characteristics of the public-­sector context that are regarded as distinctive by public
management studies, namely, the intended performance outcomes and the HRM
practices to achieve them, managerial autonomy, and employees’ public service
motivation and red tape perceptions.

Contextual Approach and Public-­S ector

Organizations

Human resource management in the public sector is a highly relevant issue to study,
because public organizations are large, labor-­intensive organizations. The quality of
public services largely depends on the services delivered by public employees. Public
organizations are under substantial pressure, originating from cutbacks caused by the
Great Recession of 2008 onward, as well as from general public calls to increase
accountability and improve the quality of services. To understand this complex context,
this section describes what distinguishes the public sector historically from other
contexts.
The large majority of HRM studies are conducted in private-­sector organizations and
have provided many valuable insights. However, an important question is to what extent
these insights are generalizable to the public sector. Knies et al. (2018) recently argued
that the public sector is not “just another context” when it comes to studying questions
of HRM. They state that “there are often far-­reaching implications for the study of HRM
within the public sector, so applying ‘what works’ in private sector contexts to the public
 Human Resource Management in a Public-Sector Context   417

sector is too simplistic” (p. 2). The public sector has some distinctive characteristics that
make it different from the private sector.
First, where private organizations often have a single bottom line (maximizing
profit), public organizations have a mission that outlines “the value that the organization
intends to produce for its stakeholders and society at large” (Moore, 2000, pp. 189–190).
The mission often consists of multiple goals that can conflict (H. G. Rainey, 2009).
This characteristic makes it arguably more difficult to align HRM policies with the
organization’s strategic goals and to achieve horizontal integration between different
sets of HRM practices.
Second, empirical research shows that public organizations apply some sets of HRM
practices more than others and differ in this respect from the pattern found in private
organizations. These sets are seen as fitting the characteristics of public-­sector employees
and echo public organizations’ tradition of being a model employer (Kalleberg,
Marsden, Reynolds, & Knoke, 2006). Also, in the public sector not all HRM practices
are implemented with the strategy in mind. Some practices are the result of a high
degree of institutionalization.
Third, the link between HRM and performance deserves specific attention, because
the organizational context and the attributes of public-­sector employees are regarded as
distinctive and impacting the HRM–performance relationship. Particular features that
are often highlighted (see Knies & Leisink, 2018; H. G. Rainey, 2009) are the limited
managerial autonomy of public managers, “red tape,” and employees’ public service
motivation (see later sections of this chapter).
Knies et al. (2018) argue that scholars should reflect on the implications of these
distinctive characteristics for research. This could imply that HRM scholars use theories
or concepts that are developed in the field of public administration and public
management or that they include sector-­specific variables in their models. This will
increase the relevance of their research but might decrease the generalizability of their
findings and the rigor of their work at the same time. Therefore, contextualizing in
research is a balancing act (Dewettinck & Remue, 2011).
Public organizations provide services ordered and/or mainly financed by government
to citizens and corporate actors. Organizations are defined as public on the basis of the
following three formal characteristics: ownership, funding, and authority (Rainey,
2009). Public organizations are government owned, they are mainly publicly funded,
and the political authority is dominant over the economic authority, meaning that pub-
lic managers’ authority is dependent on and subjected to political decision-making.
These formal characteristics allow for considerable variety. On the one hand, there are
the national police and army, which are fully public on all three criteria. On the other
hand, in many countries, government-­funded and mandated services are increasingly
provided by organizational networks involving public, not-­for-­profit, and private orga-
nizations. An example of such a not-­for-­profit organization providing public services is
the Salvation Army, which operates in many countries to provide relief and social care to
people in need. An example of institutional variation is provided by healthcare provid-
ers: In the United Kingdom, the National Health Service represents all three formal
418   Leisink, Borst, Knies, and Battista

criteria, while in the Netherlands healthcare is provided by organizations that are legally
private bodies with a public task. In this chapter, data collected by Cranet are used to
complement our conceptual analyses. For these empirical analyses, data were used from
only those sectors that, based on the three formal characteristics, can unambiguously be
defined as either public (public administration, compulsory social security, education,
human health services) or private (e.g., agriculture, manufacturing of food, chemicals,
electronic products, wholesale).
What is regarded as public employment depends on the characteristics chosen. Thijs,
Hammerschmid, and Palaric (2018, pp. 7–8) illustrate this for public employment in the
twenty-­eight EU member states. The level of public-­sector employment varies between
29.7 percent of total employment, including employment in education and healthcare,
and 6.9 percent when limited to government/public administration and excluding
education and healthcare. The Organisation for Economic Co-­ operation and
Development (OECD) (2017) uses the concept of general government employment,
which covers employment in all levels of government (central, state, local, and social
security funds). The latest edition of “Government at a Glance” (Organisation for
Economic Co-­operation and Development, 2017) concludes that the size of general gov-
ernment employment varies significantly among OECD countries. Nordic countries
report the highest government employment levels, reaching near 30 percent of
total  employment. OECD countries from the Asian region have low levels of
­public-­sector employment (under 8 percent). In between, Anglo-­American countries
can be found, with levels varying between 15 and 20 percent.
This chapter’s bias toward advanced economies is recognized. This is related to the
lack of research on HRM in the public sector in developing countries. Acknowledging
that there are large differences between developing countries, Rees (2013) notes that
the political, social, economic, educational, health, and environmental problems in
developing countries inevitably result in inadequate delivery of public services,
­specifically because public-­sector organizations lack the human capacity to deliver
them. Rees (2013) relates this to the state of HRM, involving low salary levels, lack of
effective performance standards, inability to fire people and to hire appropriately
trained people, and inadequate management by supervisors.

Public Service Performance, Employee

Outcomes, and Public-­S ector Human
Resource Management Practices

Paralleling the ongoing process of public management reforms, public management

research has made the study of performance a central issue. Performance can generally
be understood as an organization’s actual achievement of its intended goals. Given the
multiple goals of public organizations and the different stakeholders involved, the
 Human Resource Management in a Public-Sector Context   419

conceptualization of performance continues to be a difficult issue (Andersen, Boersen,

& Pedersen,  2016). Because employee outcomes do not get much attention in
­public service performance measures, these will be discussed specifically because public
­employees are an important stakeholder from the perspective of public-­sector HRM. In
addition, the HRM practices that are used to achieve public service performance and
employee outcomes will be examined.

Public Service Performance and Employee Outcomes:

The Concepts
Public organizations have different stakeholders who hold diverse views on what
constitutes good performance. For instance, efficiency will be important from the
­taxpayers’ point of view, but quality of service will be important for the client and equity
for politicians. Tackling this diversity of interests and opinions, Brewer and Selden
(2000) proposed a multidimensional concept of performance involving efficiency,
effectiveness, and fairness. Boyne (2002) studied performance in local government and
proposed another multidimensional conceptualization consisting of five dimensions:
outputs, efficiency, outcomes, responsiveness, and democratic outcomes. Many studies
have followed these conceptualizations and adapted them to the study of performance
in different public organizations such as schools, hospitals, and municipalities (Andrews
& Boyne, 2010; Boyne, Meier, O’Toole, & Walker, 2006; Van Loon, 2016). Outcomes
may, for instance, be measured by the percentage of students leaving school with a
diploma or the percentage of burglaries solved by the police. Clients’ satisfaction is an
indicator of responsiveness, as are measures of satisfaction by citizens and staff.
Examining the diversity of performance criteria used in research, Andersen et al. (2016)
suggests that it may be impossible to come up with a comprehensive measurement. They
argue that researchers should account for why they include certain dimensions and
what other aspects of performance they exclude.
Human resource management scholars began to acknowledge the importance of
paying attention to employee outcomes in the late 1990s (Peccei, Van de Voorde, & Van
Veldhoven,  2013). By “bringing in the employee,” many theories from organizational
behavior and organizational psychology were integrated into HRM research. This
resulted in a considerable body of research under the overarching heading “employee
well-­being.” Employee well-­being at work is often broadly described as the overall quality
of an employee’s experience and functioning at work (Warr, 1987). While the classic con-
ceptualization only focused on the amount of affect employees experienced (pleasures
minus displeasures) because of their work, more multidimensional conceptualizations
are proposed in the early twenty-­first century (Taris & Schaufeli, 2015; Van Horn, Taris,
Schaufeli, & Scheurs, 2004).
One of the most applied multidimensional conceptualizations in HRM research is the
distinction between health, happiness, and relationships well-­being (Van de Voorde,
420   Leisink, Borst, Knies, and Battista

Paauwe, & Van Veldhoven,  2012). The health component refers to physiological and
psychological indicators like organizational stress and need for recovery. The second
component, happiness, refers to subjective experiences of employees (i.e., psychological
well-­being), such as job satisfaction and organizational commitment. The relationships
component of employee well-­being, social well-­being, focuses on the quality of relations
between employees and their employer and colleagues, for example, trust, social
support, and cooperation. The happiness dimension has recently received an upgrade
by a new dimensional approach, which makes a distinction between eudaemonic
and hedonic employee well-­being (Borst, Kruyen, & Lako, 2019). While both forms
are focused on happiness/pleasure, hedonic well-­being is aimed at enjoyment and con-
tentment, as in the classical conceptualization, and eudaemonic well-­being refers to
purposefulness and meaningfulness (Diener, Scollon, & Lucas, 2009). Examples of this
eudaemonic employee well-­ being are the rather new concepts of vitality, work
engagement, and pride (Tummers, Steijn, Nevicka, & Heerema, 2016).

Outcomes and Human Resource Management Practices in

a Public-­Sector Context
Human resource management refers to the management of work and people with
the aim of achieving organizational, employee, and societal outcomes (Boxall &
Purcell, 2011). Alignment of HRM and organizational strategy could involve different
HRM policies with a view to different strategic outcomes (Boxall & Purcell,  2011,
pp. 333–335). Concretely, the HRM policy to achieve efficiency might be different from
the policy to achieve employee well-­ being. Following Boxall and Purcell (2011,
pp. 24–32), tensions in HRM related to different goals may be assumed.
Compared with this broader notion of strategic alignment, Boyne et al. (1999,
pp. 408–411) reserve the notion of rational management for a “hard” model of HRM
oriented on greater efficiency, effective job performance, and quality of service. They
observe that “the traditional pattern of HRM in the public sector is, by assumption, a
barrier to better organizational performance” (p. 411). This traditional pattern of HRM
consisted of the “soft” model of HRM oriented on employee well-­being, in which public
organizations aspired to the status of model employer. In their study of HRM practices
in the public and private sectors, Boyne et al. (1999) found that public-­ sector
organizations make less use of reward practices such as performance-­related pay and of
policies promoting numerical flexibility, both of which they associate with a business-
like approach to performance, as in private organizations. By contrast, Boyne et al.
(1999) found that HRM practices such as training and development, employee
participation, equal opportunities, and employee welfare policies prevailed in public
organizations.
A study by Kalleberg et al. (2006) of the use of high-­performance work system
practices in profit, nonprofit, and public organizations found related differences in the
 Human Resource Management in a Public-Sector Context   421

sets of HRM practices used. Arguing that public organizations are likely more interested
in high-­performance work system practices that fit their mission, they found that public
organizations made less use of gain-­sharing and profit-­sharing plans to motivate
employees and more use of teamwork and employee participation in decision-­making,
which are more compatible with the humanistic goals that public organizations hold.
These latter HRM practices, together with employee involvement schemes, communi-
cation programs, training, and personal development programs, are believed to promote
employee commitment, participation, trust, and collaboration and, inherently, employee
well-­being. These are also labeled as high-­commitment HRM practices associated with
the soft HRM model, as opposed to the high-­performance HRM practices associated
with the “hard” HRM model, which is oriented on control (Gould-­Williams,  2007;
Tremblay, Cloutier, Simard, Chênevert, & Vandenberghe, 2010). However, there is little
consensus on the classification of HRM practices.
The studies by Boyne et al. (1999) and Kalleberg et al. (2006) report results on public-
sector HRM dating back ten to twenty years. In the meantime, public management
reforms have influenced public-­sector values, in many cases putting efficiency and
effectiveness on par with traditional public values of legality and impartiality (Leisink &
Knies, 2018). The adoption by public organizations of what Boyne et al. (1999) call more
rational management could mean that the contrast between public- and private-sector
HRM is nowadays smaller. Yet, the institutional context of public organizations likely
continues to exert influence on the public organizations’ understanding of their goals
and their related use of HRM practices. Therefore, public organizations are expected to
make less use of the HRM practices that are associated with the hard HRM performance
model, notably reward and performance-­related pay, appraisal for the purpose of pay
decisions, and working arrangements that aim at increasing numerical flexibility.
Likewise, HRM practices that explicitly focus on employee well-­being and that are
associated with the soft HRM model are expected to occur more in the public sector
than in the private sector. These include training and development programs, career
management plans, and team working and employee participation practices. In
addition, practices that symbolize the model employer ambition are likely more
prevalent in the public than in the private sector, notably equal opportunity and
employee welfare schemes.
In Table 19.1, the results of the logistic regressions based on the Cranet 2014/15 data
are presented for all the relationships between the HRM practices and the public/private
sector divide.1 Table 19.1 shows, in the columns, respectively, the percentage of public
organizations applying the practices, the percentage of private organizations applying
the practices, the regression effect and its standard error, the odds ratio of the regression
effect, and the significance of the regression effect. While the significance indicates

1  Logistic regression is chosen as the statistical technique since most variables are binary. A few
exceptions are work arrangements and benefits in excess of statutory requirements that were ordinal.
For reasons of uniformity and readability, we chose to recode the relatively few variables that were
ordinal into binary variables.
422   Leisink, Borst, Knies, and Battista

Table 19.1.  Human resource management practices aimed at appraisal and

performance, compensation and benefit schemes, diversity management, and
development and career management

Item Public Private B* SE Exp(B)* Sig.

(n = 1.169–1.253) (n = 2.483–2.593)
(%) (%)

Appraisal system for:

Management 66.2 78.3 0.945 0.111 2.573 0.000
Professionals without 64.5 77.9 0.880 0.108 2.412 0.000
­managerial responsibility
Clericals and/or manuals 61.0 73.1 0.794 0.102 2.212 0.000
Appraisal data used for:
Salary 53.5 74.5 1.012 0.103 2.752 0.000
Training and development 64.0 79.6 0.967 0.112 2.630 0.000
Career moves 56.0 78.6 1.250 0.110 3.490 0.000
Workforce planning 40.8 57.4 0.692 0.094 1.998 0.000
Compensation and benefits schemes
Employee share schemes 4.9 23.3 1.711 0.154 5.535 0.000
Profit sharing 7.3 37.1 1.786 0.131 5.967 0.000
Stock options 2.9 21.0 1.884 0.190 6.577 0.000
Flexible benefits 23.1 40.8 0.843 0.097 2.323 0.000
Individual performance-­related 40.1 66.2 1.109 0.093 3.030 0.000
pay
Bonus based on individual 29.5 71.4 1.963 0.100 7.123 0.000
goals/performance
Bonus based on team goals/ 18.1 53.5 1.718 0.100 5.573 0.000
performance
Bonus based on organizational 21.9 62.4 1.823 0.099 6.191 0.000
goals/performance
Nonmonetary incentives 38.2 54.9 0.970 0.091 2.637 0.000

Diversity management
Action** programs for 26.9 18.3 –0.707 0.114 0.493 0.000
minorities
Action** programs for older 25.9 25.1 –0.053 0.102 0.949 0.604
workers (>50 years)
Action** programs for people 35.8 29.9 –0.235 0.095 0.790 0.013
with disabilities
Action** programs for women 28.8 35.7 0.244 0.096 1.276 0.011
Action** programs for women 22.2 28.0 0.398 0.101 1.490 0.000
returners
 Human Resource Management in a Public-Sector Context   423

Action** programs for 24.1 30.6 0.003 0.104 1.003 0.981

low-skilled labor
Action** programs for younger 33.0 47.1 0.484 0.092 1.623 0.000
workers (<25 years)
Development and career management***           
Special tasks 22.3 29.3 0.447 0.103 1.564 0.000
Projects to stimulate learning 24.2 29.3 0.251 0.102 1.285 0.014
Training on the job 47.2 64.7 0.684 0.094 1.981 0.000
Participation in project 32.8 46.1 0.529 0.093 1.698 0.000
teamwork
Formal networking schemes 14.3 15.5 0.094 0.127 1.099 0.459
Formal career plans 11.7 20.3 0.621 0.125 1.862 0.000
Development centers 8.9 14.3 0.395 0.148 1.484 0.008
Succession plans 10.8 28.9 1.074 0.123 2.926 0.000
Planned job rotation 6.8 15.9 0.722 0.153 2.058 0.000
“High flier” schemes/high 9.7 28.3 1.147 0.127 3.149 0.000
potentials
International work assignments 7.2 16.4 0.537 0.157 1.710 0.001
to gain experience
Coaching 20.0 31.3 0.809 0.103 2.247 0.000
Mentoring 20.1 27.8 0.444 0.106 1.559 0.000
Computer-­based 17.7 25.4 0.894 0.106 2.444 0.000
packages/e-­learning

*0 = public, 1 = private.
**Recruitment, training, and/or career progression programs.
***0 = barely applied; 1 = frequently applied.
Source: Cranet (2014/15) as accounted for by CRANET (2017). CRANET survey on comparative human
resource management: International executive report 2017. Cranfield University: Cranfield Network.

whether the public/private sector divide significantly affects the application of a practice
by organizations, the regression coefficient and odds ratio (Exp. B) indicate the size and
direction in which the relation is heading. If the regression weight is negative and the
odds ratio is lower than 1.0, the practice is applied more by public-­sector organizations
than private organizations and vice versa. In every logistic analysis, the public/private
divide is the independent variable, the HRM practices is the dependent variable, and the
organizational size and service/industry divide the control variables.
Table 19.1 shows successively the appraisal practices, the compensation and benefit
practices, the diversity management practices, and the development and career man-
agement practices. In line with expectations, private organizations apply appraisal sys-
tems for every job type more frequently in their organizations than public organizations.
These private organizations also use the data extracted from these appraisal systems
424   Leisink, Borst, Knies, and Battista

more often to determine workforce planning, the salary of employees, which employees
deserve to be promoted, and which employees deserve and/or need training. Private
organizations also give bonuses based on (individual, team, and/or organizational) per-
formance appraisal significantly more often than public organizations. In fact, not
merely bonuses but also all compensation and benefits schemes are applied more often
by private organizations than by public organizations, including pay for performance,
flexible benefits, and even nonmonetary incentives. All these results are in line with the
expectation that private organizations more often apply hard HRM practices than pub-
lic organizations.
However, contrary to expectations, soft HRM practices such as development and
career management practices, including, for example, participation in learning and
team projects, career and succession planning, and support via coaching and mentoring,
are significantly more often applied in private than in public organizations. Also,
diversity programs for younger workers, women, and women returners were applied
more frequently in private than in public organizations. Still, public organizations more
often apply diversity programs for people with disabilities and minorities. Therefore, the
results do not in all cases contradict the expectation that public organizations apply soft
HRM practices more than private organizations. Nevertheless, because of the
contrasting results in the case of development and career management practices and the
mixed results in the case of diversity management practices, the findings about soft
HRM practices can be called inconclusive at best.
This inconclusiveness is further confirmed by the results of work arrangements,
including, for example, teleworking, part-­time working, and overtime working, and
practices related to benefits in excess of statutory requirements, including, for example,
workplace child care, maternity and paternity leave, and pension schemes. The
differences between the public and private sectors in the application of these practices
are nonsignificant (and therefore are not shown in Table 19.1), with the exception of the
work arrangements: weekend work, shift work, part-­time work, temporary work, and
fixed-­term contracts. These practices were applied more often by public organizations
than by private organizations.2 This difference may partly be explained by the public
sector of health services, which are typically a twenty-­four-­hour per day/seven-­day per
week activity. Additional analyses showed that health services are much more likely to
have the work arrangements of weekend work, shift work, and part-­time work than
public administration and compulsory social security organizations.
Overall, the results show that the traditional contrast between public- and private-
sector HRM is smaller by 2020. While public organizations still apply hard HRM

2  These results must be interpreted with caution since these practices were not measured via apply/
not apply, but via the extent to which the practices were used by employees in percentages. The
demarcation between frequently applied and not/barely applied is therefore rather arbitrary. Another
statistical technique such as analysis of covariance would have been more suitable. However, as
mentioned in Note 1, most of the data were binary, causing us to choose for readability and uniformity
and to sacrifice some, but still very little, information.
 Human Resource Management in a Public-Sector Context   425

practices that fit rational performance management less often than private organizations,
they also apply several soft HRM practices aimed at employee well-­being less often than
private organizations, or at best in equal amounts. While public organizations did not
shift to more rational HRM management, they either diminished their investment in
soft HRM management or private organizations started to invest more in soft HRM
management.

Managerial Autonomy

Several authors (Boyne et al., 1999; H. G. Rainey, 2009) argue that the public sector is
characterized by constraints on managerial autonomy. This is arguably the result of the
strength of government directives, detailed personnel policy regulations, and the
heritage of traditional administrative HRM roles. Organizations with low degrees of
managerial autonomy are often characterized by centralization in decision-­making.
Meyer and Hammerschmid (2010) studied the degree of decentralization of HRM
decision-­making in central government and showed that, on average, HRM decision-
making in the twenty-­seven EU member states is highly centralized. However, there is
considerable variation between HRM practices. Some HRM practices are typically
decided at the central level, such as salaries, codes of conduct and ethical standards,
head count reduction, and basic working time arrangements. Other HRM practices are
decided at lower hierarchical levels, such as performance-­related pay, performance
management, training and development, and flexible working time patterns. This
resonates with findings by Brewster, Brookes, and Gollan (2015) that decision-­making
responsibilities for industrial relations and pay and benefits tend to be assigned to
central HRM departments. Meyer and Hammerschmid (2010) also show that there is
considerable variation between countries. Human resource management decision-
making ranges from most centralized in eastern European countries to least centralized
in Anglo-­Saxon and Scandinavian EU member states, with southern European and
continental member states occupying a position in between. Again, these findings are
largely in line with Brewster et al. (2015), who show that the Nordic countries are most
decentralized and liberal market economies are most centralized, with coordinated
market economies lying in between.
O’Toole and Meier (2014) argue that we should delve deeper into contextual
characteristics that can explain management’s impact on performance. Their main
argument is that the more complex the context is, the more constraints for managers are
created, and as a result, the impact that management has on performance decreases.
They developed two sets of hypotheses that specify which external and internal
contextual factors impact the management–performance relationship. Examples of
external context factors are politics and the concentration of power, complexity,
turbulence, and munificence. Internal factors that O’Toole and Meier expect to impact
426   Leisink, Borst, Knies, and Battista

the management–performance relationship are organizational goals (goal ambiguity

and goal conflict), centralization, and professionalization.
Although O’Toole and Meier (2014) advocate an approach that goes beyond “simple”
private–public differences, we compare the levels of managerial autonomy between the
public and private sectors using the data collected by the Cranet Network. We do so by
studying the level of devolution of HRM responsibilities to line managers (see also
Brewster et al., 2015; Larsen & Brewster, 2003). The rationale underlying this analysis is
that the more HRM responsibilities are devolved to line managers, the higher the level
of decentralization, which implies more managerial autonomy. Theoretically, higher
levels of devolution are to be expected in the private sector, compared to the public sec-
tor. However, as Meyer and Hammerschmid (2010) note, a higher degree of decentral-
ization does not necessarily imply a higher degree of managerial autonomy, because in
the public sector other stakeholders such as works councils and trade unions might be
involved in decision-­ making. Therefore, we also study private–public differences
regarding the involvement of trade unions and works councils (see Table 19.2 for the
logistic regression).
The analysis of the Cranet data regarding the actor who has primary responsibility
for personnel policy decisions in a number of areas shows, contrary to expectation,

Table 19.2.  Managerial autonomy in personnel management of public versus

private organizations
Item Public Private Β* SE Exp(B)* Sig.
(n = 1.170–1.253) (n = 2.296–2.593)
(%) (%)

Responsibility for major personnel policy decisions**

Pay and benefits 48.4 53.4 0.281 0.090 1.324 0.002
Recruitment and 37.9 55.8 0.707 0.091 2.027 0.000
selection
Training and 42.4 61.0 0.883 0.093 2.418 0.000
development
Industrial relations 57.1 69.4 0.753 0.099 2.123 0.000
Workforce expansion/ 34.3 41.4 0.422 0.092 1.525 0.000
reduction
Third-­party involvement
Trade unions 82.7 68.1 –1.144 0.108 0.318 0.000
Work councils 60.8 53.7 –0.566 0.092 0.568 0.000

*0 = public; 1 = private.
**0 = predominantly line management; 1 = predominantly human resource management department.
Source: Cranet (2014/15) as accounted for by CRANET (2017). CRANET survey on comparative human
resource management: International executive report 2017. Cranfield University: Cranfield Network.
 Human Resource Management in a Public-Sector Context   427

that being a public-­ sector organization increases the chances of the primary
­responsibility residing with line management (alone or in consultation with the
HRM department) and that being a private-­sector organization increases the chances
of the primary responsibility residing with the HRM department (alone or in consul-
tation with line management). This holds not just for personnel policy areas that,
according to Meyer and Hammerschmid (2010), are decided at lower hierarchical
levels, such as training and development, but also for policy areas such as industrial
relations that are typically decided at the central level. However, the observation that
the devolution of HRM responsibilities to the line does not necessarily imply a higher
degree of managerial autonomy draws support from the data as well. As expected,
being a public-­sector organization increases the chances compared with private-
sector organizations of recognizing trade unions for the purpose of collective bar-
gaining and having a joint consultative committee or works council. This means that
while authority in major personnel policy decisions rests with line management in
public organizations, their autonomy is constrained by institutional arrangements
that provide trade unions and works councils with the rights of negotiation, approval,
and/or advice. This may be an important factor in explaining why, for instance, the
chances of public organizations applying performance-­related compensation and
benefit schemes are relatively low.

Employees’ Public Service Motivation

and Red Tape Perceptions

Theoretical models of how HRM contributes to performance and employee o ­ utcomes

include the notion that HRM as perceived by employees impacts their attitudes and
behaviors, and ultimately unit-­level and organizational performance (Wright &
Nishii, 2013). Employees’ attitudes and behaviors are influenced by HRM in various
ways (Jiang, Lepak, Hu, & Baer, 2012). Supportive HRM practices will make employ-
ees feel valued, cared about, and obliged to reciprocate by engaging in behavior that
contributes to organizational goals. Employees will also feel supported by HRM
practices that enhance their abilities to do a good job. However, Boxall and Purcell
(2011) point out that even the most able and motivated employees cannot do a good
job if they lack the opportunities (e.g., autonomy, information, time) to do so.
Applying this logic to the public sector, studies point out that employees’ public
­service motivation (PSM), the motivation to contribute to society, is an important
resource for achieving performance and is also positively related to employees’ well-
being (Vandenabeele et  al.,  2013). In addition to PSM, “red tape” is regarded as
another typical public-­sector characteristic, but one that, in contrast to PSM, is detri-
mental to organizational performance and employee outcomes. Red tape refers to
428   Leisink, Borst, Knies, and Battista

rules and procedures that entail a compliance burden but lack efficacy for the rules’
functional object (Bozeman & Feeney, 2011). The negative effect of red tape is based
on the idea that these burdensome rules require employees to spend time and energy
on excessive paperwork that serves no purpose and leads to frustration. The following
sections will elaborate on the role that PSM and red tape play with regard to the
HRM–performance and HRM–employee outcomes relationships. Because of a lack
of Cranet data on PSM and red tape, the following sections will be based on public
management studies.

Public Service Motivation, Red Tape, and Performance

Public service–motivated people can fulfill their motive to do good for society by seeking
employment in public-­sector organizations. Public service–motivated employees are
willing to exert themselves at work because they identify with the organization’s mission
and the purpose of their work. Empirical studies have provided support for the proposi-
tion that PSM is positively related to individual job performance (Bellé, 2013; Leisink &
Steijn,  2009; Vandenabeele,  2009) and organizational performance (Kim,  2005;
Ritz, 2009). Van Loon (2016) emphasized the need to distinguish between performance
dimensions, because she found positive relationships between PSM and the public
service performance dimensions of service output and outcome, but not for the dimen-
sions of efficiency and responsiveness.
Human resource management can affect public employees’ PSM and thereby their
contribution to performance in a variety of ways. It can have a positive effect, for
instance, by recruiting and selecting public service–motivated employees (Leisink &
Steijn, 2008), by training programs and socializing employees in the public values that
are related to the organization’s mission (Kjeldsen, 2013), and by designing jobs that fit
with employees’ PSM (Van Loon, Vandenabeele, & Leisink 2017). However, HRM can
also have negative effects on employees’ PSM and thereby on their job performance, for
instance, by crowding out their PSM by pay-­for-­performance schemes (Weibel, Rost, &
Osterloh,  2010), by control-­ oriented managerial actions (Jacobsen, Hvitved, &
Andersen, 2014), or by adding to the red tape with which employees are confronted in
their job (Feeney & Rainey, 2009).
Studies provide support for the claim that red tape affects organizational perfor-
mance negatively (Blom, Kruyen, Van der Heijden, & Van Thiel, 2020; Jacobsen &
Jakobsen, 2018), notably service quality, but has no significant effect on efficiency
(Brewer & Walker, 2010). When studying red tape as perceived by managers, the argu-
ment is that red tape constrains managers’ HRM activities because managers are lim-
ited in rewarding good performers and firing poor performers (Pandey, Coursey, &
Moynihan, 2007). When studying red tape as perceived by employees, the argument is
that red tape prevents street-­level bureaucrats or public professionals from using their
discretion and professional expertise that are needed for executing their tasks in
 Human Resource Management in a Public-Sector Context   429

direct interaction with their clients, and as a consequence, employees become

­demotivated and public service organizations are likely to perform poorly (Jacobsen
& Jakobsen, 2018).

Public Service Motivation, Red Tape, and Employee Outcomes

Public service motivation is also positively related to employee outcomes, including
attitudes (e.g., satisfaction, commitment, and work engagement) and behavior (e.g.,
work effort and responsiveness). A meta-­analysis by Homberg, McCarthy, and Tabvuma
(2015) shows, for example, that PSM positively affects employees’ job satisfaction.
Another meta-­analysis, by Harari, Herst, Parola, and Carmona (2017), confirms these
findings and additionally shows that PSM positively affects employee attitudes, organi-
zational commitment, and the behavioral attitude organizational citizenship behavior.
However, there are also studies that show that PSM can have a negative impact on
employee outcomes. It has been found to be positively related to stress (Giauque, Ritz,
Varone, & Anderfuhren-­Biget,  2012), job dissatisfaction, and burnout (Van Loon,
Vandenabeele, & Leisink, 2015) and negatively related to physical well-­being (Liu, Yang,
& Yu, 2015). The explanation for these negative effects is the apparent misfit between the
person with PSM and the environment. In other words, if employees cannot fulfill their
desire to serve the public interest (PSM) because of environmental/organizational
burdens and constraints or if they experience the values of the employing organization
as dissimilar to their own personal values, these employees will probably develop
negative attitudes and behaviors (Schott & Ritz, 2018).
To thrive on the positive employee outcomes of PSM and to overcome the negative
outcomes resulting from misfits, HRM can play an important role. We previously
noted some HRM practices that can increase PSM and, inherently, in many cases,
employee outcomes. Other practices could be applied to diminish the risk of misfits.
Quratulain and Kahn (2015) show that public service–motivated employees develop
negative attitudes and behaviors because they feel incongruent with the values of their
organization as a result of red tape. Several soft HRM practices might prevent such a
misfit and improve employee outcomes, including job enrichment, participation in
decision-making, individual appraisal, and professional development (Homberg &
Vogel, 2016).
Red tape may also negatively affect other employee outcomes. When public servants
encounter rules, regulations, or procedures that seem pointless, yet burdensome, they
become alienated from their work, less creative, and less satisfied, committed, and
engaged (Borst et al., 2019; DeHart-­Davis & Pandey, 2005). However, red tape does not
necessarily always have such a negative effect on employee outcomes. In situations
where red tape coincides with available HRM practices, these practices might be used by
public employees to cope with the red tape (Borst et al., 2019). These HRM practices
then might gain their motivational potential, leading to increased employee outcomes.
430   Leisink, Borst, Knies, and Battista

Conclusion

Comparative empirical studies of HRM in public and private organizations are scarce.
That is why the Cranet survey provides valuable data but also why caution is required in
drawing conclusions unless we examine longitudinal data that provide the basis for
describing the development of HRM in a public-­sector context over time. Nevertheless,
based on the findings that were reported, the question can be answered as to what extent
HRM in public organizations by 2020 is different from HRM in private-­sector organiza-
tions. It appears that public-­sector organizations are less likely than private-sector
organizations to engage in HRM policies of pay for performance, of appraisal for the
purpose of taking HRM decisions (e.g., about pay), and of various development and
career management schemes. Public-­sector organizations are not likely to differ from
private-­sector organizations as regard HRM practices related to increasing flexibility
and to employee welfare benefits in excess of statutory requirements. Finally, mixed
results are evident when diversity action programs are examined: Public-­sector organi-
zations are more likely to support programs that target minorities and people with dis-
abilities, while private-­sector organizations are more likely to support programs that
target women and young workers.
Overall, these results indicate that HRM in public organizations continues to differ in
some respects, but not in others, from HRM in private-­sector organizations compared to
the turn of the twenty-­first century. There is still little or no evidence in public organiza-
tions of what Boyne et al. (1999) called rational management aimed at efficiency, effective
job performance, and quality of service through performance-­related pay. The evidence
of working arrangements supporting flexibility seems to indicate that public organiza-
tions have taken on board this element that Boyne et al. (1999) include in rational man-
agement. So, on the one hand, we find few HRM practices associated with the hard HRM
model. On the other hand, we also find that public organizations are not more likely than
private organizations to engage in HRM practices associated with the soft HRM model.
This is illustrated by the scores on, for instance, the HRM practices in training and devel-
opment, team working, and career management schemes and the HRM practices for
employee welfare in excess of statutory requirements through which public organiza-
tions used to signal their model employer role. With regard to most of these HRM prac-
tices, private-­sector organizations are as likely as public organizations to apply them.
What do these findings imply for assumptions about the distinctiveness of
­public organizations and how can they be explained?3 The relative absence of

3  The conclusions are based on an overall analysis of the Cranet data. These data include a wide
variety of countries with various institutional characteristics. The results are therefore fairly
representative for the overall relationships between HRM tasks/instruments and public- vis-­à-­vis
private-­sector divisions across countries. Although specific moderating effects could be present, our
 Human Resource Management in a Public-Sector Context   431

performance-related pay schemes in public organizations stands out as an enduring

feature. This is related to the absence of profit as the single bottom line, as in private
organizations. This also makes sense in relation to a workforce characterized by
PSM, which is positively related to employee performance and employee well-­being,
but which would be crowded out by performance-­related pay. However, the distinc-
tive image of public organizations as being model employers and oriented around
employee well-­being seems no longer warranted. This could be explained by auster-
ity measures with which public organizations have been confronted during the eco-
nomic crisis that erupted in 2008 (Bach & Bordogna, 2016). However, this could also
be related to mimetic mechanisms inducing private organizations to imitate specific
HRM practices of their public competitors in the labor market (Paauwe &
Boselie, 2007). The latter explanation is supported by the lack of significant differ-
ences between public and private organizations’ HRM regarding benefits in excess of
statutory requirements and even more by private organizations’ greater likelihood in
offering all kinds of development and career management schemes. These latter
schemes may differ from the traditional public organizations’ paternalistic under-
standing of employee well-­being in that they may reflect an orientation on the devel-
opment and use of human capital for organizational and employee outcomes that is
absent in public-sector organizations.
There is one other enduring characteristic of public organizations that needs to be
taken into account, namely, the resilience of collectivized industrial relations with
extensive scope for staff participation and good relations with trade unions (Farnham
& Horton, 1996). This institutional feature, which characterizes public organizations
more strongly than private organizations, goes along with distinctive values, for
instance, regarding equal treatment, illustrated by equal pay for equal jobs rather
than performance-­related pay, and collective rights to training and development
rather than selective career schemes for high potentials. In addition, the prevalence
of trade unions and works councils in public organizations implies that public man-
agers’ autonomy is constrained. Although decision-­making in major HRM areas has
been devolved to line management in public organizations and although public orga-
nizations stand out from private organizations by the primary responsibility for
major HRM policy decisions being assigned to line management, managerial auton-
omy in public organizations is limited because of enduring institutional arrange-
ments that provide employee representatives the rights of collective bargaining,
approval, and advice. This feature may explain partly why pay schemes as important
instruments of rational management still differ between public and private organiza-
tions, protecting employees according to collective values, but also why public

overall analysis gives no further reason to expect strong effects of contextual factors such as developing
vis-­à-­vis developed countries and more substantive public administration–specific country differences
(e.g., NPM vis-­à-­vis not NPM or Germanic vis-­à-­vis Anglo-­Saxon administrative systems).
432   Leisink, Borst, Knies, and Battista

­ rganizations have not been able to innovate their model employer role, leaving pub-
o
lic organizations in a difficult position to compete with private organizations in a
tight labor market.

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 chapter 20

H um a n R esou rce
M a nagem en t i n th e
Not-for-Profit Sector

Emma Parry and Clare Kelliher

This chapter is concerned with human resource management (HRM) in the

­not-for-­profit sector. It examines the use of HRM practices relating to recruitment,
selection, training, reward, performance management, communication, and diversity
in not-­for-­profit organizations, drawing on data collected via the Cranet survey. In the
light of ongoing debate about how the not-­for-­profit sector differs from, or is similar
to, the public and private sectors (Lee & Wilkins,  2011), we compare the findings
across sectors. Furthermore, in line with commentary about the increasing impor-
tance of HRM in this sector (Akingbola, 2013; Bartram, Cavanagh, & Hoy, 2017), we
compare the data collected in 2015 with the findings from the 2010 survey. Not-­for-
profit organizations are defined as those in the voluntary, or third, sector, for example,
charities and nongovernmental organizations. They are distinguished from public-
sector organizations, which are organizations that are subject to direct state control
(HRM in the public sector is discussed in Chapter  19 of this text). In the United
Kingdom, the voluntary sector was composed of 166,854 organizations in 2018, most
of which (82 percent) were micro (with an income of less than £10,000) or small orga-
nizations (with an income of more than £10,000 but less than £100,000). Voluntary-
sector organizations in the United Kingdom employed 865,916 people in 2018 and
were reported to contribute £17.1 billion to the UK economy (National Council for
Voluntary Organisations, 2019).
Alfes (2019) argues that, although the not-­for-­profit sector is extremely heteroge-
neous, there are three main characteristics that these organizations share. First, not-
for-­profit organizations have a clear mission, which is often accompanied by a values
statement. Second, not-­for-­profit organizations typically rely on third-­party funding
438   Parry and Kelliher

to meet their objectives and, frequently, to survive. Typically, their income comes
from parties other than those for whom the services the organization provides are
designed. In practice, a voluntary-­sector organization’s income tends to be either
from individuals, obtained through fundraising, and/or from government bodies or
charitable foundations through a contract for the delivery of some type of service.
Third, not-­for-­profit organizations are frequently accountable to multiple stakehold-
ers, such as the funders, contracting organizations, and recipients of their services,
who will potentially have conflicting interests (Armstrong, 1992). These three charac-
teristics have given rise to ongoing discussion in the literature about the particular
importance of the way in which people are managed, because of the need to utilize
limited resources effectively (Bartram et al.,  2017) and in particular because labor
costs often constitute a significant proportion of total costs (Passey, Helms, &
Jas, 2000), and employees and volunteers play a central role in delivering the organi-
zation’s mission (Kendall,  2003; Ridder & McCandless,  2010). The management of
human resources is also deemed important because the relationship between the
employee and the organization is often seen to be based on shared goals, with an
emphasis on intrinsic rather than extrinsic rewards, stemming from the so-­called
voluntary-­sector ethos (Cunningham, 2010, p. 701; Tailby, Pollert, Warren, Danford,
& Wilton, 2011). Furthermore, not-­for-­profit organizations often face additional chal-
lenges as a result of having to manage both paid employees and a volunteer workforce
(Alfes, 2019).
More recently, as a result of wider government reforms in a number of countries
such as the United Kingdom, not-­for-­profit organizations have increasingly become
involved in the provision of publicly funded services (Bach, 2012; Tailby et al., 2011).
As such, it has been suggested that HRM in the not-­for-­profit sector has experienced
pressure to change as a result of the need to compete with organizations in other sec-
tors for public funding, in turn resulting in a need to professionalize its approach to
managing its workforce, in order to attract and retain high-­quality talent (see, for
example, Parry & Kelliher, 2009). In particular, it has been argued that organizations
in the not-­for profit sector have been required to look for ways of increasing effi-
ciency and to adopt elements of new public management (NPM) to meet the require-
ments of public funders (Cunningham,  2008,  2010; Hemmings,  2011; Parry &
Kelliher, 2011).
This chapter therefore seeks to examine HRM in the not-­for-­profit sector, com-
pare the approaches adopted with other sectors, and identify any emerging patterns.
Using data from the 2014/15 round of the Cranet survey, the chapter will first
describe the characteristics of HRM by examining the use of practices relating to
recruitment, selection, training, reward, performance management, communica-
tion, and diversity and compare them with those used by the public and private sec-
tors. Second, the chapter will examine any changes in HRM practices used in the
not-­for-­profit sector against a backdrop of government reform in the provision of
public services by comparing data obtained in the 2014/15 survey with data from the
2009/10 round.
 Human Resource Management in the Not-for-Profit Sector   439

Comparing Human Resource

Management Practice in the Not-­F or-
Profit Sector with That in the Public
and Private Sectors

The workforce in a voluntary-­sector organization is frequently composed of two groups:

paid employees and unpaid volunteers. Paid employees receive monetary compensation
in return for work and are bound by the formal structures and regulations of the
­organization. Volunteers, however, operate on a somewhat different basis: While they
carry out work for the organization, they are unpaid and usually, at least formally,
­outside of the formal structures of the organization and normally act as volunteers
because they gain intrinsic rewards from the work they do (Alfes, 2019). Volunteers, it is
argued, are frequently strongly motivated by social and mission-­related reasons for
working with a particular organization, but may be less reliable than paid employees
(Pearce, 1983). Although it has been suggested by some authors that certain aspects of
the employment relationship, such as the psychological contract, can also apply to
­volunteers (Stirling, Kilpatrick, & Orpin, 2011), overall these differences suggest that
­different approaches will be needed in managing these two groups in the workforce. In
this chapter, we focus our attention solely on the paid workforce in not-­for-­profit
organizations. The management of the volunteer workforce has been discussed
­
­elsewhere (Alfes, 2019).
In recent years, the paid workforce in the not-­for-­profit sector has been growing in
many countries. For example, since 2010 the paid workforce in the UK not-­for-­profit
sector grew by 11 percent (National Council for Voluntary Organisations, 2019). This
can be compared with a 17 percent increase in the private sector and a 4 percent drop in
public-­sector employment. However, the overall proportion of the UK workforce who
are employed in the not-­for-­profit sector has remained relatively constant, at around
3 percent (National Council for Voluntary Organisations, 2019).
It has long been argued that practices relating to the management of paid employees
within organizations in the not-­for-­profit sector are likely to differ from those in either
the public or the private sector (Kelliher & Parry, 2011). Typically, HRM in the not-­for-
profit sector has been portrayed as lacking in sophistication (Cunningham, 2000) and
for failing to be linked with the organization’s strategy (Akingbola, 2006). It has been
suggested that this is likely to be, at least in part, because attention in voluntary-­sector
organizations has been mainly focused on fundraising activities, rather than the
management of people (Zacharias, 2003). However, the increased involvement of the
not-­for-­
profit sector in providing public services has created a need for greater
professionalization of HRM and there is some evidence of greater formalization through
the development of policies, investment in training, and practices such as performance-
related pay (Kellock Hay, Beattie, Livingstone, & Munroe, 2001; Palmer & Ross, 2004).
440   Parry and Kelliher

Guo, Brown, Ashcroft, Yoshioka, and Dong (2011), using survey data from 229
­ ot-for-­profit organizations in the United States, examined the prevalence of strategic
n
HRM practices (including, for example, recruitment practices designed to recruit
well-qualified and experienced employees, active approaches to employee retention,
mechanisms for assessing employee performance, and systems for internal communica-
tions and opportunities for employee voice) and the contextual and organizational fac-
tors linked to the use of such practices. Their findings showed that larger, younger,
more technologically savvy organizations were more likely to use these practices, as
were those that were affiliated with a larger national organization and those that were
­dependent on independent contractors.
Bartram et al. (2017) observe that much of the research on HRM in not-­for-­profit
organizations has focused on recruitment and retention of staff, and it is generally
accepted that the attraction and retention of employees in the sector is associated with
an affinity with the mission or cause of the organization. De Cooman, De Gieter,
Pepermans, and Jegers’s (2011) study, comparing the motivations of knowledge workers
in not-­for-­profit and for-­profit organizations, found those in the not-­for-­profit sector
were more concerned with altruism and perceived a better fit between their work values
and those of their employing organization than their counterparts in the for-­profit
sector, even after gender, age, seniority, contract type, and work characteristics were
taken into account. The lower significance of extrinsic rewards may also, at least in part,
be because not-­for-­profit organizations often have limited resources, only allowing
them to offer lower rates of pay, fixed-­ term or insecure contracts, and limited
development opportunities for employees. For example, Brewster and Cerdin (2019)
focused on the mission-­driven nature of these organizations and highlighted the fact
that the people within these organizations are essential for their mission to be achieved.
Indeed, the strong values-­based orientation of not-­for-­profit organizations linked to
their mission (Ridder & McCandless, 2010) is seen as a key influencer of their approach
to HRM, because employees tend to have a strong commitment to this mission
(Cunningham, 2010). As such, it has been suggested in the literature that employees
might prioritize this mission over earning a higher salary. In support of this, Light
(2002) found that 60 percent of employees in not-­for-­profit organizations in their study
reported that they joined their organization because of a desire to “make a difference,”
rather than for the pay and benefits offered. This idea of an “ethos discount” (Lloyd, 1993),
in which not-­for-­profit employees accept lower pay because of their commitment to the
organization’s cause, has dominated much of the early literature on HRM in the not-­for-
profit sector (see, for example, Zimmeck, 1998). However, authors have also noted that
this commitment to the organization’s mission can result in employees having higher
expectations in relation to their participation in decision-­making (Cunningham, 2001;
Mann, 2006).
Cerdin, Sharma, Tarique, and Purpura (2019) supported these suggestions through
their identification of a number of characteristics of talent management in international
not-­for-­profit organizations that differentiate the approach adopted by organizations
from for-­profit multinational corporations. These include a focus on humanitarian logic
 Human Resource Management in the Not-for-Profit Sector   441

as a means of attracting talent, rather than engaging in competing for talent on costs, a
reliance on on-­the-­job training with only limited other development opportunities, a
failure to use modern technology in talent management, and a challenge in retaining
talent, because of the nature of short-­term contracts.
These results mirror our own earlier findings in a study of not-­for-­profit organizations
in the substance misuse sector in the United Kingdom (Parry & Kelliher, 2009; Parry,
Kelliher, Mills, & Tyson, 2005). Our findings suggested that the recent expansion in
service provision and the growth in contracting for publicly provided services had led to
a number of challenges in relation to resourcing. In response to these challenges, not-
for-­profit organizations had taken steps to professionalize their HRM by establishing
formalized policies in relation to recruitment, training, grievances, and equal
opportunities, as well as ring-­fencing resources for training and training plans.
In this chapter, we draw on data collected in the 2014/15 Cranet survey to compare
HRM practices adopted in the not-­for-­profit, public, and private sectors. The data used
here were collected in 2014/15 and includes responses from 6,083 organizations in thirty-
four countries.1 These include 266 organizations in the not-­for profit sector, 1,432 in the
public sector, and 4,385 in the private sector. We use these data to compare a number of
HRM policies and practices between the three sectors.

Table 20.1.  Recruitment methods for managers, professionals, and clerical/

manual workers (percentage of organizations using the method)
  Not for profit Public Private

  M P C/M M P C/M M P C/M

Internal recruitment 70 71 81 70 68 62 76 74 70
Word of mouth 49 65 70 32 44 45 50 68 72
Newspapers 45 48 52 49 52 48 31 39 42
Company website 73 78 82 66 73 67 58 70 67
Commercial jobs website 60 64 59 45 50 40 57 68 60
Social media 36 45 40 18 24 18 29 41 34
Speculative applications 25 48 51 12 29 29 26 49 54
Career fairs 15 26 30 11 26 22 18 37 34
Recruitment agencies/executive search 44 27 21 33 21 11 60 47 26
Public job centers 20 31 48 19 28 41 12 23 44
Trainee programs 9 25 24 9 28 26 15 38 35

Note: M, managers; P, professionals; C/M, clerical or manual workers.

Source: Cranet (2014/15).

1  Austria, Belgium, Cyprus, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Italy,
Latvia, Lithuania, the Netherlands, Romania, Slovakia, Slovenia, Spain, Sweden, the United Kingdom,
Croatia, Iceland, Norway, Russia, Serbia, Switzerland, Turkey, China, Indonesia, Israel, the Philippines,
the United States, Australia, and South Africa.
442   Parry and Kelliher

Table 20.1 shows the types of recruitment methods utilized by each sector for manag-
ers, professionals, and clerical/manual workers, respectively.
The data show that organizations in the not-­for-­profit sector use a range of recruitment
methods for each level of workers. The adoption of several methods is likely to be as a
response to the resourcing challenges experienced in the sector. Comparing the different
sectors, no distinct characteristic patterns seem to emerge. For some methods, such as
the use of word of mouth, commercial websites, social media, and speculative applica-
tions, the results for the not-­for-­profit sector are similar to those for the private sector.
However, in relation to methods such as the use of newspapers, job centers, trainee
schemes, and careers fairs, the results are more similar to those in the public sector.
Turning to look at the selection methods, Table 20.2 shows the methods utilized by
each sector. For selection methods, the results suggest that not-­for-­profit organizations
most commonly use interviews (both panel and one-­to-­one), references, and applica-
tion forms for selecting personnel. The high use of interviews and references suggests
that these organizations are attempting to use some form of valid method for selecting
employees. As with recruitment methods, it is difficult to identify a characteristic
approach when comparing the results for the not-­for-­profit sector to those in the public
and private sectors.
Looking more broadly at who not-­for-­profit organizations target as potential employ-
ees and whether there are specific initiatives to reach different groups in the workforce,
Tables 20.3a–20.3c show the proportion of organizations in each sector that have action

Table 20.2.  Selection methods for managers, professionals, and clerical/manual

workers (percentage of organizations using the method)
  Not for profit Public Private

  M P C/M M P C/M M P C/M

Panel interview 70 65 50 68 61 47 59 55 38
One-­to-­one interview 72 75 78 51 55 57 72 76 76
Application forms 56 62 66 56 61 61 46 54 60
Psychometric tests 28 24 18 36 22 14 39 35 23
Assessment center 21 15 14 19 12 8 27 21 12
Social media profiles 16 17 17 12 12 7 23 25 19
References 78 76 70 65 67 60 72 72 61
Ability tests/work sample 32 43 48 33 36 30 31 42 42
Technical tests 19 33 28 13 27 22 18 38 33
Numeracy test 12 14 20 10 13 14 16 24 22
Online selection test 9 50 13 10 11 8 15 18 14

Note: M, managers; P, professionals; C/M, clerical or manual workers.

Source: Cranet (2014/15).
 Human Resource Management in the Not-for-Profit Sector   443

programs for particular groups in terms of recruitment, training, and career progres-
sion. It is interesting that in this context, there does seem to be a distinctive approach
being taken by not-­for-­profit organizations. The use of action programs for minority
ethnics, older workers, workers with disabilities, and women is relatively high in
comparison to that of organizations in the public and private sectors. This may be
explained by a number of factors. First, the difference may be related to the values-­based
nature of not-for-­profit organizations. Organizations that are values based may be more
likely to think about their broader role as an employing organization and hence
develop programs targeted at underrepresented groups. Second, it could be that
­not-­for-­profit organizations seek to grow and develop their workforce from a broader
range of groups, such as older workers and people with disabilities, as a means of ­tapping
into a wider talent pool to address resourcing difficulties. For example, some employees
of not-­for-­profit organizations might be former users of the services of that or similar
organizations.

Table 20.3a.  Action programs in relation to recruitment

(percentage of o­ rganizations using the method)
  Not for profit Public Private
Minority ethnics 30 24 16
Older workers 19 12 14
People with disabilities 38 28 25
Women 31 24 28
Women returners 17 12 17
Low-­skilled labor 16 9 15
Younger workers 27 23 35

Source: Cranet (2014/15).

Table 20.3b.  Action programs in relation to training

(percentage of ­organizations using the method)
  Not for profit Public Private
Minority ethnics 18 14 10
Older workers 21 16 16
People with disabilities 25 19 15
Women 25 22 22
Women returners 19 16 18
Low-­skilled labor 19 21 22
Younger workers 26 24 34

Source: Cranet (2014/15).

444   Parry and Kelliher

Table 20.3c.  Action programs in relation to career progression

(percentage of organizations using the method)
  Not for profit Public Private
Minority ethnics 19 10 9
Older workers 16 12 12
People with disabilities 21 12 11
Women 25 20 25
Women returners 16 12 16
Low-­skilled labor 10 8 9
Younger workers 18 15 26

Source: Cranet (2014/15).

Managing Employees

Tables 20.4 through 20.9 present findings on various employee management practices

used in each of the three sectors. Tables 20.4 and 20.5 present data on training provided,
both in relation to resources allocated to training and in relation to the time spent
invested in training per employee. In relation to the proportion of payroll costs invested
in training, the results are largely similar across the sectors, but with the not-­for-­profit
sector recording a slightly lower proportion than the other two sectors. This may be a
reflection of the financial constraints faced by the sector, rather than a lack of value
placed on training. Moreover, it is worth noting that since this measure relates to payroll
costs, even where an organization allocates a similar proportion, in real terms this is
likely to represent a lower spend on training per employee. In the light of the above find-
ings, it is perhaps not surprising to observe in Table 20.6 the not-­for-­profit sector reports
providing a lower number of days training per year for managers and professionals than
the public or private sectors. However, by contrast, a slightly higher number of days is
provided for clerical and manual workers. This may be a reflection of a higher propor-
tion of clerical and manual workers being recruited who lack relevant skills and
experience.
Table 20.6 shows the proportion of organizations that use formal approaches to
employee appraisal for different levels of employee. The results above show that the
use of formalized appraisal systems is relatively widespread across all sectors, by just
over two-­thirds of not-­for-­profit organizations for each group of employees. For
managers and professionals, this figure is similar to that reported for the public
­sector, but lower than that reported for the private sector. This similarity with
the  public sector may be in line with the spread of NPM-­style practices and
­growing managerialism from the public to the not-­for-­profit sector as a result of the
 Human Resource Management in the Not-for-Profit Sector   445

Table 20.4.  Mean proportion of annual payroll costs spent on training

  Not for profit Public Private
Mean proportion of payroll costs (%) 3.29 3.38 3.78

Source: Cranet (2014/15).

Table 20.5.  Days training per year per employee

  Not for profit Public Private
Managers 6.17 8.36 7.40
Professionals 7.22 9.04 7.80
Clerical 7.06 6.61 6.89

Source: Cranet (2014/15).

Table 20.6.  Use of formal appraisal systems (percentage of

organizations using the method)
  Not for profit Public Private
Formal appraisals for managers 68 70 79
Formal appraisals for professionals 68 68 78
Formal appraisals for clerical/manual workers 70 63 74

Source: Cranet (2014/15).

increase of the not-­for-­profit sector in the provision of publicly funded services, as

observed by a number of commentators (Hemmings, 2011; Kelliher & Parry, 2011).

Pay and Benefits

Tables 20.7 and 20.8 present data on pay mechanisms and the range of welfare benefits
offered.
In relation to the use of individual performance-­related pay, a similar proportion
of organizations in the not-­for-­profit sector use this method for managers and pro-
fessionals compared to the public sector, although it is interesting that a greater pro-
portion use it for clerical and manual staff. By contrast, the not-­for-­profit sector is
markedly less likely to use individual performance-­related pay than the private
sector.
446   Parry and Kelliher

Table 20.7.  Use of individual performance-­related

pay (percentage of o­ rganizations using the method)
  Not for profit Public Private
Managers 41 39 56
Professionals 37 37 53
Clerical 37 32 44

Source: Cranet (2014/15).

Table 20.8.  Provision of welfare benefits (above statutory

minimum) (percentage of organizations providing the benefit)
  Not for profit Public Private
Workplace child care 16 9 9
Child-­care allowances 22 13 19
Career break schemes 25 19 20
Maternity leave 63 63 60
Paternity leave 58 57 51
Parental leave 53 53 46
Pension schemes 50 45 47
Education/training breaks 53 54 49
Private healthcare schemes 48 31 54
Flexible/cafeteria benefits 41 35 40

Source: Cranet (2014/15).

Organizations in the not-­for-­profit sector are more likely to offer welfare benefits that
are above the statutory minimum (where relevant) than either the public or the private
sector. This supports the idea that not-­for-­profit organizations are more likely to seek to
develop a mutuality-­based relationship with their employees (Cunningham, 2010). It
might also be that not-­for-­profit organizations offer these benefits in lieu of the higher
salaries that they cannot afford (Parry & Kelliher, 2009).

Communication

Finally, Table 20.9 relates to what organizations communicate with their employees about.
These results paint a picture of the not-­for-­profit sector commonly c­ ommunicating
with its employees about business strategy, financial performance, and organization of
work, but less frequently about financial performance with professional and clerical/
 Human Resource Management in the Not-for-Profit Sector   447

Table 20.9.  Communication to employees about business

strategy, financial performance, and organization of work
(percentage of organizations using the method)
  Not for profit Public Private
Managers      
Business strategy 90 82 93
Financial performance 86 81 92
Organization of work 84 85 87
Professionals      
Business strategy 70 53 63
Financial performance 57 47 60
Organization of work 77 69 76
Clerical/manual workers      
Business strategy 59 37 47
Financial performance 48 35 47
Organization of work 74 35 69

Source: Cranet (2014/15).

manual employees. While these general trends are in line with other s­ ectors, it is not
easy to identify an overall pattern of how the not-­for-­profit sector relates to the other
two sectors.
Overall, the results show that in relation to formalized policies and practices, the not-
for-­profit sector does not differ significantly from the public or private sectors. Thus,
these data do not provide strong support for the contention that HRM in the not-
for-profit sector is less sophisticated than in the other two sectors. However, there is
some evidence that organizations in the not-­for-­profit sector tend to adopt an approach
to HRM that reflects their values and/or focuses on the welfare of their employees. This
is evidenced in particular by the higher reporting of action programs for older workers,
people with disabilities, ethnic minorities and women, and the provision of welfare-
related benefits in the not-­for-­profit sector. These approaches might also be driven by a
need to address resourcing challenges caused by increased competition for labor and
a constrained ability to offer higher salaries (Parry & Kelliher, 2009).

Has Human Resource Management in

the Not-­F or-­P rofit Sector Changed?

It appears from the above analysis that HRM in the not-­for profit sector does have some
characteristics that distinguish it from the approaches adopted in the public and private
sectors, although it does not appear to be less sophisticated than the other two sectors.
448   Parry and Kelliher

In the light of this, we turn to our second concern, whether the approach to HRM within
the not-­for-­profit sector has changed, reflecting the changed context in which it oper-
ates. As mentioned previously, several authors have suggested that voluntary-­sector
HRM has evolved to that which is more sophisticated and is more similar to that of the
public and private sectors (Kelliher & Parry,  2011; Parry & Kelliher,  2009; Parry
et al., 2005; Rodwell & Teo, 2004). This may be the result of two main forces. First, the
resourcing pressures caused by the need to compete with private- and public-­sector
organizations for high-­quality labor has meant that not-­for-­profit organizations have
had to offer more competitive terms and conditions to employees. Parry and Kelliher
(2009) found that the expansion of provision in the substance misuse treatment sector
led to increased difficulties in recruiting employees and thus resulted in changes to
recruitment and retention practices. Second, the involvement of not-­for-­profit organi-
zations in publicly funded services may impose cost restrictions on not-­for-­profit orga-
nizations (Passey et al., 2000). Where resources are constrained, it could be argued that
there is an even greater need to manage all resources, including human resources, more
effectively. These circumstances may also, however, compromise the mission of the
organization (Cunningham, 2010). Furthermore, the adoption of the principles of NPM
by some not-­for-­profit organizations can result in reductions to pay and conditions in
real terms and the use of less secure forms of employment (Baluch, 2017; Cunningham,
Baines, & Charlesworth, 2014; Hemmings, 2011).
In our earlier article (Kelliher & Parry, 2011), we drew on data from the Workplace
Employment Relations Study to compare HRM in the not-­for-­profit sector to that in
private- and voluntary-­sector organizations in relation to performance-­related and
welfare-­related practices. These data showed that performance-­focused practices such
as performance appraisals and off-­the-­job training were common in the not-­for-­profit
sector, as were the use of appraisals to identify training needs and the use of employee
involvement and communication schemes. However, despite this, not-­ for-­profit
organizations remained significantly different from public- and private-­sector organi-
zations and no clear pattern was found that likened organizations in the not-­for-profit
sector to either public- or private-­sector organizations. A similar pattern was found in
relation to welfare-­related practices such as equal opportunities policies, sick pay, and
employer pension schemes. However, our findings also showed that the nature of HRM
in the not-­for-­profit sector was not in line with the approaches traditionally ascribed to
the sector in relation to a lack of sophistication (e.g., Lloyd,  1993) or a more social
­justice–oriented perspective (e.g., Baines, 2010; Evans & Shields, 2002). This suggests
that HRM in the not-­for-­profit sector may have migrated to something nearer that in
the public or private sectors. This is supported by our comparison of the not-­for-­profit,
public, and private sectors in the last section. This change is likely to be the result of pres-
sures on the sector to adopt NPM-­style approaches.
We will now examine data from the Cranet survey to examine any change in
approaches to HRM between 2009/10 and 2014/15. We will use the same data from
2014/15 as described above. In 2009/10, the data for the not-­for-­profit included 274
 Human Resource Management in the Not-for-Profit Sector   449

Table 20.10.  Formalized structure and strategy (percentage

of organizations using the method)
  2009/10 (%) 2014/15 (%)
Existence of HRM department 81 88
Written mission statement 80 89
Written business strategy 61 82
Written HRM strategy 47 59

Note: HRM, human resource management.

Source: Cranet (2009/10, 2014/15).

organizations from twenty-­eight countries or communities.2 These data have been used
to compare a number of HRM policies and practices in the not-­for-­profit sector between
2009/10 and 2014/15.
Before we move on to examining the changes in the HRM policies and practices that
we discussed earlier, we will first examine the formality of the structure and strategy in
relation to HRM in the not-­for-­profit sector (see Table 20.10). From Table 20.10 it can be
seen that there was a marked increase over this five-­year period in the proportion of
not-­for-­profit organizations reporting formal structures in the form of an HRM depart-
ment and statements and strategies in relation to their mission, business strategy, and
HRM strategy. This supports previous literature (Kelliher & Parry,  2011; Parry et
al., 2005; Parry & Kelliher, 2009; Rodwell & Teo, 2004) that suggests the formalization of
HRM within the not-­for-­profit sector.
We now compare responses to the survey questions asking about HRM policies and
practices in the not-­for-­profit sector in 2010 and 2015. Where these policies or practices
were not included in the 2010 survey, they have not been included in this analysis.
The results suggest that the use of recruitment methods, apart from company websites,
commercial websites, speculative applications, and public job centers, dropped between
2010 and 2015 (see Table 20.11). The rise in the use of Internet recruitment is not surpris-
ing given the general growth in the use of online methods during this period. Generally,
these findings suggest that not-­for-­profit organizations are using what would appear to
be cheaper recruitment methods and fewer seemingly more costly approaches, such as
recruitment agencies and advertising. This is in line with previous evidence suggesting a
restriction of budgets in this sector as a result of the growth in competitive contracting
for service provision.

2  Austria, Belgium, Bulgaria, Cyprus, Denmark, Estonia, Finland, France, Germany, Greece,
Hungary, Ireland, Italy, Lithuania, the Netherlands, Slovakia, Slovenia, Sweden, the United Kingdom,
Iceland, Norway, Switzerland, Israel, the Philippines, the United States, Australia, New Zealand, and
the Turkish Cypriot Community.
450   Parry and Kelliher

Table 20.11.  Recruitment methods for managers, professionals, and clerical/

manual workers (percentage of organizations using the method)
  2009/10 2014/15

Managers M P C/M M P C/M

Internal recruitment 82 73 78 70 71 81
Word of mouth 58 62 67 49 65 70
Newspapers 83 86 80 45 48 52
Company website 72 74 73 73 78 82
Commercial jobs website 57 60 51 60 64 59
Speculative applications 22 39 45 25 48 51
Recruitment agencies/executive search 60 42 27 44 27 21
Public job centers 17 29 38 20 31 48

Note: M, managers; P, professionals; C/M, clerical or manual workers.

Source: Cranet (2009/10, 2014/15).

Table 20.12 suggests that the proportion of not-­for-­profit organizations using a range

of selection practices (most of those asked about) dropped slightly between 2010 and
2015. The exceptions to this trend were the use of psychometric tests, ability tests, and
technical tests, which have risen in use during this period. This increased use of testing
in the selection process suggests a greater concern for more objective evidence and for-
malization in the process.
Overall, the use of action programs in recruitment generally increased between 2010
and 2015 in not-­for-­profit organizations. The use of action programs in training also
increased for minority ethnics, individuals with disabilities, and younger workers, but
the use of action programs for career progression dropped in many cases, particularly
for older and low-­skilled workers (see Table 20.13).
The findings reported in Table 20.14 paint a picture of stability in the use of formal
employee appraisals in not-­for-­profit organizations in 2010 and 2015, notwithstanding a
marginal drop for managers and professionals. In some senses this is surprising, given
the reported growth in managerialism and the increasing need to monitor performance
in this sector (Hemming, 2011; Kelliher & Parry, 2011) through the indirect influence of
NPM. However, the number of organizations reporting use is high, and it could be that
smaller organizations may experience pressure to adopt such practices.
The findings reported in Table  20.15 show that organizations in this sector have
increased their investment in training by providing professional and clerical/manual
employees with more days training on average per year between 2010 and 2015. It is
interesting that the number of days training provided to managers remained relatively
constant over this period.
The findings presented in Table  20.16 show that the use of individual performance-
related pay in the not-­for-­profit sector dropped for managers and professionals, but
remained constant (although at a lower level) for clerical employees between 2010 and 2015.
 Human Resource Management in the Not-for-Profit Sector   451

Table 20.12.  Selection methods for managers, professionals, and clerical/manual

workers (percentage of organizations using the method)
  2009/10 2014/15

  M P C/M M P C/M
Panel interview 79 65 49 70 65 50
One-­to-­one interview 76 75 77 72 75 78
Application forms 62 64 69 56 62 66
Psychometric tests 25 15 11 28 24 18
Assessment center 29 14 7 21 15 14
References 82 78 77 78 76 70
Ability tests/work sample 24 32 38 32 43 48
Technical tests 14 30 32 19 33 28

Note: M, managers; P, professionals; C/M, clerical or manual workers.

Source: Cranet (2009/10, 2014/15).

Table 20.13.  Diversity management programs in recruitment,

training, and career management (percentage of organizations
using the method)
  2009/10 2014/15
Recruitment    
Minority ethnics 27 30
Older workers 16 19
People with disabilities 25 38
Women 23 31
Women returners 17 17
Low-­skilled labor 10 16
Younger workers 19 27
Training    
Minority ethnics 7 18
Older workers 27 21
People with disabilities 22 25
Women 25 25
Women returners 21 19
Low-­skilled labor 21 19
Younger workers 24 26
Career progression    
Minority ethnics 21 19
Older workers 20 16
People with disabilities 20 21
Women 25 25
Women returners 19 16
Low-­skilled labor 14 10
Younger workers 22 18

Source: Cranet (2009/10, 2014/15).

452   Parry and Kelliher

Table 20.14.  Formal appraisal systems (percentage of

organizations using the method)
  2009/10 2014/15
Formal appraisals for managers 71 68
Formal appraisals for professionals 72 68
Formal appraisals for clerical/manual workers 70 70

Source: Cranet (2009/10, 2014/15).

Table 20.15.  Days training per year per employee

  2009/10 2014/15
Managers 6.21 6.17
Professionals 6.63 7.22
Clerical 4.35 7.06

Source: Cranet (2009/10, 2014/15).

Table 20.16.  Use of individual performance-­related

pay (percentage of organizations using the method)
  2009/10 2014/15
Managers 48 41
Professionals 43 37
Clerical 37 37

Source: Cranet (2009/10, 2014/15).

As with the use of performance appraisals, this might be seen as surprising, given the need
to manage performance more effectively, but might be explained by the growing concern
expressed in other sectors over the effectiveness of linking individual pay to performance.
The proportion of not-­for-­profit organizations offering certain welfare benefits, par-
ticularly education/training breaks, pension schemes, and child-­care allowances above
the statutory rate, dropped over the period 2010–15, although others remained fairly sta-
ble (see Table 20.17). This reduction might be a reaction to resource constraints caused by
the need to keep costs low in order to develop competitive bids for public funding.
Finally, the findings reported in Table 20.18 show some evidence of a drop in the pro-
portion of not-­for-­profit organizations communicating with their staff on business
 Human Resource Management in the Not-for-Profit Sector   453

Table 20.17.  Provision of welfare benefits (above statutory

minimum) (percentage of organizations using the method)
  2009/10 2014/15
Workplace child care 18 16
Child-­care allowances 14 22
Career break schemes 25 25
Maternity leave 66 63
Paternity leave 58 58
Parental leave 68 53
Pension schemes 61 50
Education/training breaks 65 53
Private healthcare schemes 48 48

Source: Cranet (2009/10, 2014/15).

Table 20.18.  Communication to employees about business

strategy, financial performance, and organization of work
(percentage of organizations using the method)
  2009/10 2014/15

  M P C/M M P C/M
Business strategy 96 78 63 90 70 59
Financial performance 95 72 57 86 57 48
Organization of work 93 85 80 84 77 74

Note: M, managers; P, professionals; C/M, clerical or manual workers.

Source: Cranet (2009/10, 2014/15).

issues. Communication about business strategy, financial performance, and organiza-

tion of work dropped for all groups between 2010 and 2015. These survey data do not,
however, provide an insight into why this is the case.
Taken together, the above results show some indication that HRM practice in the not-
for-­profit sector became more formal between 2010 and 2015, with more organizations
having an HRM department and a formal HRM strategy and using formal policies and
practices in personnel selection. In other areas, however, the use of formal p ­ olicies
and practices dropped or remained stable. The evidence for a change, at least in the
five-­year period examined using this data set, suggests a mixed pattern of activity, rather
than a clear trend. It should also be noted, however, that many policies and practices in
the not-for-­profit sector are similar to those in the public and private sectors, so any
change might have occurred prior to 2010.
454   Parry and Kelliher

Conclusion

A number of commentators have suggested that as not-­for-profit organizations have

become more involved in the delivery of publicly funded services, the role of effective
management of their human resources has become increasingly important (Bartram
et al., 2017), not least because when resources are scarce it becomes especially impor-
tant to manage them effectively. The evidence presented here shows that many of the
policies and practices adopted by not-­for-­profit organizations, such as those for per-
sonnel selection, are similar to those employed in the public and private sectors. This
degree of commonality makes it difficult to identify a unique approach to HRM in the
not-­for profit sector context and adds weight to arguments challenging the widespread
view that a different approach to managing is needed in this sector (Hamlin, Sawyer, &
Sage, 2011). In some senses this is surprising, given the acknowledged differences in
motivation and identification with the organizations’ mission, along with the variety of
size and purpose of not-­for-­profit organizations, as discussed earlier. However, other
scholars have noted that the implementation of HRM and/or strategic HRM in not-
for-­profit organizations is not without tensions. Baluch (2017) observes that there may
be differences in the way in which polices are implemented by line managers, leading
to a lack of consistency and weak HRM systems. Similarly, Cunningham et al. (2017)
note that in delivering public services, not-­for-­profit organizations face the conflicting
demands of tighter cost control and the requirements of enhanced customer service,
and that in the context of HRM, it may be difficult to reconcile these pressures. Indeed,
in our data, there is some evidence that not-­for-­profit organizations are reacting to
resource constraints in their choice of HRM practices. For example, the drop in some
benefits offered and lower percentage spend on training may be a result of the need to
cut costs when competing for public funding. The use of a wider range of recruitment
methods compared to the public and private sectors might be a means to cast the net
wide when trying to attract higher-­quality workforce labor in the absence of such
benefits.
However, the data also suggest that some elements of the values-­based nature of the
not-­for-­profit context remain. For example, not-­for-­profit organizations are more likely
to use action programs to support minority groups in recruitment, training, and career
progression.
This chapter provides an initial overview of the nature of HRM in the not-­for-­profit
sector across thirty-­five countries and how it has changed over time. Future research
needs to undertake a more detailed examination of the impact of the not-­for-­profit con-
text on HRM and whether it retains any distinctiveness in the face of pressures related to
professionalization and resource constraints and heterogeneity in the sector. There is
also a need to compare not-­for-­profit HRM between countries to see if differences in the
role of the voluntary sector in different countries affects the nature of people manage-
ment. Finally, future research should link the nature of HRM in the sector to outcomes
 Human Resource Management in the Not-for-Profit Sector   455

such as recruitment and retention in order to examine whether different people man-
agement practices are effective depending on the sector context.

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 chapter 21

H um a n R esou rce
M a nagem en t i n th e
Fa m ily Busi n e ss
Con text

Eleni Stavrou

Often the impression is that family firms are small “mom-­and-­pop” operations with
little impact on the larger business arena. However, families control the majority of
businesses around the globe and are important contributors to national and local econ-
omies (Stavrou, Kassinis, & Filotheou, 2007). In the United States alone, they control
approximately 80 percent of businesses over a broad range of industries and sizes
(Gomez-­Mejia, Larraza-­Kintana, & Makri,  2003), and in Europe they account for
approximately 40–50 percent of all jobs in the private sector (European Family Business
Report,  2018). Even though the majority are small or medium in size, family
firms constitute approximately one-­third of both the S&P 500 and the Fortune 500 firms
(Anderson & Reeb, 2003).
Definitions of family firms take into account their distinct characteristics from
different perspectives (de Massis, Frattini, & Lichtenthaler,  2012, p. 1). Price, Stoica,
and Boncella (2013) state that definitions generally include family ownership, family
involvement in management and operations, and the ways in which intergenerational
participation takes place. Some researchers have defined family firms in relation to how
they differ from nonfamily firms (Price et al., 2013; ) and their unique characteristics
(Chrisman, Chua, & Sharma, 2005; Kellermanns, Eddleston, Barnett, & Pearson, 2008;
Zellweger & Nason,  2008). Moreover, the variability in the level of participation of
family and whether they consider themselves family businesses has encouraged
researchers to define the family business with respect to whether they display a certain
set of characteristics (Chrisman et al., 2005, p. 556). These characteristics include the
­following: (1) the impact of a family over the long-­term direction of the organization;
(2) whether the family aims to remain active and exercise control; (3) the role and style
460   Stavrou

of the family business; and (4) distinct, nonseparable, synergistic resources and
­competences arising from family participation.
The definitions of family business indicate that family business research still consti-
tutes an emerging area of study (Benavides-­Velasco, Quintana-­García, & Guzmán-
Parra,  2011). Adopting the position of Sharma, Chrisman, and Chua (1997, p.  2), we
define family business as a “business governed and/or managed on a sustainable, poten-
tially cross-­generational, basis to shape and perhaps pursue the formal or implicit vision
of the business held by members of the same family or a small number of families.”

The Family Business Context and

Theorizations around It

As already mentioned, family businesses seem to have unique characteristics that make
them different from nonfamily firms. For example, Allio (2004) and Carney (2005) have
noticed a reluctance of family firms to take risks through a notable long-­term time
horizon. In a similar fashion, Martin and Lumpkin (2003) suggest that family firms
prefer to adopt a “defensive” stance, resulting in a reluctance to grow. Such a stance,
according to Short et al. (2009), has resulted in superior performance.
In addition, even though the phenomenon is understudied, family businesses seem to
differ substantially from nonfamily firms in the ways they handle human resource
management (HRM) issues (Combs et al., 2018), such as performance appraisals
(Gómez-­Mejía, Nuñez-­Nickel, & Gutierrez, 2001), compensation (Gómez-­Mejía et al.,
2003), and training and development (Cabrera-­ Suárez, de Saá-­ Pérez, & García-­
Almeida, 2001; Jaskiewicz et al., 2013), to name just a few.
Furthermore, researchers report that the values and beliefs of the founder usually
become strongly embedded in the organization and its culture long after the founder
might have left the organization (Kammerlander, Dessi, Bird, Florid, & Murru, 2015).
According to Chua, Chrisman, and Sharma (1999) and Dyer (2003), family dynamics
play a key role in the behavior of family firms and are a unique aspect of these firms
(Astrachan, 2010, p. 10). As a result, strategy formulation and implementation are highly
influenced by these family dynamics (Astrachan, 2010).
More specifically, Miller, Wright, Le Breton-­Miller, and Scholes (2015) suggest that
families in business are interested in building a healthy organization that would sustain
its success from generation to generation in the long term. They place a strong emphasis
on stakeholder management, accessing financial capital, and building human resources
for the future, even if the present might be compromised. Aronoff (2004) and Deniz and
Suarez (2005) report that a family firm’s reputation, quality, hard work, ethical business
practices, customer and employee relations, philanthropy, and support for its
community and employees are especially important. Along similar lines, Gallo (2004)
explains that family firms fulfill their social responsibility toward employees and their
 Human Resource Management in the Family Business Context   461

communities to a large extent and value unity, commitment, industriousness, teamwork,

and helping others. Finally, Stavrou and Swiercz (1998) have long reported that family
firms tend to exhibit a deep sense of personal responsibility toward their employees.
The above values do not mean that the owning families are not concerned with profits.
In fact, Gallo (2004) notes that one of the major aims and duties of family businesses is,
as with their nonfamily counterparts, to create economic wealth. However, their values
may be driven by unique concerns and interests, such as stability, capital preservation,
reputation concerns, and intentions to pass the business on to succeeding generations,
which may not align with the interests of other investors (Anderson & Reeb,  2003,
p. 1303). These unique differentiating characteristics that family firms demonstrate may
often act as pillars to define and achieve a competitive advantage that is uniquely suitable
for family enterprises.
Given the aforementioned discussion, several theoretical perspectives can be
mobilized to advance our understanding of family-­owned organizations, three of which
we focus on here, namely, the resource-­based view of the firm, institutional perspectives,
and stakeholder analyses.

The Resource-­Based View of the Firm

The resource-­based view of the firm (RBV) emerged as a strategic management
paradigm to explain how firms gain a competitive advantage (Habbershon &Williams,
1999; Lockett, 2005; Peteraf, 1993). The RBV focuses on organizational resources as ante-
cedents to performance (Habbershon & Williams, 1999). Its main argument is that firms
are heterogeneous, resource heterogeneity may be long-­ lasting, and firm-­
specific
resources that are valuable, rare, nonimitable, and nonsubstitutable may lead to sustain-
able competitive advantage (Barney, 1991). Resources may be physical, human, organi-
zational, or process capital (Barney, 1991; Habbershon & Williams, 1999).
Early researchers such as Wernerfelt (1984) directed scholars to focus on resources
(rather than on products) when analyzing firms, arguing for a link between firm
resources and profitability. In turn, theorists positioned the RBV in relation to theories
of competitive advantage and argued that resources can have a sustainable impact on
organizations (Barney, 1991). Building on Barney’s (1991) influential work, the RBV has
been extensively researched, evolving from a rather static to a more dynamic framework
that has been widely applied in the management literature (e.g., Lockett,  2005;
Peteraf, 1993; Wright, Dunford, & Snell, 2001).
Several scholars recommend the use of the RBV as a preferred theoretical approach
within strategic management to be followed in family business research. It is useful in
providing a framework to examine how family businesses can seek opportunities and
competitive advantage (Sirmon & Hitt, 2003). However, its application within this field
has been limited. In the family business literature, the RBV has been applied mainly in
relation to the unique characteristics of family firms arising through the interconnection
between the family and the firm (Wernerfelt, 1984). Some of these characteristics that
462   Stavrou

are considered unique and nonimitable are the family relationships, family power, and
social capital (Astrachan,  2010). Encompassed as part of their social capital, often
ignored in the strategic literature related to family firms and yet of high importance to
explore, are the HRM practices family firms may apply to be strategic in relation to their
workforce and to gain competitive advantage.
In this chapter, we focus on HRM in family firms and its potential to contribute to the
creation of sustainable competitive advantage. As Wright et al. (2001, p. 702) note, the
“growing acceptance of internal resources as sources of competitive advantage brought
legitimacy to [human resources’] assertion that people are strategically important to
firm success.” A consensus now exists in the field of strategic HRM concerning the
potential of HRM to contribute to sustainable competitive advantage (see, for example,
Conway & Monks, 2009; Pfeffer, 1994; Wright et al., 2001).
In exploring the role of HRM in family firms, we will combine the RBV with context,
using institutional perspectives. Oliver (1997) proposed combining the RBV with insti-
tutional theory to capture the effects of the institutional context on resource selection
and competitive advantage. According to Oliver, “choices about the accumulation
and  acquisition of firm resources . . . affect the potential for firm heterogeneity and
sustainable advantage” (1997, p. 701).
Therefore, firm decisions are influenced by both resource-­based and institutional fac-
tors related to a family business across all levels of analysis. At the managerial level, fam-
ily firm choices about resources are guided by economic and normative rationality. At
the family firm level, competition for resources may be limited by institutional isolating
mechanisms. Finally, at the interfirm level, the RBV’s emphasis on family firm heteroge-
neity may be counteracted by pressures for isomorphism stemming from the firm’s
embeddedness in national and other economic and social relationships. Thus, it is use-
ful to explore not only the strategic but also the institutional effects in relation to HRM
in family firms in order to benefit in both competitiveness and social acceptance.

Institutional Perspectives
Institutional theorists argue that organizations are influenced by pressures to conform
to practices and procedures that are institutionalized in society (Meyer & Rowan, 1977;
Oliver, 1991) (see Chapter 3 for a discussion of institutional approaches). Why should
family firms be the exception? Institutional rules are built into society and reflected in
relevant laws and culture; they entail normative expectations, taken-­ for-­
granted
assumptions, and behavioral constraints (Dacin, Goodstein, & Scott, 2002; Meyer &
Rowan, 1977; Oliver, 1991). In turn, institutional pressures may be functional, political,
and/or social (Dacin et al.,  2002). They may come from outside or from within an
organization. For family firms, examples of external pressures may come from the
national context, industry norms, or even relatives of the owning family; internal pres-
sures may come from important employee groups or the managing family.
 Human Resource Management in the Family Business Context   463

According to institutional theorists (Meyer & Rowan,  1977; Zucker,  1987), family
firms within an institutional setting respond to such pressures in similar ways in order
to enhance their legitimacy and likelihood for survival in that setting, thus creating
isomorphism. DiMaggio and Powell (1983) distinguish between three types
of  ­isomorphism: coercive, which relates to organizational compliance to regulation;
mimetic, which relates to modeling themselves on other successful organizations in
their environment to reduce uncertainty; and normative, which relates to social pres-
sures on organizations and their members to conform to certain norms.
Nonetheless, pursuing legitimacy through isomorphism may conflict with efficiency
criteria (Meyer & Rowan, 1977). Oliver (1991) explains that when norms and practices
obtain the status of a social fact, organizations might accept and adopt them, even at the
expense of their strategic interests. In this respect, family firms often face strong norma-
tive pressures from their owning families (Aronoff, 2004): They may conform to the
norms and expectations imposed by the owning family even at the expense of business
operations. In this sense, decisions guided by institutional theory can be considered
“irrational,” but are adopted nonetheless exactly because they are “normatively sanc-
tioned” (DiMaggio & Powell, 1983, p. 148).
Oliver (1997) calls this “normative rationality” and places it side by side with the
“economic rationality” put forth by the RBV, explaining that both play a role in firm
decisions. Besides coercive pressures involving legislation, conforming to institutional
rules is a strategic choice: Organizations choose to what degree they will conform
(Goodstein, 1994). Therefore, both institutional effects and strategic concerns are influ-
ential for all firms, including family businesses. Family firms must decide the extent to
which they need to adhere to the institutional pressures they face, given their own stra-
tegic aims. One such institutional pressure for family firms involves not only the require-
ments of family members, but also those of other important employee groups. Notably,
researchers who operationalize institutional theory measure institutional factors through,
among other things, the demographic composition of the workforce. Institutional theory
indeed suggests that pressures from internal stakeholders should be incorporated in
­relevant analyses since powerful internal groups can influence managerial decisions
(Beer, Boselie, & Brewster, 2015; Goodstein, 1994).

The Stakeholder Theory Perspective

To capture the potential impact of various employee groups on a family firm’s potential,
we add a stakeholder theory perspective (Berman, Wicks, Kotha, & Jones, 1999; Bridoux
& Stoelhorst, 2014; Freeman, 1984). Stakeholders create value by performing productive
activities and/or providing important resources. A central premise is that treating
stakeholders well and looking out for their interests help a firm create value
(Freeman, 1984; Freeman, Harrison, & Wicks, 2007) and in turn improves performance
(Choi & Wang,  2009). In his original formulation of the stakeholder concept in the
context of strategy, Freeman (1984) argued that a company’s relationship with
464   Stavrou

stakeholders is crucial in understanding how it operates and how it draws value from
these stakeholders. He also claimed that stakeholder relationships are the very basis of
added value and strategic initiatives. Along similar lines, Hillman, Keim, and Luce
(2001) note that by developing long-­term relationships with stakeholders, including
present and future employees, “firms expand the set of value-­creating exchanges with
these groups beyond that which would be possible with interactions limited to market
transactions” (p. 127).
Berman et al. (1999, p. 488) propose that a firm’s motivation to manage its stakeholders
can be characterized as either strategic or intrinsic. According to the strategic
stakeholder orientation, management’s concern for a stakeholder group is determined
by the group’s perceived ability to improve the firm’s financial performance. According
to the intrinsic stakeholder commitment model, a firm’s concern is based on a moral
commitment or obligation to treat stakeholders well (see also Harrison et al., 2010). The
first model is very similar to the RBV perspective, which we discussed previously. In the
second model, which we adopt here, this moral commitment shapes a firm’s strategy
and ultimately influences its financial performance (Berman et al., 1999).
The intrinsic stakeholder orientation model denotes that a firm’s relationships with its
stakeholders are based on “normative, moral commitments rather than on a desire to
use those stakeholders solely to maximize profits.” In other words, a firm’s treatment of
its stakeholders and its overall decision-­making are driven by a set of fundamental
moral principles. In turn, the profitability and competitiveness of stakeholder
­management result from a firm’s “genuine commitment to ethical principles” and its
commitment to “ethical relationships with stakeholders regardless of expected benefits”
(Berman et al.,  1999, pp. 493–494). The stakeholder concept has also been applied
specifically to HRM (Beer et al., 2015).
We propose that family firms espouse this intrinsic stakeholder commitment model,
especially when it comes to their employees. According to Aronoff (2004), family firms,
while not denying the importance of the firm’s successful financial performance, are
typically motivated by and committed to a set of “family values” represented by their
business. To illustrate, Deniz and Suarez (2005) describe owner-­managers as stewards
committed to act on the basis of their principles rather than financial needs, toward the
collective interests of the company’s stakeholders. Moreover, Aronoff (2004) argued
that successful family businesses often have a philosophy that includes stewardship of
the family resources for the benefit of the family, the employees, and the community at
large and a wish to leave behind an enduring institution.

Empirical Evidence

The focus of this chapter is to explore the aforementioned theoretical lenses for family
firms by utilizing the 2014/15 data set of the Cranet survey, “the largest and most repre-
sentative independent survey of HRM policies and practices in the world” (Parry,
 Human Resource Management in the Family Business Context   465

Stavrou-Costea, & Morley,  2011, p. 2). Cranet is an established research network that
­collects comparative information on organizational HRM policies and practices across the
world. The unit of analysis is the firm and the respondent is the person responsible for
HRM. The questionnaire is developed through literature reviews and subsequent meetings
among HRM academics. It is developed in English, translated into each local language,
back-­translated, and pilot tested. The survey is conducted to a stratified representative
sample of organizations in each country using mainly postal questionnaires.

Institutional Demographics: Country and Firm Type

We use data from the countries in Table 21.1. We included a variety of European coun-
tries to capture the diversity of national context (House, Hanges, Javidan, Dorfman, &
Gupta, 2004). We split the sample into family (781) and nonfamily (1,355) firms. The
question we asked to acquire the two samples was, “Is the business owned and/or
controlled by primarily a family?” Furthermore, with the question, “If primarily owned
by a single family, is the family involved in management?” we ascertained that in 600 of
the 781 family firms, the owning family is involved in management.
Comparing the demographics of family and nonfamily firms, we found that the
average number of employees is 3,361 in the former but 1,489 in the latter. Almost all
firms responding, regardless of their family status, have an HRM department.
Furthermore, approximately 89 percent of nonfamily and 82 percent of family firms

Table 21.1.  Countries and samples utilized

Country Number of organizations
(alphabetic order)

Austria 140
Belgium 120
Cyprus 43
Denmark 98
Finland 82
France 138
Germany 205
Greece 131
Iceland 47
Italy 102
Netherlands 112
Norway 98
Spain 73
Sweden 147
Switzerland 137
United Kingdom 132
Total 2,136
466   Stavrou

have a written business service strategy, while 90 percent of nonfamily and 82 percent
of  family firms have a mission statement. Fewer firms have a written HRM
­strategy—72 percent of nonfamily and 59 percent of family firms, respectively. In a similar
fashion, in 73 percent of nonfamily and 66 percent of family firms, the person in charge
of HRM is on the board or executive team of the firm; a lower proportion involved HRM
in making strategic decisions from the outset—49 percent of nonfamily and 38 percent
of family firms, respectively.
Given the aforementioned descriptive information, we may conclude that family
businesses seem to place less emphasis on the strategic role of HRM compared to their
nonfamily counterparts. The following analysis reinforces this view.

Firm Type, Human Resource Management,

and the Resource-Based View
To compare how strategic family versus nonfamily firms were, firm type (family versus
nonfamily) was used as the dependent variable in a hierarchical linear modeling analysis
across the countries listed in Table 21.1. In this analysis, we used a number of independent
variables as proxies for the strategic approach in HRM.
First, we combined a set of variables to create a measure of strategic HRM (ranging
from 0 to 3): (1) whether the person with responsibility for HRM issues has a seat on the
board (0 = no, 1 = yes); (2) if the organization has a written HRM strategy (0 = no, 1 = yes);
and (3) whether the person responsible for HRM is involved in the development of the
organization’s business/service strategy from the outset (1 = yes, 0 = no). We also created
a formal performance appraisal measure by combining the following three variables
(ranging from 0 to 3): formal appraisal system for (1) management (0 = no, 1 = yes);
(2) professionals without managerial responsibility (0 = no, 1 = yes); and (3) clerical/
manual staff (0 = no, 1 = yes). In a similar fashion, we created a measure of employee
share schemes (ranging from 0 to 3) by combining the use or not of employee share
schemes for managers (1 = yes, 0 = no), professionals without managerial responsibility
(1 = yes, 0 = no), and clerical/manual staff (1 = yes, 0 = no).
Specifically, as Table 21.2 illustrates, after controlling for employee size, industry, and
country, family firms are less likely to have strategic HRM, formal performance
appraisals, and employee share schemes than their nonfamily counterparts. These
measures have been used in the literature to measure the strategic orientation of a
business. De Kok, Uhlaner, and Thurik (2006) report that family firms are less likely
than nonfamily firms to develop sophisticated HRM practices, attributing this partially
to agency theory. It seems that the family has control over HRM issues rather than a
sophisticated HRM function. However, Astrachan (2010) claims that these measures
may not be relevant to the strategic aims of family firms that foster networks and long-
term relationships, rather than transactional or market-­based ones. Further studies
should explore what HRM strategies work best for family firms and why.
 Human Resource Management in the Family Business Context   467

Table 21.2.  Hierarchical linear modeling of firm type and strategic human
resource management
Parameter Estimate Std. error Sig.

Intercept 0.43 0.05 ***

Industry: services (vs. products) –0.15 0.05 **
Size (ln number of employees) –0.03 0.02
Strategic human resource management –0.05 0.02 **
Use of formal appraisals –0.19 0.04 ***
Use of employee share schemes –0.19 0.06 ***
Model fit
σε2 0.20 0.01 ***
σ2 0.00 0.00
Deviance (–2 log likelihood) 890

*p < .05; **p < .01; ***p < .001.

Second, we compared the rate of innovation, productivity, and revenue levels between
the two firm types across country contexts. Thus, firm type in the next analysis is the
independent variable and the aforementioned organizational outcome variables are the
dependent variables. We used self-­reported, perceptual measures of the dependent
variables. While they are not ideal, perceptual measures have been used extensively and
successfully in the literature (Dess & Robinson,  1984; Perry-­Smith & Blum,  2000).
Furthermore, a number of authors provide support for the high degree of equivalence
between objective and self-­report measures of performance (Conway & Lance, 2010;
Wall et al., 2004).
For innovation and productivity, the two separate questions were “Compared to other
organizations in your sector, how would you rate the performance of your organization
in relation” to (a) the “rate of innovation” and (b) the “level of productivity?” Both
questions were measured on a scale: 1 = poor, or at the low end of the industry; 2 = below
average; 3 = average or equal to the competition; 4 = better than average; and 5 = superior.
For revenue, the question inquired about the gross revenue of the firm over the past
three years, measured on a scale of 1 (so low as to produce large losses) to 5 (well in
excess of costs).
Starting with innovation, Laforet (2013) notes that family firms may have a certain
culture and unique characteristics through which their behaviors in relation to
innovation differ from nonfamily firms. In a similar fashion, Rössl, Kraus, and Fink
(2010) argue that the culture and unique characteristics of family firms make their inno-
vation behavior different from that of nonfamily firms. Interestingly, innovation
researchers have largely ignored family-­owned firms (Craig & Moores, 2006). Garud
and Karnøe (2001) add that innovation in family firms is influenced by “organizational
path dependence” and is often affected by the founders or their legacy.
As shown in Table 21.3, family firms are likely to have a lower rate of innovation when
compared to their nonfamily counterparts. Supporting our results, de Massis, Frattini,
468   Stavrou

Table 21.3.  Rate of innovation and firm type

Parameter Estimate Std. error Sig.

Intercept 3.46 0.10 ***

Industry: services (vs. products) –0.16 0.10
Size (ln number of employees) 0.04 0.04
Family business (no = 0, yes = 1) –0.20 0.08 *
Proportion of younger employees (ln) 0.06 0.04
Strategic human resource management –0.05 0.04
Model fit
σε2 0.86 0.05 ***
σ2 0.02 0.01
Deviance (–2 log likelihood) 1,842

*p < .05; **p < .01; ***p < .001.

Kotlar, Petruzzelli, and Wright (2016) argue that family firms are less innovative than
nonfamily firms because of their strong attachment to tradition and the past. One of the
dominant reasons why family firms are considered resistant to innovation is an exces-
sive reliance on the firms’ past, their history, and the founders’ decision-­making
approach (Zahra, Hayton, Neubaum, Dibrell, & Craig, 2008). In the same vein, Allio
(2004) and Carney (2005) argue that the close ties among family members, along with
capital restrictions, act as barriers to innovation and contribute to a reluctance to take
risks. Similarly, de Massis, Frattini, Pizzurno, and Cassia (2013) advise that family firms
that allow socioemotional goals to dominate may suppress innovation. Research also
suggests that one of the main barriers to family firm innovation is their allocating fewer
resources to innovation (Chrisman & Patel,  2012). These issues warrant further
investigation.
In addition to innovation, Barth, Gulbrandsen, and Schone (2005) note that empiri-
cal studies comparing the performance of family- and non-­family-­owned firms are
uncommon and those that exist produce mixed results. In relation to productivity, they
report on an older study by Wall (1998), who, after controlling for industry, labor input,
and firm age, found that family firms are 18 percent less productive than nonfamily
firms.
Our results support previous studies in that productivity in family firms tends to be
lower than that of their nonfamily counterparts (see Table  21.4). Barth et al. (2005)
report similar results and show that firms with family management are about 14 percent
less productive than nonfamily firms. Their interpretation is that finding the most quali-
fied person from a large pool of applicants through an open call is more likely to ensure
high productivity, something that family firms do not seem to do.
In relation to revenues, López-­Gracia and Sánchez-­Andújar (2007) report that family
businesses tend to employ different financial policies compared to other businesses and
that growth opportunities, financial distress costs, and internal resources appear to be
 Human Resource Management in the Family Business Context   469

Table 21.4.  Level of productivity and firm type

Parameter Estimate Std. error Sig.

Intercept 3.52 0.08 ***

Industry: services (vs. products) –0.13 0.09
Size (ln number of employees) –0.06 0.04
Family business (no = 0, yes = 1) –0.15 0.07 *
Proportion of younger employees (ln) 0.05 0.04
Strategic human resource management –0.02 0.03
Model fit
σε2 0.61 0.03 ***
σ2 0.01 0.01
Deviance (–2 log likelihood) 1,627

*p < .05; **p < .01; ***p < .001.

the main factors that differentiate the financial behavior of family from nonfamily firms.
As López-­Gracia and Sánchez-­Andújar (2007) note, the first financing objective of fam-
ily firms is not to lose control of the business; thus, they base their financial policies
mainly on internally generated resources and pass up growth if necessary.
In our study, the self-­reported gross revenue of the firm over the past three years
seems lower in family firms than in their nonfamily counterparts (see Table 21.5). This
result could be related to Romano, Tanewski, and Smyrnios’s (2000) explanation that
owners of family firms tend to use company profits rather than reinvesting capital for
additional growth.
Overall, it seems that from an RBV perspective, family firms lag behind nonfamily
firms in innovation, productivity, and gross revenue, or they may approach perfor-
mance from a very different angle. It is possible that family firms give priority to their
own, perhaps idiosyncratic, performance indicators that are different from those of
nonfamily businesses. As Astrachan (2010) notes, in providing family business with an
edge over its competitors, families can add to and shed resources from the business in
various ways, but they are seen as doing so differently from their nonfamily counter-
parts, and these ways have not been adequately explored. Further research on these
issues is merited.

Employees as Intrinsic Stakeholders

Further research is also merited in relation to the ties within family firms. Astrachan
(2010) explains that families in business are a particular type of group bonded by kinship
ties that are relational and systemic, with trust and commitment. These seem related to
the intrinsic stakeholder orientation model (Berman et al., 1999). In turn, the question
that arises is whether family firms, even though they seem to be less strategic in relation
to traditional HRM and the RBV, are intrinsically oriented toward people.
470   Stavrou

Table 21.5.  Gross revenue and firm type

Parameter Estimate Std. error Sig.
Intercept 3.68 0.23 ***
Industry: services (vs. products) –0.17 0.23
Size (ln number of employees) 0.08 0.05
Family business (no = 0, yes = 1) –0.18 0.08 *
Proportion of younger employees (ln) 0.04 0.05
Strategic human resource management 0.01 0.04
Model fit
σε2 0.96 0.05 ***
σ2 0.20 0.08 **
Deviance (–2 log likelihood) 1,971

*p < .05; **p < .01; ***p < .001.

Research in this area is scarce, but the handful of existing studies suggest that this may
be the case. For example, Chrisman, Chua, and Zahra (2003) explain that family firms
tend to focus on creating jobs or offering opportunities for growth and development,
even if these objectives lower the firm’s overall profitability. They note that family firms
have several societal goals, including improving the quality of life in a given community,
fighting poverty, and promoting key social causes (e.g., literacy). Further to this, Zhang
and Ma (2009, p. 125) report that management in family firms might be more prone to
hiring low-­skilled labor in labor-­intensive industries.
Given this discussion and in order to explore whether family businesses focus more
on their workforce, and which types, than their nonfamily counterparts, we examined
whether family firms hire more people, place emphasis on younger employees, and
utilize action programs in recruitment, training, and career progression covering
low-­skilled labor (see Table 21.6). First, we used the change in the total number of
employees over the period of the past three years (ranging from 1 = decreased to a
great extent to 5 = increased to a great extent). Second, we used the variable (1 = 0% to
6 = 76–100%) asking about the proportion of employees twenty-­five years old and
younger to see the likely proportions of younger people firms tend to employ. Finally,
we combined the following set of variables to create a measure on action programs for
low-­skilled labor (ranging from 0 to 3): (1) action programs for low-­skilled labor in
recruitment (1 = yes, 0 = no); (2) action programs for low-­skilled labor in training
(1 = yes, 0 = no); and (3) action programs for low-­skilled labor in career progression
(1 = yes, 0 = no).
Even though these relationships are tested for the first time in the context of family
firms, Table  21.6 demonstrates at least some direction toward a more intrinsic
stakeholder orientation approach. As per Chrisman, Chua, and Zahra (2003), as well as
Zhang and Ma (2009), our results demonstrate that family firms are more likely to hire
younger employees, to have action programs for low-­skilled labor, and to hire more
 Human Resource Management in the Family Business Context   471

Table 21.6.  Firm type and employees

Parameter Estimate Std. error Sig.

Intercept 0.04 0.06

Industry: services (vs. products) –0.16 0.04 ***
Size (ln number of employees) –0.03 0.02
Written diversity statement (0 = no, 1 = yes) –0.20 0.04 ***
Strategic human resource management –0.05 0.02 **
Proportion of younger employees (ln) 0.08 0.02 ***
Action programs for low-­skilled employees 0.06 0.03 *
Change in total number of employees 0.04 0.01 *
Model fit
σε2 0.20 0.01 ***
σ2 0.00
Deviance (–2 log likelihood) 790

*p < .05; **p < .01; ***p < .001.

people than their nonfamily counterparts. These results hold true regardless of country
context, industry, and firm size, even strategic HRM, which suggests that they are spe-
cific to the family business context over and above these factors. Other variables may
also be added to explore such emphasis. Further research is warranted to reach any
generalizable conclusions, but at least we have some indication in support of the
intrinsic stakeholder orientation of family versus nonfamily businesses as noted in
extant studies.

The Role of Institutions

The intrinsic stakeholder orientation of family firms may be showcased further when
combined with the RBV approach and institutional theory. To do so, we tested for the
moderating role of firm type as an institutional variable in the relationship between the
proportion of younger employees and the change in total number of employees, which
serve as institutional forces internal to the firm. We obtained some interesting results in
relation to the former. Specifically, when the proportion of younger employees is high,
we see that the gross revenue in family firms increases much more than that in their
nonfamily counterparts.
As shown in Figure 21.1, firm type is a moderator of the relationship between gross
revenue and proportion of younger employees. In this sense, we may begin to under-
stand that relationships are not always simple and that certain institutional factors can-
not be ignored. In this case, the family business as an institution produces different
results than the nonfamily business institution when combining their emphasis on
younger employees, an internal institutional stakeholder, with gross revenues. While
472   Stavrou

4.5
4
3.5
3
Gross revenue

2.5 Nonfamily firm

2 Family firm
1.5
1
0.5
0
Low proportion of High proportion of
younger employees younger employees

Figure 21.1.  Moderation of firm type to gross revenue and proportion of younger employees.

the direct relationship between gross revenues and firm type in Table 21.7 showed lower
revenues for family firms, when the emphasis on younger employees was included in the
model, the gross revenue of family firms was higher than that of their nonfamily
counterparts.
The results in this section demonstrate that, when factoring in institutional influ-
ences, relationships may be approached from a different angle than the one originally
adopted and might even point toward attaining competitive advantage. These results
could mark a new beginning in research of family firms where more intricate and
nuanced relationships are explored.

Conclusion

The competitive business world of our era is highly dynamic, ever changing, and full of
uncertainties, which makes family businesses success and sustainability a challenge.
Issues related to gaining competitive advantage through important stakeholders within
their specific institutional context become very relevant for families in business. In this
chapter, we discussed a number of both relevant theories and HRM practices in relation
to family businesses and their nonfamily counterparts.
Family businesses are certainly one type of institution not to be ignored. As
demonstrated in this chapter, family businesses handle HRM quite differently than
nonfamily business institutions. First, looking at the strategic orientation of HRM and
the direct relationships between HRM and distal competitive outcomes, the family
business context seems to fall short compared to its nonfamily business context.
However, when adding moderators, some relationships change. These results raise
questions as to the appropriateness of extant theorizations of competitive advantage
across organizational institutional settings.
 Human Resource Management in the Family Business Context   473

Table 21.7.  Gross revenue, firm type, and proportion of younger employees
Parameter Estimate Std. error Sig.

Intercept 3.25 0.31 ***

Industry: services (vs. products) –0.18 0.23
Size (ln number of employees) 0.08 0.05
Strategic human resource management 0.02 0.04
Proportion of younger employees (ln) –0.05 0.15
Family business (1 = yes, 0 = no) –0.64 0.25 **
Family business × proportion of younger employees (ln) 0.52 0.26 *
Model fit
σε2 0.95 0.05 ***
σ2 0.21 0.08 **
Deviance (–2 log likelihood) 1,966

*p < .05; **p < .01; ***p < .001.

Second, family businesses seem to pay special attention to certain stakeholders when
compared to their nonfamily counterparts. Further research needs to explicate the rea-
sons behind such emphasis: Why are family firms more likely to hire more, especially
younger, employees and focus on those who are low skilled? Is this indeed proof of an
intrinsic orientation on the part of family firms? And what other such important stake-
holders may be found?
Third, family businesses are affected by certain institutional constraints and enablers.
One such internal institutional enabler in family firms involves younger employees,
who seem to make the difference at least in terms of revenue generation. How can these
results be supported and replicated? How can other such institutional enablers or even
constraints to family firm practice be approached?
This chapter, while providing relevant theoretical frameworks, has only scratched the
surface empirically. Unless systematic research on family firms in context and their
similarities or differences with their nonfamily counterparts is conducted, we will not
acquire a holistic view of the contextual factors important to the former’s survival and
growth.
We propose that a line of research be devoted to the study of family business in its insti-
tutional context by focusing separately on each HRM function and how these firms apply
HRM, while looking at the antecedents and the effects of such practices. Both qualitative
and quantitative as well as cross-­country studies will be useful. In this manner, we can
find out how family firms achieve sustainable competitive advantage through their peo-
ple, what institutional factors may affect them, and how intrinsically important their var-
ious stakeholders are. Once we find out the answers to these questions, we will be in a
better position to make specific recommendations and assessments that will assist family
businesses to not only survive but also thrive over time.
474   Stavrou

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 chapter 22

H um a n R e sou rce
M a nagem en t w ithi n a
Tr a de U n ion Con text

Lorraine Ryan and Jonathan Lavelle

The field of international and comparative employment relations is focused on both the
challenges that organizations face and their response to such challenges (Collings, 2008).
The focus of much attention tends to be on the issues of trade unions and collective
bargaining (Grimshaw, Rubery, & Almond,  2015). Dowling et al. (2017) outline that
trade unions and collective bargaining have the potential to limit the strategic choices of
organizations in three ways: (1) by influencing wage levels to the extent that cost
structures may become uncompetitive, (2) by constraining the ability of organizations
to vary employment levels, and (3) by hindering or preventing global integration of
organizations. Thus, an understanding of the issues around trade unions and collective
bargaining across countries is an important topic within the context of international
and comparative employment relations. The aim of this chapter is to draw on a range of
sources to profile trade unions and their primary activity of collective bargaining across
countries. Three main data sources are used:

1. The ICTWSS Database (2019)—database on the characteristics of trade unions and

collective bargaining in fifty-­five countries between 1960 and 2018 (Visser, 2019).
2. The Cranet survey—international and comparative organizational-­level survey
data of policies and practices in comparative human resource management across
the world. Data are drawn from three rounds of the survey: 2004/5, 2009/10, and
2014/15 (Cranet, 2004/2005; 2009/2010; 2014/15).
3. The European Social Survey—a cross-­national survey focused on peoples’ atti-
tudes, beliefs, and behavior patterns in more than thirty nations (European Social
Survey, 2010).

In comparative employment relations, the most common framework for exploring

issues across countries is the varieties of capitalism framework (Hall & Soskice, 2001).
480   Ryan and Lavelle

According to this framework, two ideal types of capitalist political economy exist—the
liberal market economy and the coordinated market economy. Examples of liberal mar-
ket economies include countries such as the United States, Canada, the United
Kingdom, Australia, New Zealand, and Ireland. Examples of coordinated market econ-
omies include Austria, Germany, Japan, South Korea, Belgium, the Netherlands, and the
Nordic countries. Within these two types, it is suggested that trade unions and collective
bargaining differ. In liberal market economies, trade unions are weak (low levels of trade
union density), collective bargaining is decentralized, and coverage is low. In coordi-
nated market economies, the opposite is true: trade unions are strong, often structured
at the industry level, collective bargaining is centralized (either at the national or the
industry level), and coverage is high. More recently, Hamann and Kelly (2008) sug-
gested that countries could be grouped into four categories based on a number of indus-
trial relations criteria—union density and union structure, bargaining structure and
bargaining coverage, employment protection, income inequality, industrial conflict,
and unemployment rates:

• northern Europe—Denmark, Finland, Norway, Sweden

• Mediterranean Europe—France, Greece, Italy, Portugal, Spain
• central Europe—Austria, Belgium, Germany, the Netherlands, Switzerland
• liberal market economies—Australia, Canada, Ireland, New Zealand, the United
Kingdom, and the United States

In a more specialized framework, Gumbrell-­McCormick and Hyman (2013) identify four

models of trade unionism in Europe—Nordic countries (Sweden and Denmark); “cen-
tral” countries (Germany, Austria, the Netherlands, and Belgium); “southern” countries
(France and Italy); and anglophone countries (the United Kingdom and Ireland).
These classifications provide useful frameworks for comparative analyses of employ-
ment relations and human resource management (HRM) issues from an international
perspective.

Trade Unions—Definitions, Structures,

Functions, Objectives

The study of trade unions has long been central to the disciplines of employment rela-
tions and HRM. The definition of a trade union can be traced back to work by Sydney
and Beatrice Webb (Webb & Webb, 1897, p. 1), who described a trade union as “a contin-
uous association of wage earners for the purpose of maintaining and improving the con-
ditions of their working lives.” Trade unions play a fundamental role in representing the
interests of workers within the employment relationship through protecting and
improving wages and working conditions, and the origin of trade unions is inextricably
linked to the emergence of capitalist industrial society in the late nineteenth century
 Human Resource Management within a Trade Union Context   481

(Webb & Webb,  1920). Salamon (2000, p. 95) notes that in many industrialized
­countries, the development of trade unionism “may be seen as a social response to the
advent of industrialisation and capitalism.” Trade unions are not, however, merely eco-
nomic agents, but also social actors, and the role of trade unions extends to the political,
social, and economic spheres of working life and society.
The way in which trade unions influence society is twofold. First, exposure to union
activities in the workplace causes a spillover effect for members and impacts their
actions in society. For example, independent representation via a trade union provides
members with employee voice or a say in the decision-­making of the organization,
which enhances commitment to democracy and political participation in the wider
society among union members (Pateman,  1970; Turner, Ryan, & O’Sullivan,  2019).
Second, trade unions often play a direct role in society through their function as social
actors. Outside the immediate work sphere of the organization, trade unions are
frequently actively involved in social democratic political parties, social movements,
and campaigns and generally strive to ensure equality and human rights for all members
of society, particularly disadvantaged socioeconomic groups (D’Art & Turner,  2007;
Hyman, 2007; Visser, 2006). Many of the goods that trade unions seek can be classified
as public goods, and union movements constantly pursue influence over decisions and
policies in the political arena (Freeman & Medoff, 1984).
While the context of national institutions has a profound effect on the ability of trade
unions to carry out their activities, both within the workplace and in wider society, the
activities and influence of the trade union movement in turn have an effect on the
national context. Through campaigns for workers’ rights with regard to key issues such
as hours of work, health and safety, equality, and the living wage, an enduring raison
d’être of trade unions is to press governments for improvements in workers’ rights at
work, terms and conditions of employment, and social benefits. Thus, trade unions in
countries across the world have been instrumental in shaping the political, economic,
social, and regulatory environments in which organizations operate and individuals live
and work. Although the strength of trade union influence has waned over time,
understanding the complexities of trade unions and their role within organizations and
society remains important for successfully managing an organization’s workforce and
determining the best approach to HRM strategy, policies, and practices.

Trade Union Structures

Trade unions as organizations are made up of members (who are typically workers), and
the primary purpose of trade unions is protecting and advancing the interests of those
members. For a trade union to be formed, workers must first mobilize and organize
themselves into a union. Once established, a core function of trade unions is to continue
to mobilize and recruit new members (Kelly 1998; Tilly, 1978). Members normally pay
union dues or fees that help to finance the trade union and provide a fund for protecting
workers’ incomes if pay is lost during a strike or industrial action. Although the structure
482   Ryan and Lavelle

of trade unions varies widely in different national and international contexts, trade
unions are essentially democratic organizations with voluntary shop stewards or
representatives acting on behalf of members “on the ground” and trade union leaders
democratically elected at different levels of the trade union organization by rank-­and-
file members. The internal structure of trade unions may have some common features of
internal governance, including workplace, branch, and national-­ level structures
(Wallace, Gunnigle, McMahon, & O’Sullivan, 2013). A basic characteristic of the internal
organizational arrangements of trade unions is to establish a high degree of democratic
participation of its members (Salamon, 2000).
Trade unions represent the interests of members at workplace, branch, national,
international, or global levels depending on the issues at stake. Generally, at the
workplace level, trade unions through shop stewards or workplace representatives act to
advise and speak for members in their dealings with management. This can include
resolving grievances or disputes, providing information, and keeping members up to
date on union activities (Wallace et al., 2013). Union activities at the branch and other
levels will depend on the structure of trade unions in a particular national context, as
well as the regulatory environment in which they operate. Collective bargaining, for
example, one of the core institutions of trade union activity, may be conducted at distinct
levels within an employment organization, sector, or country. It is important, therefore,
to understand the structure of trade unions as well as the national context in order for
HRM to engage with trade unions in an effective and meaningful way.
The structure and organization of trade unions should not be viewed as static
institutional arrangements, but rather as fluid adaptable processes that respond to both
the internal and the external environment. Trade union processes and organization
structures will adapt to different factors in the labor market, including changing
working patterns, employment relationships, workforce demographics, membership
levels, and other factors in the environment within which unions operate. It is useful,
however, to consider how trade unions are typically organized to understand how the
functions of trade unions are carried out and the impact this has on employment
relations and HRM engagement with trade unions. Trade unions can be organized in a
number of ways, including by sector, by industry, or by job type, depending on the needs
and interests of the members and how they are best represented. Table 22.1 outlines
some of the most common ways in which trade unions have been categorized.
It is worth noting that other societal factors can influence the role and organization
of trade unions, including political and religious factors. It is common in some countries
for trade unions to be strongly associated with social democratic political parties
(Sweden, Denmark, Norway, and Finland), while in other countries they are associated
with Christian democratic traditions (Germany, Austria, Italy, the Netherlands, Belgium,
France, and Switzerland). Furthermore, in some Scandinavian countries, the “Ghent”
system is in operation, whereby unemployment benefits are administered by trade
unions, giving employees a strong incentive to join, and this has contributed to higher
union density (Wallace et al., 2013). Across all countries, it is common for trade unions to
have umbrella bodies at, for example, the national, European, and international levels. At
the national level in some countries, such as Austria, Ireland, and the United Kingdom,
 Human Resource Management within a Trade Union Context   483

Table 22.1.  Types of trade unions

Craft unions These trade unions represent workers who possess a particular skill in a trade. Entry to
such a trade union is generally restricted to workers who obtain the relevant qualifica-
tion in this skill domain.
General trade General trade unions adopt an open approach, taking into membership all categories
unions of workers, regardless of skill, occupation, or industry.
White-­collar White-­collar trade unions represent workers in professional, supervisory, technical,
unions clerical, and managerial grades.
Industrial Industrial trade unions represent all workers in a particular industry, regardless of their
unions occupation or skill level.
Enterprise Enterprise trade unions operate at an organizational level and represent workers who
unions work for a particular organization only. These types of unions are common in Japan.

there is one umbrella body. In other countries (such as Germany, France, and Sweden),
trade unions organize under a number of umbrella bodies with divisions based on politi-
cal, religious, and occupational lines. The role and function of these institutions differs
according to the context in which they operate. At the European level, the main trade
union body is the European Trade Union Confederation, and at international level, the
International Trade Union Confederation represents the labor movement.
The strength of the trade union movement is determined by critical factors such as
trade union membership (simply the number of people in trade unions) and trade
union density (the proportion of the employed labor force who are members of a
trade union). As a measurement of trade union strength, union density offers a better
gauge because it provides a more accurate comparison of unionized workers in relation
to the labor market as a whole. Typically, higher levels of trade union density bring
higher levels of influence, and employers operating in countries where union density is
high will be more likely to engage with trade unions in their dealings with workers. In
addition to directly impacting relations between organizations and their employees,
these contextual factors also interact with each other. For example, union density and
institutional support for trade unions are mutually reinforcing. Therefore, countries
where union density is high might be expected to have a strong trade union movement
that can successfully push for a regulatory environment that is conducive to and
supportive of the activities of trade unions. In turn, countries with strong regulation and
protection of trade unions tend to maintain higher levels of trade union density.
The number of workers within a trade union varies greatly across countries (see
Figure 22.1). Trade union density tends to be higher within countries located in northern
Europe, including Iceland, Sweden, Denmark, Finland, and Norway. At the lower end,
countries such as Hungary, France, Malaysia, the Philippines, Turkey, Lithuania,
Indonesia, and Estonia have density levels in single-­digit figures (5 to 9 percent). Thus,
trade union density differs significantly depending on the national context.
We can also explore the number of employees within an organization who are mem-
bers of a trade union across countries. Figure 22.2 outlines the results from the Cranet
484   Ryan and Lavelle

0 10 20 30 40 50 60 70 80 90 100
Iceland
Sweden
Denmark
Finland
Belgium
Norway
Malta
Cyprus
China
Italy
Luxembourg
Taiwan, China
Argentina
Ireland
Canada
Russian Federation
Austria
South Africa
Hong Kong, China
United Kingdom
Greece
Croatia
Israel
Romania
Brazil
Singapore
Slovenia
New Zealand
Netherlands
Germany
Japan
Australia
Chile
Portugal
Switzerland
Costa Rica
Spain
Poland
Bulgaria
Mexico
India
Latvia
Czech Republic
Slovak Republic
United States of America
Korea, Republic of
Hungary
France
Malaysia
Philippines
Turkey
Lithuania
Indonesia
Colombia
Estonia

Figure 22.1.  Trade union density (2015). From ICTWSS (figures for Argentina and Poland,
2014; figures for China, Ireland, Greece, Australia, and India, 2013; figures for Israel and Romania,
2012). Figures for Mexico, South Africa, and the United States are taken from Labour Force
Surveys.
 Human Resource Management within a Trade Union Context   485

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Iceland
Sweden
Finland

Cyprus

Canada
Serbia
Romania
Japan

United States
Latvia
Czech Republic
Spain
Switzerland
Lithuania
Australia
Netherlands
United Kingdom

Slovakia
Estonia
South Africa

Russia
Austria
Croatia

Belgium

Indonesia

Tunisia
Ireland
Slovenia
Brazil
China
Bulgaria
Philippines

New Zealand
Israel

Greece

France
Taiwan
Denmark

Norway

Turkey

Italy

Germany

Hungary
0% –10% 11% –50% 51% –100%

Figure 22.2.  Trade union density within organizations (2014/15). From the Cranet (figures for
Bulgaria, Canada, Japan, New Zealand, and Taiwan, 2009/10; figures for Canada and Tunisia, 2004/5).

survey of organizational-­level trade union density. Organizations in countries such as

Iceland, Sweden, Finland, and Denmark reported high levels of organizational union
density. Organizations in countries such as Estonia, the United Kingdom, and France
reported much lower levels of organizational union density.
While a strict comparison between the two data sets is not the objective, the profile of
trade union density in countries across both data sets is one of consistency. For example,
union density figures are high in both data sets in countries such as Cyprus, Denmark,
Finland, Iceland, Norway, and Sweden, whereas union density figures are low in coun-
tries such as the Czech Republic, Estonia, France, Hungary, Lithuania, and Slovakia. The
data do reveal some minor differences between national-­level figures and organizational
figures. For example, union density figures are slightly higher at the national level in
countries such as Australia, Belgium, Ireland, Italy, the Netherlands, Spain, and
Switzerland than the organizational union density figures for those countries. Similarly,
union density figures are slightly lower at the national level in Greece, Latvia, the
Philippines, and the United States compared to the organizational data. In a small num-
ber of countries, we find significant differences between national union density figures
and organizational union density figure. Union density figures are significantly higher at
the national level in China, Taiwan, and the United Kingdom, whereas they are signifi-
cantly lower at the national level in South Africa, Indonesia, Japan, Romania, and Turkey.

Trends (2004–15)
Figure 22.3 illustrates a predominantly downward decline in trade union density across
most countries. The exceptions are Chile, Hong Kong, China, Italy, Brazil, Costa Rica,
486   Ryan and Lavelle

–25 –20 –15 –10 –5 0 5 10

Chile
Hong Kong, China
Italy
Brazil
Costa Rica
Iceland
Singapore
Colombia
Belgium
India
France
Korea, Republic of
Philippines
Canada
Greece
Spain
United States of America
Malaysia
Norway
Japan
Ireland
United Kingdom
Netherlands
Mexico
New Zealand
Switzerland
Germany
Denmark
Bulgaria
South Africa
Argentina
Estonia
Portugal
Finland
Indonesia
Lithuania
Australia
Austria
Hungary
Latvia
Luxembourg
Czech Republic
Turkey
Poland
Taiwan, China
Malta
Slovak Republic
Sweden
Croatia
Slovenia
Cyprus
Russian Federation

Figure 22.3.  Trends in trade union density (2004–15). Figures for Columbia (2005–14), India
(2005–13), Greece (2004–13), Ireland (2004–13), Mexico (2005–15), Bulgaria (2005–15), Argentina
(2005–14), Indonesia (2003–15), Lithuania (2003–15), Australia (2003–13), Hungary (2003–14),
Latvia (2003–14), Turkey (2003–14), and Poland (2004–14) are from ICTWSS. Figures for South
Africa and the United States are from the Labour Force Survey.
 Human Resource Management within a Trade Union Context   487

Iceland, and Singapore, which recorded increases between 1 and 4 percent. In countries
such as Colombia, Belgium, India, France, Korea, and the Philippines, little change
occurred in trade union density. While a number of countries recorded minor declines
in density levels—Canada, Greece, Spain, the United States, Malaysia, Norway, and
Japan—many countries experienced quite significant falls. For example, countries such
as Russia and Cyprus experienced a decline of around 20 percent in union density levels.
Thus, overall trade union density levels between 2004 and 2015 are on a downward
­trajectory in most countries, with some countries experiencing significant declines in
that period.

The Importance of Studying Trade

Unions: How They May Influence Human
Resource Management

The potential for trade unions to influence HRM activities in an organization is deter-
mined by a number of critical factors. These include contextual factors outlined previ-
ously, such as the regulatory environment of the country in which the organization
operates, the ideological approach to HRM adopted by leaders in the organization, and
the strength of the trade union movement. Contextual factors determine the parame-
ters for negotiating or dealing with trade unions. One critical contextual factor in this
regard is the legal regulation of trade unions. Since their foundation, trade unions
across countries have endured lengthy struggles with the law in relation to their func-
tions and activities. One of the key questions around the law and trade unions is
whether there is a legal right for a trade union to compel a company to recognize the
trade union for the purposes of collective bargaining. This question is of particular
interest to organizations that originate from countries where there is predominantly a
strong anti–trade union ideology (for example, the United States of America) or
organizations that may be looking to avoid trade unions given previous experience
either in their home country or in another foreign country (Lavelle,  2019). Thus,
organizations operating in a country with strong protection for the role of trade
unions and collective bargaining would be expected to have a much stronger impetus
to engage and negotiate with trade unions than those operating in a country with a
weak regulatory ­environment. For example, in countries with compulsory union
recognition, organizational decisions in relation to numerous aspects of the employment
relationship are typically determined through collective agreements and must be
negotiated with workers and their representatives. Other countries adopt a more
voluntarist approach to employment relations and HRM, where dealing with trade
unions and negotiating collective agreements are dependent on the goodwill of
management and driven by the moral responsibility to include workers in decision-
making on issues that affect them, rather than legal obligations.
488   Ryan and Lavelle

The ideological approach to HRM adopted by leaders in the organization refers

essentially to the views held by senior management and owners about the employ-
ment relationship and the role of trade unions. The unitarist and pluralist dichotomy
provides a framework that views trade unions as a necessary representation of diver-
gent interests on the one hand (pluralist) and an unnecessary interference with
­management’s prerogative to manage on the other (unitarist). Of course, there are
variations between these views, but where the views of HRM leaders lie along this
unitarist and pluralist spectrum will have a significant bearing on the type and level
of interactions the organization will have with trade unions.
A good indicator of trade union strength and influence across countries is to measure
the extent to which organizations recognize trade unions for the purposes of collective
bargaining. The Cranet survey provides data to explore this issue (see Figure  22.4).
Trade union recognition is highest within some central and northern European
countries, with all companies recognizing a trade union in Austria, Finland, Germany,
Sweden, and Tunisia. Much lower recognition figures were recorded for countries such
as Estonia, the United Kingdom, Hungary, and Bulgaria.
In examining trends in this area (see Table 22.2), a small number of countries recorded
an increase in union recognition, such as Finland, Iceland, Romania, Russia, Slovenia,
Spain, South Africa, and the United States. A similar number of countries recorded very
little change in terms of the percentage of companies recognizing a trade union. A
significant number of countries recorded a decline in the number of companies
recognizing trade unions—for example, countries such as Hungary, the Philippines,
Bulgaria, and Switzerland witnessed a significant decline in the number of organizations
recognizing a trade union.
Some other measures of trade union influence can be gathered by asking both
workers and organizations specifically about trade union influence in their

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Austria
Finland
Germany
Sweden
Tunisia
Iceland
Brazil
Italy

Denmark
Japan
Spain
Cyprus
Norway
Czech Republic
Belgium
Netherlands
Slovenia

Romania
Lithuania
France
South Africa

Russia
New Zealand
Canada
Croatia
Serbia
United States
Australia

Greece
Switzerland
Indonesia
Turkey
Slovakia
Ireland
Latvia
China

Philippines
Bulgaria
Hungary
Estonia
United Kingdom
Israel
Taiwan

Figure 22.4.  Trade union recognition (2014/15). From the Cranet. (figures for Canada and
Tunisia, 2004/5; figures for Bulgaria, Czech Republic, Germany, Ireland, Japan, New Zealand,
and Taiwan, 2009/10).
 Human Resource Management within a Trade Union Context   489

Table 22.2.  Trends in trade union recognition

2004/5 2009/10 2014/15
Australia 66% 58% 61%
Austria 100% 100% 100%
Belgium 90% 88% 79%
Bulgaria 63% 34% —
Cyprus 87% 85% 84%
Czech Republic 94% 83% —
Denmark 87% 80% 86%
Estonia 30% 29% 28%
Finland 91% 100% 100%
France 99% 97% 89%
Germany 100% 100% —
Greece 79% 80% 58%
Hungary 92% 71% 33%
Iceland 90% 89% 95%
Israel 69% 33% 43%
Italy 91% 81% 91%
Lithuania — 58% 59%
Netherlands 86% 60% 76%
New Zealand 70% 72% —
Norway 96% 96% 83%
Philippines 75% 44% 34%
Romania — 24% 59%
Russia — 24% 74%
Serbia — 81% 64%
Slovakia 53% 59% 47%
Slovenia 51% 54% 76%
Spain 73% — 84%
South Africa — 75% 87%
Sweden 100% — 100%
Switzerland 84% 100% 56%
Turkey 52% — 48%
United Kingdom 52% 50% 28%
United States 52% 33% 64%

Source: Cranet

­ orkplace. The European Social Survey in 2010 asked people their view on the level
w
of influence trade unions had in their workplace (see Figure 22.5). According to the
data, trade unions had strong influence in countries such as Israel, the Czech
Republic, Denmark, Ireland, and Belgium. Countries such as Estonia, Portugal,
Russia, Hungary, the United Kingdom, and Bulgaria reported that trade unions have
very little or no influence.
The Cranet survey includes the opposite perspective on trade union influence in the
workplace: that of the senior HRM specialists. As Figure 22.6 outlines, unions exert strong
influence in organizations in South Africa, Sweden, Serbia, and Norway. In countries
490   Ryan and Lavelle

100.0%
90.0%
80.0%
70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0% Finland
Belgium
Bulgaria
Croatia
Cyprus
Czech Republic

Estonia

Greece

Ireland
Israel
Lithuania
Netherlands

Poland
Portugal
Russian Federation
Slovakia
Slovenia
Spain
Sweden
Switzerland
Ukraine
France
Denmark

Germany

Hungary

Norway

United Kingdom
Not much influence Some influence Quite a lot of influence A great deal of influence

Figure 22.5.  Trade union influence in the workplace (2010). From the European Social Survey.

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Switzerland
Finland
Sweden
Serbia
Norway
Cyprus
China
Iceland
Croatia

Denmark

Italy
Turkey
Romania
Spain
Brazil
Israel
Germany

United States
Austria
Australia
Ireland
Slovenia
Czech Republic
Netherlands
Latvia
Greece

Philippines
Indonesia
New Zealand
Slovakia
Bulgaria
Lithuania
Japan
Hungary
Estonia
South Africa

Russia
Belgium

France

Taiwan
United Kingdom

Not at all To a small or some extent To a great or very great extent

Figure 22.6.  Trade union influence (2014/15). From the Cranet (figures for Bulgaria, Czech
Republic, Ireland, Japan, New Zealand, and Taiwan, 2009/10).

such as the United Kingdom, Taiwan, and Estonia, organizations reported that trade
unions had little influence in the workplace.
The Cranet data also allow an exploration of trends of trade union influence
between 2009/10 and 2014/15 (see Table  22.3). Countries such as Australia,
Belgium,  Denmark, Finland, Germany, Iceland, Israel, Italy, Lithuania, Russia,
 Human Resource Management within a Trade Union Context   491

Table 22.3.  Trend in influence (2010–15)

To a small or some To a great or very
Not at all extent great extent

2010 2015 2010 2015 2010 2015 Trend

Australia 52% 47% 42% 38% 6% 16% Stronger
Austria 21% 32% 62% 51% 17% 17% Weaker
Belgium 17% 20% 55% 46% 28% 35% Stronger
Cyprus 15% 16% 39% 38% 47% 45% Much the same
Denmark 19% 18% 60% 47% 21% 35% Stronger
Estonia 63% 65% 34% 32% 3% 4% Much the same
Finland 1% 2% 65% 60% 34% 38% Stronger
France 6% 18% 79% 60% 15% 22% Mixed
Germany 33% 35% 53% 43% 14% 23% Stronger
Greece 32% 46% 51% 42% 17% 12% Weaker
Hungary 57% 66% 36% 28% 7% 5% Weaker
Iceland 6% 6% 60% 51% 33% 42% Stronger
Israel 66% 49% 16% 28% 18% 23% Stronger
Italy 5% 9% 84% 60% 11% 31% Stronger
Lithuania 59% 61% 40% 32% 1% 6% Stronger
Netherlands 4% 32% 63% 56% 33% 12% Weaker
Norway 3% 16% 51% 37% 46% 47% Weaker
Philippines 66% 71% 28% 18% 6% 11% Mixed
Russia 76% 39% 24% 26% 0% 35% Stronger
Serbia 33% 31% 53% 18% 13% 50% Stronger
Slovakia 50% 60% 37% 31% 13% 9% Weaker
Slovenia 13% 22% 72% 64% 15% 14% Weaker
South Africa 29% 14% 51% 32% 21% 55% Stronger
Sweden 1% 1% 47% 47% 52% 52% Much the same
Switzerland 55% 37% 38% 52% 7% 11% Stronger
UK 44% 70% 38% 27% 18% 3% Weaker
USA 62% 40% 26% 39% 11% 21% Stronger

Source: Cranet

Serbia, South  Africa, Switzerland, and the United States all reported an increase in
trade union influence. In Austria, Greece, Hungary, the Netherlands, Norway,
Slovakia, Slovenia, and the United Kingdom, organizations reported that trade
union influence had declined. There was consistency in the level of trade union
influence in Cyprus, Estonia, and Sweden, with little change in levels of influence
being reported. In France and the Philippines the results were mixed—in those
countries the data revealed an increase in both no influence at all and great/very
great influence, with the decline in reported influence in the middle category of
small/some influence.
492   Ryan and Lavelle

Collective Bargaining

Employment relations and HRM scholarship focus on a number of core aspects of

the employment relationship, including (1) the parties to the employment relationship,
(2) the processes through which that relationship is governed, and (3) the outcomes
of these processes (Heery, Bacon, Blyton, & Fiorito, 2008). One of the core functions of
trade unions as a party to the employment relationship is to engage in the process of
­collective bargaining. Grounded in beliefs about democracy, equality, and inclusivity,
the right of workers to organize and bargain collectively is recognized as a fundamental
right. It is thus enshrined in the United Nations Universal Declaration of Human Rights,
International Labour Organisation Convention 154, promoted by the Organisation for
Economic Co-­operation and Development’s policy on work and employment and by
the European Union Social Pillar, as well as many national-­level social dialogues.
National contexts provide the framework for how collective bargaining operates in
practice but, whether at the firm, sector, or national level, collective bargaining essen-
tially allows workers as a collective to negotiate the terms and conditions of their
employment. The main levels at which collective bargaining occurs in different national
contexts are outlined in Table 22.4. However, collective bargaining is more than simply a
rule-­making process for determining pay and conditions. It is a mechanism that allows
employees a “voice” in decisions that affect their working lives and an institution for
the collective expression and management of conflict in the employment relationship.
It also acts as a critical convention for economic and social stability in the wider societal
sphere. The set of conventions, norms, and rules that govern the relationship between
management and employees and their bargaining over revenues, resources, and rights
of control are among the key institutions of modern societies (Visser, 1996).
Of particular concern for international HRM is the role and impact of collective bar-
gaining in different national contexts. In adopting HRM strategies and practices, it is
critical for organizations to be cognizant of regulations and obligations regarding the
negotiation and implementation of terms and conditions of employment agreed
through the mechanism of collective bargaining. Most typically, this refers to the need
for understanding the organizations’ legal obligations in relation to implementing col-
lective agreements. In many countries, employees have a right to trade union recogni-
tion and employers are legally obliged to engage in collective bargaining and/or
implement the terms and conditions agreed among the parties. The way in which the
parties to the employment relationship engage in bargaining and the level at which
negotiations are conducted can vary significantly. For example, in some countries (such
as France), pay and conditions are negotiated at the national or sectoral level and apply
by extension to all workers employed within those sectors. Thus, all workers have an
entitlement to the terms of those collective agreements, regardless of whether a firm
wishes to recognize or negotiate directly with a trade union and irrespective of whether
those workers are members of a trade union. Consequently, in national contexts where
 Human Resource Management within a Trade Union Context   493

Table 22.4.  Levels of collective bargaining

Collective
bargaining Description Countries

National level Typically corporatist-­type arrangements where tripartite Belgium, Finland

bodies representing the interests of various stakeholders are
conducted within a national framework. Implementation of
agreements may be voluntarist or compulsory.
Sectoral level Collective bargaining negotiations take place at the industry Austria, Germany,
or sectoral level. Typically, all workers employed in the sector Netherlands,
are entitled to the terms of the collective agreements, whether Portugal, Spain,
they are union members or not. Sweden
Firm/organiza- Direct negotiations that take place at local firm or company United Kingdom,
tion level level between a trade union(s) or employee representative United States
body and the direct employer.

the terms of collective agreements are legally binding, employers must ensure those
terms are implemented regardless of how or if they as employers have directly been
party to negotiation and discussions. Employers who fail to fulfill their obligations in
this way will face sanctions such as fines/damages. Other countries (such as the United
Kingdom and Ireland) adopt a more voluntarist convention, whereby negotiated collec-
tive agreements are generally not legally binding but are agreed on the basis of creating
orderly conduct of employment rules. The absence of legal regulation in a particular
national context, however, should not be taken as a cue by firms to ignore collective
bargaining.
It is also important to understand the accepted conventions in different national
­contexts in relation to employer engagement with collective bargaining as a means of
managing the employment relationship and maintaining industrial peace. In other
words, even in the absence of statutory obligations to engage in collective bargaining or
implement the terms of collective agreements, certain national contexts may have a
strong tradition of collective bargaining, particularly in sectors, industries, or organiza-
tions that have a long history of trade union influence. An employer who attempts to
bypass these accepted conventions or norms of negotiating the terms of employment
may not face legal sanctions as such, but will encounter distinct difficulties in relation to
maintaining a stable employment relations climate and engaging an efficient and com-
mitted workforce. Thus, for example, an employer attempting to introduce changes to
work systems or employment conditions in a unilateral manner without consultation
with employees could face strong resistance from employees, a lack of engagement with
the process, or even industrial action as a result of breaching accepted industrial rela-
tions norms in that particular context. This can cause significant disruption to the con-
duct of business for employers and other stakeholders, including employees and
customers. Thus, outside the regulatory sphere this demonstrates the importance of
494   Ryan and Lavelle

understanding traditions, norms, and custom and practice within national contexts in
relation to governing the terms and conditions of the employment relationship. It is
worth considering, however, that collective bargaining has many benefits for employers
with regard to providing for the orderly conduct of employment relations and stability
of pay. Rather than a rule that needs to be complied with, collective bargaining can be
viewed as a positive mechanism to manage conflict, ensure fairness and consistency,
provide clear understanding about the obligations of parties, and keep wages out of
competition (Wallace et al., 2013).
Furthermore, it is important to consider that collective bargaining structures can
influence HRM activities by shaping choices and constraints both directly and
indirectly. It is critical for firms to develop knowledge and understanding of the indirect
impact that collective bargaining within a particular national context might have on
employment terms and conditions and how this will shape HRM and employment
relations within the organization. Particularly in countries where the predominant level
of collective bargaining is at the national or industry level, the outcomes of collective
agreements can act as a benchmark in terms of setting pay and terms and conditions for
organizations outside the collective bargaining process. For example, research on
multinational corporations in Ireland found that 60 percent of such corporations that
were not involved in national-­level collective bargaining said that the outcome of the
collective bargaining process still heavily influenced their decisions on pay (Lavelle,
McDonnell, & Gunnigle, 2009).
As Wailes, Bamber, and Lansbury (2011) observe, there are numerous difficulties in
adopting an international comparative approach when exploring issues related to
employment relations and HRM, not least of which are the difficulties associated with
the lack of a common language and terminology. In this chapter, we do not seek to
provide a comprehensive comparative analysis of trade unions and collective bargain-
ing in all of the countries covered in this book. Rather, our aim is to provide an over-
view of the types of factors that can affect the parties to the employment relationship,
the processes through which that relationship is governed, and the outcomes of these
processes. More specifically, we provide an overview of trade unions in relation to
their origin, structures, and purpose and an exploration of collective bargaining in
terms of its level, scope, and impact, providing some examples from the different
countries within the study. In doing so, our hope is that readers will recognize the
complexities associated with these institutions in different national contexts and
develop an appreciation that there is no universal definition or explanation of a trade
union or collective bargaining that would enable us to fully appreciate their role and
impact on employment relations and HRM in the absence of a comprehensive under-
standing of the national economic, political, legal, social, and industrial relations con-
texts in which they are embedded. Rather, there is a critical need to delve deeper into
these important national contextual factors in each country in an effort to understand
how they interact with trade unions and collective bargaining and, consequently, how
this impacts employment relations and the conduct of business in a wide variety of
contexts.
 Human Resource Management within a Trade Union Context   495

It is difficult to precisely classify collective bargaining into neat categorizations; how-

ever, there are some universal considerations regarding the structure and operation of
collective bargaining in national contexts across the world. Primarily, these include col-
lective bargaining level, scope, coverage, and implementation of collective agreements.
Table 22.4 outlines the different levels at which collective bargaining takes place and
provides some examples of countries where the various levels of collective bargaining
are a prominent feature of the employment relations environment.

Scope
The scope of collective bargaining refers to the issues covered by negotiation and col-
lective agreements. The issues that are the subject of collective bargaining may be
determined by legislation or custom and practice in a country. Pay is the predomi-
nant issue, but all other issues related to the employment relationship may be subject
to negotiation. Issues included in the collective bargaining process may vary in terms
of their importance, with it being possible to make a distinction between low-­level
issues and strategic issues. The number of issues covered by collective bargaining can
be very narrow, with only a small number of issues related to terms and conditions of
employment being subject to negotiation—the remaining terms are likely to be
decided by management and legislation. For example, in the United Kingdom, the
number of issues covered by collective bargaining are very narrow and mostly
focused on pay, grievance procedures, and health and safety issues (Dundon &
Rollinson,  2011). In other instances, the majority of issues around managing the
employment relationship may be subject to negotiation—for example, Sweden. In
the United States, legislation clearly marks issues that are mandatory, issues that are
voluntary, and issues that are unlawful in relation to collective bargaining
(Dessler, 2017).

Coverage
A critical measure of the impact of collective bargaining within any national context is
the level of collective bargaining coverage—that is, the extent to which workers in a
­sector or economy have their pay and conditions determined through collective
­agreements. It may be assumed that this measure is directly related to trade union
­membership or density levels, where the more workers are members of a trade union,
the more workers are covered by collective agreements. However, in countries where
sectoral bargaining is common, workers are often covered by the terms and conditions
of sectoral agreements regardless of whether they are trade union members. Thus,
Salamon (2000, p. 324) notes that the relationship between collective bargaining cover-
age and union density is not a simple one, where if “union affiliation is high, coverage
will be extensive, and where membership is low, coverage will be more limited.” In
496   Ryan and Lavelle

France, for example, the level of trade union density is low (at 8 percent). However, the
level of collective bargaining coverage is high (at 98 percent). This is explained by the
relatively unique process of extension agreements in France whereby collective agree-
ments negotiated by trade unions are extended to cover the vast majority of workers
(including nonmembers).

0 10 20 30 40 50 60 70 80 90 100
Austria
France
Belgium
Sweden
Finland
Iceland
Denmark
Italy
Netherlands
Portugal
Norway
Spain
Slovenia
Argentina
Australia
Germany
Switzerland
Croatia
Cyprus
Brazil
Czech Republic
Slovak Republic
South Africa
Canada
Bulgaria
United Kingdom
Israel
Latvia
Greece
Estonia
Romania
Hungary
New Zealand
Singapore
Japan
Chile
Korea, Republic of
United States of America
Costa Rica
Lithuania
Turkey
Colombia
Philippines

Figure 22.7.  Collective bargaining coverage (2015). From ICTWSS (figures for Australia,
Croatia, Finland, Iceland, Italy, Latvia, Norway, and Switzerland, 2014; figures for Austria, Brazil,
and Bulgaria, 2013; figures for Estonia and Israel, 2012).
 Human Resource Management within a Trade Union Context   497

Collective bargaining coverage is highest among mostly northern European coun-

tries, Austria, France, and Belgium. In contrast, in countries such as the United States,
Indonesia, Lithuania, Turkey, and the Philippines, very few workers are covered by a
collective agreement.
Similar to trends in trade union density, the percentage of workers covered by a col-
lective agreement has fallen across most countries, in a downward decline. The excep-
tion are countries such as the Czech Republic, Finland, New Zealand, Singapore, Spain,
and, in particular, Switzerland, Denmark, and Chile, where collective bargaining cover-
age has increased. Countries such as Austria, Italy, and Korea have maintained the same
level of collective bargaining coverage, while in Australia, Canada, and the United
States, it has slightly declined. Dramatic changes in collective bargaining coverage
occurred in Romania and Greece, where coverage declined by 77 percent over that
period (see Figure 22.8).

Conclusion

The objective of this chapter was to profile trade unions and collective bargaining across
a range of countries. The overriding conclusion is that diversity exists when exploring
trade unions and collective bargaining across countries. For example, we find that trade
unions are strong in northern European countries, but weaker in more liberal market
economies. While differences across countries are evident, we do find some examples of
similar trends—for example, in most countries, trade union density levels are declining
(albeit to varying levels). While it may be argued that trade unions have lost their rele-
vance to employment relations and HRM, this chapter has demonstrated that under-
standing the complexities of trade unions’ organization and roles, both within the
workplace and in society, remains important for HRM scholars and practitioners.
Developments such as globalization, increasing neo-­liberalism, fragmentation of work,
and individualization of the employment relationship have posed numerous challenges
to the trade union movement (Grady & Simms, 2019).
This chapter has focused on the issues related to trade unions and collective bargain-
ing that organizations need to understand and address. For example, in relation to trade
unions, key questions such as the legal arrangements around trade union engagement,
trade union influence, and strength are critical considerations for firms. The level at
which collective bargaining predominantly takes place, the coverage rate and any
­extension procedures, the issues subject to the process, and the legal status of the agree-
ments are also of key concern. This chapter illustrates the diversity of contexts and
arrangements across countries and demonstrates the need for organizations to have a
clear understanding of these issues.
In terms of areas for future research, Collings (2008) notes that international employ-
ment relations is an area that has received less attention compared to international
498   Ryan and Lavelle

–100 –80 –60 –40 –20 0 20

Switzerland
Denmark
Chile
Czech Republic
Finland
New Zealand
Singapore
Spain
Austria
Italy
Korea, Republic of
Australia
Canada
United States of America
Norway
Japan
Sweden
Belgium
Philippines
Turkey
France
Netherlands
Lithuania
Portugal
United Kingdom
Germany
Slovak Republic
Croatia
Bulgaria
Hungary
South Africa
Cyprus
Slovenia
Greece
Romania

Figure 22.8.  Trends in collective bargaining coverage (2004–15). From ICTWSS. Figures for
Australia (2004–14), Austria (2004–13), Bulgaria (2003–13), Chile (2005–15), Croatia (2004–14),
Finland (2004–14), Italy (2005–14), Japan (2005–15), Lithuania (2003–15), New Zealand (2005–15),
Norway (2004–14), the Philippines (2005–15), South Africa (2005–15), Sweden (2005–15), and
Switzerland (2003–14).

HRM. While it is widely acknowledged that comparative research is difficult, particu-

larly with an issue like employment relations, Almond and Connolly (2019) propose the
need for “slow” research strategies to more fully explore employment relations in a com-
parative context. Indeed, this chapter may act as a starting point to identify countries or
themes that are worthy of such slow comparative research.
 Human Resource Management within a Trade Union Context   499

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 section 4

THE
F U NC T IONA L
C ON T E X T A N D
AC T I V I T I E S
 CHAPTER 23

I n di v idua l-L ev el
R ewa r ds a n d
A ppr a isa l
The Influence of Context

Paul Gooderham and Wolfgang Mayrhofer

In this chapter, we address the influence of national context on two closely related
human resource management (HRM) practices, namely, individual-­level rewards and
individual performance appraisals. Not only are these two practices closely connected,
but also various researchers choose to treat them as the primary constituents of a
­common approach to HRM that we label “calculative HRM” (e.g., Gooderham,
Fenton-­O’Creevy, Croucher, & Brookes, 2018; Gooderham, Nordhaug, & Ringdal, 1999).
Why our focus on these two particular practices? As we document, the simple answer is
the centrality accorded to these two practices within both macro- and micro-­level strategic
HRM empirical studies. However, in this chapter, we are arguing that before considering
the impact of individual-­level rewards and appraisal on performance, we need to take a step
back and consider the effect of context on the application of these practices.
Having established the status of individual-­level rewards and appraisal as key ele-
ments of strategic HRM research, we underscore the dominance of studies that have
drawn on data derived from the US national context. Unlike many European national
contexts, in the US context there is a justifiable assumption of firm latitude
(Brewster,  1995), meaning that management can readily introduce individualistic
practices. In contrast, in many European contexts, the use of individual-­level rewards
and appraisal is constrained because management must be responsive to stakeholders
such as labor unions that have collectivistic agendas.
Prior to reviewing a body of research that indicates that national context conditions
the use of calculative HRM, we briefly introduce the differentiation between formal and
informal institutional influences that are present in various institutional perspectives
504   Gooderham and Mayrhofer

(Gooderham, Mayrhofer, & Brewster, 2019), since this will be an important lens for our
analyses with regard to individual rewards and appraisal. In our review of empirical
research of the impact of context on the use of these core calculative HRM practices, we
signal that many studies either have not employed this distinction or have incorporated
one rather than both institutional influences. We then point to recent research that
disentangles informal and formal aspects of national institutions. The evidence suggests
that the latter constitutes the more salient feature when considering the impact of
context on these practices. However, as this research emphasizes, it is important to avoid
any simplistic notion of contextual determinism. Firm latitude also needs to be taken
into account.

The Rise of Individual-­L evel Rewards

and Appraisal as Core Human Resource
Management Practices

As HRM emerged as an academic topic in the mid-­1980s, two now-­classic macro mod-
els of HRM appeared. Both were products of the US context. While in one model the
perspective was firm-­centric (Fombrun, Tichy, & Devanna,  1984), in the other, the
broader national context, including governments and society, figured as an important
influence on HRM (Beer, Spector, Lawrence, Mills, & Walton,  1984). In the former,
HRM promised to deliver strategically driven systems that would boost firm perfor-
mance: In addition to recruitment and training, the core systems of “strategic HRM”
were individual-­level rewards and performance appraisal. In the latter, there was signifi-
cantly greater emphasis on enhancing employee influence.
Just as these models emanated from one specific national context, so did much of the
most influential empirical research on HRM (Brewster, Gooderham, & Mayrhofer,
2016). For the most part, the Fombrun et al. (1984) strategic HRM model was the primary
influence on this US research stream (Brewster et al., 2016). Thus, a substantial proportion
of the most highly cited empirical studies have had as their primary focus the relationship
between firm-­level strategic HRM practices or systems and organizational performance,
not least financial performance (Jackson, Schuler, & Jiang,  2014). Not only has this
firm-­level or macro perspective been at the forefront in terms of research effort, but also
researchers such as Becker and Huselid (1998) and Guest (1997) were explicit that it
should become the core endeavor of HRM research. Individual-­level rewards and
appraisal practices are an essential element of such an approach and it is hardly surprising,
then, that they figure prominently within empirical research targeting the link between
HRM and firm performance. Some of those macro-­level studies have been highly cited
and include, either as single practices or as components of HRM systems, individual-­level
rewards (Arthur,  1994; Batt,  2002; Delaney & Huselid,  1996; MacDuffie,  1995),
 Individual-Level Rewards and Appraisal   505

­ erformance appraisals (e.g., Delery & Doty, 1996; Huselid, Jackson, & Schuler, 1997;
p
Snell & Dean, 1992), or both (e.g., Combs, Liu, Hall, & Ketchen, 2006; Huselid, 1995;
Youndt, Snell, Dean, & Lepak, 1996). These practices came to be viewed as a generic and
fundamental form of HRM, variously labeled “hard” (Legge,  1995) or “calculative”
(Gooderham et al.,  1999). What constitutes such a system of HRM practices, often
referred to as a high-­performance work system, varies: “The managerial practices that
are deemed to constitute [a high-­performance work system] are subject to a confusing
array of definitions and assertions” (Boxall & Macky, 2009 p. 6). Thus, there is no single
agreed-­on or fixed list of HRM practices (Paauwe, 2009).
A more contemporary understanding of individual performance, again US
embedded, views it as a function of ability, motivation, and opportunity (AMO)
(Boxall, 2003). Thus, Appelbaum, Bailey, Berg, and Kalleberg (2000) and Lepak et al.
(Lepak, Liao, Chung, & Harden, 2006) argue that HRM practices, or systems of practices
that are designed to impact employee performance, can be divided into three domains:
first, skill-­enhancing HRM practices are designed to ensure appropriately skilled
employees; second, motivation-­enhancing HRM practices aim at increasing employee
motivation; and third, opportunity-­enhancing practices are implemented to ensure that
employees use their skills and motivation to seek out challenges at work, thereby
achieving organizational objectives (Jiang, Lepak, Hu, & Baer,  2012). As the AMO
approach has evolved, individual-­level rewards and performance appraisals regularly
figure as drivers of individual performance because they affect all three types of
enhancement practices.
For example, Ostroff and Bowen (2000) suggested that employee knowledge and
skills (human capital) can either be acquired by recruiting and selecting employees
with high ability or be developed by formal and informal training. They also identify
performance appraisals and feedback, use of work teams, job enrichment, skill-­based
pay, and internal labor markets as skill-­enhancing practices. Similarly, Delery and
Shaw (2001) viewed staffing, training, and compensation-­related HRM practices as
associated with employees’ level of knowledge, skills, and abilities, as well as their
motivation.
Motivation-­enhancing HRM practices also generally involve performance manage-
ment, rewards, and performance-­based compensation. Thus, Ostroff and Bowen (2000)
noted that employee commitment, intrinsic motivation, and reward motivation are
enhanced by HRM practices such as skill-­based pay, merit-­based pay, organization-­based
pay, and contingent pay. Likewise, Delery and Shaw (2001) viewed compensation-­related
HRM practices as associated with employees’ motivation, but also added training.
Typical of opportunity-­enhancing HRM practices are flexible job design, work teams,
employee involvement, and information sharing (Batt,  2002; Delery & Shaw,  2001;
Kalleberg, Nesheim, & Olsen,  2009). However, Batt (2002) suggested that HRM
incentives such as ongoing training, employment security, high relative pay, and
performance management systems build trust toward the organization and encourage
employees to work toward its long-­term objectives.
506   Gooderham and Mayrhofer

The Universalistic Assumption in US

Research

In their analysis of the most influential HRM studies, Brewster et al. (2016, pp. 182–183)
observed a preponderance of HRM studies that sampled firms exclusively within the
United States of America. Their conclusion was that it was “reasonable to claim that the
dominant research orthodoxy bears the imprint of the USA.” Further, this research ortho-
doxy, with its focus on individual-­level performance rewards and appraisals, tacitly assumes
that its insights and approaches are by and large universalistic; that is, their results are
claimed to be true across a broad variety of national, cultural, and institutional contexts.
The predominance of US-­centric studies often firmly rooted in the universalistic
HRM paradigm raises the question of the cross-­ national generalizability of the
dominant research orthodoxy. At least as salient an issue is the validity of firm-­centric
studies for national contexts where firm latitude is constrained. Based on these
observations, we now turn to the issue of why one should consider context in studies of
individual performance rewards and appraisal that, taken together, are the essence of
calculative HRM.

Context

Conceptualizing context requires defining a theoretical angle. The use of “obvious”

surface phenomena such as size, sector, unemployment rates, and quality of the
educational system is important, but has its limits. Unless we define what these elements
represent in theoretical terms, understanding their importance for HRM will be
difficult. Placing our considerations firmly in the institutional quarter, we will first
briefly address comparative capitalisms as a major theoretical discourse for
conceptualizing context in HRM before pointing toward firm autonomy as a major
conceptual cornerstone for describing and explaining commonalities and differences in
the use of individual-­level performance and appraisal in different contextual settings.

Comparative Capitalisms
Hoffman (1999, p. 351) states:

institutional theory directs attention toward forces that lie beyond the organisational
boundary, in the realm of social processes (Powell & DiMaggio, 1991; Scott, 1995). A
firm’s action is seen not as a choice among an unlimited array of possibilities
determined by purely internal arrangements, but rather as a choice among a
 Individual-Level Rewards and Appraisal   507

narrowly defined set of legitimate options determined by the group of actors

composing the firm’s organisational field (Scott, 1991). The form of this influence is
manifested in institutions: rules, norms, and beliefs that describe reality for the
organisation, explaining what is and what is not, what can be acted upon and what
cannot.

Standard neo-­institutional explanations of management practices and strategies

predict limited diversity among firms that operate in the same industry or organiza-
tional fields within the context of a single society or national economy (Dobbin, Sutton,
Meyer, & Scott, 1993; Powell & DiMaggio, 1991). The field of comparative new institu-
tionalism accepts this insight, but argues that acquiring and maintaining legitimacy is
construed very differently across national settings. Analysts have attempted to link
intraorganizational behavior with politics (Roe,  2003), political systems (Pagano &
Volpin,  2005), or legislation (Botero, Djankov, La Porta, López de Silanes, &
Shleifer,  2003), but the most promising and to date widely used approach in HRM
comprises the synthetic theories developed to include these and other national factors
in explaining the differences between countries. Collectively, they are known as
comparative capitalisms theories (Jackson & Deeg, 2008), with important contributions
from Amable (2003), Thelen (2014), Whitley (1999), and Hall and Soskice (2001). Of
these, comparative HRM researchers have increasingly applied the latter (see Chapter 3
for a discussion of comparative capitalisms as part of institutional approaches).
Varieties of capitalism (VoC) theorizing has established itself as the most influential
comparative institutionalist perspective for explaining variations in the use of HRM
practices across a variety of developed countries (e.g., Farndale, Brewster, Ligthart, &
Poutsma,  2017; Wood, Brewster, & Brookes,  2014). VoC distinguishes two major
varieties of capitalism: the “liberal market” economies (LMEs) of the United States and
the United Kingdom and the “coordinated market” economies (CMEs) of mainland
Europe, with Germany as the prime example. In the former, “top management normally
has unilateral control over the firm, including substantial freedom to hire and fire. Firms
are under no obligation to establish representative bodies for employees such as works
councils; and trade unions are generally less powerful than in CMEs” (Hall &
Soskice,  2004, p. 29). The United States and the United Kingdom are “shareholder
economies” under which private enterprise is about maximizing short-­term profits for
investors rather than seeking any broader harmony of interests. Within this context,
managerial decisions are typically perceived as legitimate to the extent that they align
closely with shareholder interests, maximizing firm profitability. Germany, the classic
example of the CME, is characterized by a considerably greater emphasis on
coordination through nonmarket mechanisms—relational contracting, coordination,
and mutual monitoring through networks—and greater reliance on collaborative rather
than competitive relationships to build firm competence. Firm governance is
characterized by attention to a wider set of stakeholder interests, reinforced by
legislation on employee rights and by financial arrangements that are less reliant on
open capital markets. Firms operating in the latter context are regarded as significantly
508   Gooderham and Mayrhofer

more institutionally constrained than those in the former, in the sense that they operate
within contexts whose legal frameworks and systems of industrial relations constrain
managers’ autonomy in applying market-­ driven or technologically contingent
management practices. Hall and Soskice recognize that several European countries,
including France, Italy, Spain, and Portugal, have somewhat ambiguous positions in
relation to the LME/CME distinction.
It is important to note that in relation to the institutional perspective, VoC is centered
on the formal or “rules” aspect to institutional context, such as the legal protection
shareholders have and collective bargaining rights (Hall & Gingerich, 2004). Further,
these regulatory differences are reflected in other regulatory features of national context,
including employment legislation and industrial relations (Hall & Gingerich,  2004).
Thus, VoC does not capture the informal aspects of the institutional perspective, norms,
and beliefs. To remedy this, one approach has been to include a separate measure of
national culture as a proxy for informal aspects (Gooderham et al., 2018). Finally, one
limitation to VoC is the limited number of countries for which there are VoC measures.
This has prompted some researchers to use, for example, Botero et al.’s (2003)
­cross-­national measure of employment legislation because it spans a greater number of
countries (Gooderham et al., 2018). Nevertheless, the approach is one of comparing and
contrasting LMEs with CMEs.
One important aspect of the VoC theoretical framework is firm autonomy, that is, to
what degree organizations are free in their managerial action, both internally when
applying various managerial measures, for example, rewards and appraisal tools, and
externally when deciding their overall course of action, such as strategic positioning. To
this we turn next.

Firm Autonomy
The theoretical importance of firm autonomy with regard to calculative HRM practices
in general and individual-­level rewards and appraisal in particular did not come by
chance, but must be understood in light of broader societal developments, in particular
in the United States of America. Gooderham et al. (2018) refer to the institutional change
that took place in the 1970s in the United States, when the New Deal employment rela-
tions regime of linking wages to jobs and employee groups dissolved (Weinstein &
Kochan,  1995). Labor unions became increasingly marginalized, while management
and shareholders increased their power. In this, as Weinstein and Kochan (1995, p. 27)
observe, “government played an important role by weakening its enforcement of
labour and employment laws and by allowing (some would say encouraging) a harder
line by management in its resistance to unions.”
This change established a significantly greater degree of firm latitude. As Ferner
(2000) and Ferner et al. (2004) argue, the business system that emerged in the United
States can be understood as a distinctive model of economic organization. It is
characterized by a dominant individualist ethos and a strong antiunion mentality.
 Individual-Level Rewards and Appraisal   509

Overall, pay and performance management became characterized by the innovative use
of performance systems, including individual performance rewards and forced
performance distributions in employee appraisal processes. By way of example, in the
early 1980s the US company General Electric introduced as its core HRM policy the
practice of using performance appraisals to identify and cull the bottom 10 percent of
performers. This degree of differentiation constituted a complete break with what had
been General Electric’s approach to rewarding employees (Gooderham & Nordhaug,
2003). Speaking more generally, Gerhart, Rynes, and Fulmer (2009) estimated that
calculative HRM in the sense of performance-­related pay based on appraisal ratings is a
feature of roughly 90 percent of US organizations.
The firm-­centric Fombrun et al. (1984) model we have discussed, including the
requirement to link human resource policies in general and compensation systems in
particular with wider business strategies via reward and appraisal and improved
methods for monitoring employee development, was therefore a manifestation of the
opportunities provided by this new leeway. Thus, a key managerial assumption that
developed in the United States is that firms have discretion to introduce HRM practices
aligned with their competitive strategies (Tichy, Fombrun, & Devanna, 1984). Similar
institutional changes have been described by Gooderham et al. (1999) in the United
Kingdom during the 1980s during the Thatcher period and by Gooderham, Nordhaug,
and Ringdal (2006) for Australia in 1993 with the introduction of the Industrial
Relations Reform Act. Their work did not observe similar changes for Germany, France,
or Scandinavia (cf. Hall & Gingerich,  2004). This is borne out by Crossland and
Hambrick’s (2011) study that indicates while an assumption of managerial autonomy is
relatively prevalent in the United States, the United Kingdom, and Australia, it is
markedly less common than in many European countries, such as Germany or France.
This notion of the distinctiveness of Europe in terms of limited managerial autonomy
finds significant resonance in the VoC theorizing of Hall and Soskice (2001).

The Impact of Context on Individual

Rewards and Performance Appraisals

As we now review the research on the impact of national context on the use of individual
performance rewards and appraisals, it is important to recognize that early
research efforts did not have available the VoC theoretical lens. Indeed, some of the
early research did not have a specifically institutional theoretical lens. When necessary,
we retrospectively apply this lens to the empirical findings.
Since 1990, the long-­running Cranet project has been a particularly important source
of data for comparative HRM studies and has enabled researchers to examine how HRM
policies and practices vary between countries (Brewster & Hegewisch,  1994; Parry,
Stavrou, & Lazarova, 2013). In our overview of empirical studies of the impact of national
510   Gooderham and Mayrhofer

context on performance rewards and appraisal as calculative HRM practices, because of

the dearth of other multicountry HRM data sets, we draw on research that has made use
of the Cranet project data set. However, before reviewing the most salient Cranet
studies, we present some key findings from other non-­Cranet strands of research.
We start with Hall and Soskice (2001), who point to a number of systematic and
fundamental differences in HRM practices among firms operating in LMEs and CMEs
that are derived from these institutional structures. Thus, for example, whereas in
LMEs substantial pay differentials are observed, even within the same industries, in
CMEs most pay negotiation occurs at the industry level, taking pay negotiation out of
the workplace. In other words, this indicates that LME firms avail themselves of their
opportunity to use individual performance-­related pay. Likewise, whereas in LMEs the
opportunities for employee dismissal are relatively unconstrained, in CMEs a tradition
exists of long-­term labor contracts and substantially greater security against arbitrary
layoffs. The implication is that LME firms employ individual performance appraisals
not just to calculate contingent pay, but also as a means to remove underperforming
employees.
In their review of the individual pay-­for-­performance literature, Gerhart et al. (2009,
p. 258) argue that people with a higher need for achievement prefer jobs where pay is
linked to performance and that “most employees (at least in the US) prefer their pay to
be based in individual rather than group performance.” As a result, US organizations use
pay for performance in an attempt to address turnover and motivation. Sturman et al.
(2012) question the universality of this, arguing that in certain contexts,
­organizations  may decide that there is significantly less need to introduce individual
performance-­related pay. More specifically, Gerhart et al. (2009) speculate that
­individual performance-­related pay is likely to fit better in settings where competition
between individuals is encouraged and cooperation is regarded as relatively unimportant.
In short, the transferability of individual performance-­related pay may be moderated by
informal institutional or cultural factors.
Thus, in relation to Hofstede’s (1980a) cultural dimensions, the pronounced incidence
of individual performance-­related pay in the United States could be ascribed to its
extreme position on the individualism/collectivism dimension. This dimension plots
the degree of preference for a loosely knit social framework in which individuals are
expected to take care of only themselves and their immediate families, as opposed to a
preference for a tightly knit social framework in which individuals can expect their
relatives or members of a particular in-­group to look after them in exchange for loyalty.
Thus, Hofstede (1980b, p. 61) argues that “the Individualist conception [means that] the
relationship between the individual and the organisation is essentially calculative, being
based on enlightened self-­ interest.” Other researchers have also observed the
significance of individualism/collectivism for the distribution of rewards. Hui, Triandis,
and Yee (1991) find that in collectivist societies, there is a preference for rewards to be
distributed equally among group members rather than to be individually targeted.
Smith, Dugan, and Trompenaars (1996, p. 231) argue that in individualistic cultures,
however, individual performance-­ related pay appeals directly to the “utilitarian
 Individual-Level Rewards and Appraisal   511

involvement” aspect of individualism that stresses and links individual responsibility

with recognition.
We turn now to Cranet-­based studies of the impact of context on performance
management and rewards.

Informal Institutions
As we have outlined, elements of national culture are part of the informal institutions
relevant for organizations. In their analysis of variations in a range of HRM practices
among European firms, including pay for performance and focus on individual
performance, Schuler and Rogovsky (1998) employed Hofstede’s four cultural
dimensions. They found that individualism was significantly correlated with firms’ use
of these calculative HRM practices. However, neither power distance nor masculinity
was associated with these practices, while firms in countries with high levels of
uncertainty avoidance were markedly less inclined to use them. Schuler and Rogovsky’s
(1998) results specifically indicated that “individual incentive compensation practices
have a better fit in countries with higher levels of Individualism” (p. 172) and in countries
with low levels of uncertainty avoidance. Although, as Schuler and Rogovsky
acknowledged, their research failed to control for a range of variables such as firm size
and industry, all of which they conceded might explain a certain amount of variance in
the use of these HRM practices, individualism and individual rewards and performance
appraisal do appear to be related.

Informal and Formal Institutions

Like the other studies in this subsection, Gooderham et al.’s (1999) analysis of the impact
of context did not distinguish between formal and informal institutions. Their starting
point was to develop a particular grouping of national HRM contexts based on two
generic HRM dimensions. Their first aim was to examine the degree to which
“calculative” HRM practices—of which individual level rewards and appraisal are key—
are deployed across national contexts. Their second aim was to examine the degree to
which “collaborative” practices such as employee consultation are deployed. Using
Cranet data from six European countries, they tested predictions from institutional and
rational perspectives concerning the degree of adoption of these two sets of HRM
practices. Their findings indicated that institutional determinants, as indicated by the
national embeddedness of firms, have a substantial effect on the application of both
calculative and collaborative HRM. For the purpose of this chapter, we note their
particular findings for the application of the calculative HRM practices, including those
related to individual-­level rewards and performance appraisal. They found that among
UK firms there was a relatively high degree of use of calculative practices, while their use
in firms in Germany and the Scandinavian countries was lower. Firms in France and
512   Gooderham and Mayrhofer

Spain were closer to their UK counterparts. Overall, Gooderham et al. (1999) found that
the country that most resembled the United States in relation to calculative HRM was
the LME country, the United Kingdom. These findings are robust even when controlling
for the impact of rational determinants such as firm size and industry embeddedness.
Thus, it was concluded that national institutional embeddedness plays a far more
important role in determining the use of individual rewards and appraisal than
industrial embeddedness.
Given that US companies make significant use of calculative HRM practices such as
individual-­ level rewards and appraisal, one may expect that US multinational
companies (MNCs) would attempt to apply them in their foreign subsidiaries (Cantwell
et al., 2007). However, institutional theory points to the issue of achieving legitimacy in
the local environment. As institutional distance—in the sense of dissimilarity between
the regulatory, cognitive, and normative institutions of two contexts (Xu &
Shenkar, 2002)—increases, the more problematic transfer of HRM potentially becomes.
This is particularly the case for practices that impinge on wage bargaining and
compensation (Farndale et al.,  2017). Individual-­ level rewards and performance
appraisals are more likely to be subject to local constraining forces than other HRM
practices, such as training and direct information provision. Both VoCs’ measures of
regulatory or formal institutional distance and Hofstede’s (1980b) measures of cultural
or informal institutional distance indicate substantial overall institutional distance
between the United States and many European contexts. As such, one should expect that
subsidiaries of US MNCs in these contexts will experience significant tension between
the need to be globally integrated with the parent company and to be isomorphic with
the local institutional setting (Kostova & Roth, 2002).
Using Cranet data, Gooderham et al. (1998, 2006) explored this tension by examining
the deployment of calculative HRM (primarily individual-­level rewards and appraisal)
by US subsidiaries in the United Kingdom, Ireland, Scandinavia, Germany, and
Australia. Specifically, they addressed the extent to which US MNCs adapt their use of
calculative HRM to the local institutional setting. Controlling for industry and size, they
observed that while the CME locations of Scandinavia and Germany result in a
significant reduction in the use by US MNCs of calculative HRM, their subsidiaries in
these locations deploy calculative HRM to a significantly greater degree than their
domestic counterparts. Thus, US MNCs in these contexts do not passively adapt to the
local institutional setting: They also resist, and in resisting they are sources of innovation.
Gooderham et al. (2006) also observed that in the LME settings of the United Kingdom
and Australia, US MNCs clearly experience no resistance to their deployment of
­calculative HRM. In turn, these findings provide clear support for the notion that US
firms are distinctively prone to using calculative HRM.
Over and above the issue of the degree of power of the MNC in relation to local
institutional actors, the implication is that the degree of global integration should vary
according to the degree to which the local institutional context the subsidiary confronts
differs from the norms of the parent organization. By extension, because these norms
are substantially derived from the parent organization’s own institutional environment,
 Individual-Level Rewards and Appraisal   513

the degree of local adaptation will reflect the degree of divergence between the local
institutional context and the parent institutional context.
In a similar vein and using Cranet data for 1995 and 2000, Poutsma, Ligthart, and
Veersma (2006) examined variations in the use of HRM practices across national
borders. Applying institutional theory, they developed three clusters or bundles of HRM
practices including individual, calculative performance-­ oriented practices. They
observed substantial effects of country-­specific institutions and of the country of origin
of MNCs on the use of practices, which the authors argue clearly support the
institutional duality thesis. It was also reported that foreign-­owned MNCs, especially
US MNCs, appear to exert moderate country-­specific institutional effects on the
diffusion of the three HRM clusters.
A second theme in the Poutsma et al. (2006) study is their analysis of the convergence
and divergence of HRM practices across Europe. Although their data did not permit
firm conclusions as to the extent of diffusion of practices, they found evidence of
directional convergence (Mayrhofer, Brewster, Morley, & Ledolter, 2011) of individual
calculative practices. This means that the use of individual calculative practices
increased in organizations in all countries, but significant diversity between countries
remained. Gooderham and Brewster (2004) reported similar findings. They discerned a
limited degree of convergence to the use of calculative HRM in the sense of
individual-­level rewards and appraisal. However, they emphasized that their findings
also indicated substantial national differences in the use of these practices in Europe,
with, for example, the United Kingdom as very different from Germany. As such,
national institutional contexts had extensive explanatory power for divergence in the
use of these practices.

Formal Institutions
Concerning national convergence, Farndale et al.’s (2017, p. 1076) study arrived at a similar
conclusion for individual-­level performance rewards, labeling it one of “non-­robust
convergence.” However, unlike the studies in the previous subsection, Farndale et al.
employed an operationalization and application of VoC theory. Rather than using
country—which comprises both formal and informal institutional influences—
Farndale et al. employed a measure of exclusively formal institutions.

Formal versus Informal Institutions versus Agency

A set of studies provides additional angles by comparing the relative significance of
formal and informal institutions and by explicitly focusing on organizational and
managerial agency. Brookes, Croucher, Fenton-­O’Creevy, and Gooderham’s (2011)
study is a response to the need to distinguish the relative impact of formal and informal
institutional factors on firms’ use of calculative HRM practices—first and foremost,
514   Gooderham and Mayrhofer

individual-­level rewards and appraisal—to determine their separate analytic power.

Their findings indicated that formal institutional factors have more explanatory power
than informal factors. Thus, they concluded that formal institutional distance from the
United States is more significant than informal institutional distance in determining the
incidence of calculative HRM. The same authors (Gooderham et al., 2018) then further
refined their analysis of the influences on the adoption of individual-­level rewards and
appraisal by including the role of union influence and the role of firm-­level agency.
While they found that both formal institutions in the sense of labor regulations and
union influence had a direct impact on the use of individual-­level rewards and appraisal,
the role of informal institutions was primarily indirect. In other words, formal
institutions and union influence mediated the influence of informal institutions.
Because Gooderham et al. (2018) employed a multilevel analysis, they could also observe
the significant impact of senior manager agency on the adoption of calculative HRM.
They observe that, “regardless of country context, there is considerable variability at the
firm level [meaning that while formal institutions] influence (they) do not entirely
constrain firms’ compensation practices” (Gooderham et al., 2018, p. 22). Thus, this is in
line with Oliver’s (1991) theorizing that firms can exercise strategic agency in active
resistance to institutional constraints.

Conclusion

Individual performance rewards and individual performance appraisals—the core of

calculative HRM—have figured strongly as practices within the most highly cited
studies of HRM. However, these studies are overwhelmingly located within one context,
the United States of America. Comparative institutional theory points to the underlying
assumption within the United States of firm latitude and to the non-­transferability of
this ­assumption to CME Europe. Our review of cross-­national studies of the adoption of
calculative HRM—both Cranet-­ based studies and others—reveals a significant
­influence of context. Recent research suggests that formal institutional influences are of
greater importance than informal influences. This research also underscores that while
context is a substantial constraint, this does not mean that it determines the uptake of
calculative HRM. Regardless of context, managers do have agency.
For managers, our review has two particular implications that go beyond
individual-­level rewards and appraisal practices. The first is that context does matter.
However, rather than viewing context in terms of informal institutional or cultural
distance (e.g., Hofstede, 1980a, 1980b), a more useful analytic approach is to be found in
the VoC literature. An emphasis on formal rather than informal institutional distance
has consequences for international management education. The second implication is
that managers have latitude to incorporate calculative HRM practices such as
individual-­level rewards and appraisal, regardless of context. However, we suggest that
their efforts need to be adapted to and sensitive to the contextual constraints.
 Individual-Level Rewards and Appraisal   515

We would argue that future research should distinguish formal and informal
c­ ontextual influences and integrate this in an overall conceptual frame (see, e.g., the
comparative conceptual framework presented by Gooderham et al., 2019). Further,
to capture firm-­level or managerial influences, the research should employ multi-
level approaches. Particularly this latter ambition involves relatively large data sets
drawn from multiple countries. We view Cranet as being well equipped to carry this
research agenda forward. However, arguably, there is now an even greater need for
qualitative research that reveals how managers understand and respond to institu-
tional constraints and how at least some of them develop firm-­level approaches that
“defy” those constraints.

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 chAPTER 24

H um a n R e sou rce
Dev el opm en t

Noreen Heraty

Learning capacity lies at the heart of sustainable competitive functioning. Ulrich

(1997) describes it simply as the DNA of competitiveness, while the Organisation for
Economic Co-­operation and Development reports that having a well-­skilled workforce
is one of the central supports for prosperity and economic growth, both in the world’s
most advanced economies and in those experiencing rapid development (Organisation
for Economic Co-­operation and Development, 2011). An organization’s ability to create
and share knowledge is a critical determinant of competitive functioning and represents
an essential national competitiveness lever ( Fulmer, Gibbs, & Goldsmith, 2000; Hall &
Soskice, 2001; Lam, 2003; Tregaskis & Heraty, 2018). We are witnessing a renewed global
focus on human resource development (HRD) fueled by an array of demand pressures
associated with competitive market functioning, internationalization, and the
emergence of skill gaps in certain industries and sectors. In addition, speculation about
what the future workplace might look like is casting increasing attention on how to
“future-­proof ” organizational knowledge and skills. Hagel, Schwartz, and Bersin (2017)
describe the future of work as the great global “hot topic” spanning a diverse range of
issues from demographic trends and challenges, through to big data, technology. and
artificial intelligence, to the gig economy and beyond, and with appreciable attention to
factors such as learning, careers, hiring practices, and the use of technology in the
workplace. In this chapter, we start with definitional aspects of learning and
development at the organizational level and a consideration of who the different HRD
stakeholders might be. Trends in the macro context for HRD are then discussed, since
any appreciation of workplace HRD patterns is best understood against the backdrop of
the prevailing environment within which organizations are situated and from which
employees are drawn (Tregaskis & Heraty,2018). We turn then to the organizational-­level
context of HRD in organization and, drawing on data from successive rounds of the
Cranet survey (2004/5, 2009/10, and 2014/15), we take a cursory overview of HRD
investment across the countries surveyed and discuss issues around needs identification,
targeted investment, and common evaluation strategies employed.
522   Heraty

Defining Human Resource Development

Any discussion of HRD should first begin with some clarification regarding what is
meant by the term. In its primary sense, HRD relates to the education of an individual
for the purpose of work. Its roots, therefore, can be said to derive from the
­well-­developed bodies of knowledge associated with learning, education, and training.
Arguably, however, HRD has a broader remit, as well as reach, than individual function-
ing as it seeks to deliver organizational, economic, and social benefits. Table 24.1 pro-
vides some conceptual differentiation between a set of terms that are routinely used
when referring to the learning and development infrastructure that takes place within
workplaces.
Garavan, McCarthy, and Morley (2016) note that, from a global perspective, HRD
can be seen to span nations, regions, communities, and organizations that pursue a
multiplicity of economic and social goals. Global pressures highlight the importance
of economic training to facilitate national competitiveness and encourage the
­delivery of high-­quality learning and development as both a national and an organi-
zational priority. Human resource development offers an integrative mechanism
through which investment in learning, skills development, and broader human
­capital upgrading can contribute to effectiveness at multiple levels. Continuing pres-
sures from technological innovations, changing consumption patterns, new ways of
working, and global value networks are together influencing the types of knowledge
and skills that will be in demand in the early twenty-­first century and into the future.

Identifying Human Resource

Development Stakeholders

Conceptualizing HRD as a multilevel phenomenon that is influenced directly and

indirectly by a variety of interrelated contexts at the societal, national, and organizational
levels requires us to consider who has an “interest” in the outcomes of HRD. Because
HRD can mean different things to different sets of people, it is useful to consider it from
a stakeholder perspective. Freeman (1994, p. 25) defines a stakeholder as any group or
individual who can affect or is affected by the achievement of the firm’s objectives.
Human resource development stakeholders are persons or groups who are directly or
indirectly affected by the outcomes of HRD, as well as those who may have an interest in
HRD and/or the ability to influence its outcome, either positively or negatively. In other
words, various stakeholders have different combinations of power, legitimacy, urgency
(Freeman, Harrison, Wicks, Parmar, & de Colle, 2010; Mitchell, Agle, & Wood, 1997),
and resources that can affect a particular decision or outcome at any given time.
 Human Resource Development   523

Table 24.1.  Terms used for learning and development

Term Description

Education Education is person-­oriented rather than job-­oriented. It refers to the assimilation of

knowledge and understanding that can be far broader than the work context within
which an individual may operate. When we speak of education, we typically refer to
formal programs of study, many of which are accredited, and which generally occur
outside the workplace.
Learning Learning is a process through which individuals assimilate new knowledge and skills
that result in relatively permanent behavioral changes. Learning can be conscious or
unconscious, formal or informal, and requires some element of practice and
experience. Effective learning requires the ability to question habits and methods and
to be prepared to change.
Training Training focuses on improving capability or capacity to perform and thus has a
specific job or vocational purpose. In workplace terms, training refers to the planned
acquisition of knowledge, skills, and abilities considered necessary to perform
effectively in a given role or job. Each training intervention aims to effect some
change in subsequent job performance and therefore requires some form of learning
to occur.
Development Development is a broad concept that is future-­oriented and is concerned with the
growth and enhancement of the individual. In organizational terms, it refers to the
acquisition of skills and abilities that are required for future roles in the organization.
In this way, development can be seen as a vehicle of career enhancement (career
development), for succession planning, for determining managerial potential
(management development), or for reasons of personal development (lifelong
learning).
Competencies Two perspectives on competencies exist. The first is a vocational view that separates
the job into its various component parts to identify the behavioral characteristics
and standards of performance that need to be attained by the job holder. The second
focuses on the nature of the skills and abilities that the individual brings to the job.
Organizations are increasingly adopting competency frameworks to help them to
identify the types of behaviors they wish to promote and to assist the performance
of individuals and organizations. Competency-­based approaches may underpin
learning, training, and/or development interventions.
Organizational This describes a holistic approach to an organization’s learning and development
learning strategies and practices. The organization is viewed as a participative learning
system, which places an emphasis on the exchange of information, reflection, and
individual self-­improvement. It promotes continuous development and improvement,
a willingness to take risks, shared knowledge, and a work system that actively
facilitates learning at work. Work structures and systems are designed to maximize
learning potential. It may also include the development of a knowledge management
infrastructure or system to capture, store, and disseminate explicit forms of
organizational learning and knowledge.
(Continued)
524   Heraty

Table 24.1.  Continued

Term Description

Talent Popularized since 2020, talent management can be variously understood to be a

management strategic approach to succession planning, a broader leveraging of key strengths
and talents of employees within the internal labor pool, or even a reimagining of
human resource management in general with an explicit focus on the link between
business operations (local and global) and people management. Irrespective of the
definition, it recognizes the strategic contribution that employee knowledge and
skills can deliver and initiates sets of practices and opportunities to develop those
who are is considered core or strategic talent within the organization.
Human Human resource development reflects the development of a strategic organizational
resource approach to managing learning and development at work. It advocates the strategic
development linking of learning and development activities to corporate business objectives and a
central role for line managers in developing employees. It refers to learning at the
individual, group, and organizational levels to enhance the effectiveness of human
resource utilization, primarily at the level of the organization, but then escalating up
to economic and societal benefits more generally.

Moreover, these stakeholders have access to different sets of resources, have different
sets of priorities or problems to solve, and may operate on different time horizons.
A stakeholder is classified as being either internal or external to the organization. On
the one hand, internal stakeholders comprise individuals, groups, or actors with a vested
interest (a stake) in the success of an organization. Primary HRD stakeholders would
thus comprise individual employees, line managers, HRM practitioners, units/divisions,
trade unions, or senior managers and perhaps owners/shareholders who have an
interest in the “success” or return on investment of organizational investment in HRD
activities.
External HRD stakeholders, on the other hand, will primarily include individuals,
groups, or institutions/organizations who are involved with or concerned that an
organization is delivering on intended results and meeting its financial objectives. Here,
we can consider how educational and training institutions, economic agencies,
regulatory bodies, and labor market actors will all have a stake in the viability of
organizations, including its HRD investment, because it impacts the infrastructure for
national competitiveness.
Human resource development has traditionally been examined from the individual
stakeholder level of analysis, and understandably the individual at work is the
­primary stakeholder in any HRD process or activity. An individual may have multiple
and varying reasons for engaging in HRD at any point in time but, when understood
from a workplace perspective, the motivations and outcomes of their engagement can be
seen to center around maintaining or extending their human capital or improving their
 Human Resource Development   525

employability within or across defined internal or external labor markets. Net individual
benefits accrue from HRD investment.
However, an individual stakeholder perspective fails to consider the ways in which
HRD is rooted in or significantly influenced by other key internal stakeholders that
operate beyond the individual level of analysis. First, the outcomes of HRD are
experienced not just by the individual. As noted earlier and discussed in further detail
later, knowledgeable and skilled employees represent a highly valuable resource for
organizations. Organizations have both formal and informal structures, policies, and
practices that can facilitate HRD and that determine the nature, scope, and reach of
HRD investment. However, and as we might anticipate, the “added value” could be
calculated quite differently by an employee (improved employability/promotability
arising from increased knowledge, skills, and abilities, perhaps) compared with a senior
manager or shareholder who may be more interested in the financial return on
investment in terms of productivity or financial improvements.
There is also a national and social good attached to HRD and so stakeholders at the
macro level are salient in helping to explain HRD investment decisions. Organizations
are nested within national, social, and economic institutions and structures, which
represent important resource repositories (Lawrence, Leca, & Zilber,  2013). Each
country or territory, through its various governments and institutions, determines the
financial spend on its national education and training infrastructure and the
“subvention” to individuals and organizations by way of tax concessions, grant aid,
subsidies, and so forth. As we move now to consider in more depth the levels of analysis
within which we can understand the centrality of HRD, we can see how this stakeholder
perspective underpins the perceived role and likely investment in HRD.

A Multilevel Perspective on Human

Resource Development

Given that there is a strong policy as well as practice dimension to HRD, a levels of anal-
ysis perspective is useful here. McGuire (2014) identifies three central tenets to HRD
that reflect different levels of analysis: the development and enhancement of human
potential (a micro or individual level), the enhancement of organizational effectiveness
(an organizational level), and overall societal development (a more macro or national
level). Cappelli (2008) similarly proposed that the principles underpinning an orga-
nization’s talent development straddle both the individual and the organizational level
of analysis, as reflected in the hiring or developing of talent according to the business
strategy as an investment; improving the cost-­efficiency of employee development; and
balancing individual and organizational interests in development investment.
Variation in these underlying tenets or principles of HRD will necessarily give rise to
different understandings of the role and value of HRD and the level of attention and
526   Heraty

investment afforded to it. Moreover, it will be reflected in how it is operationalized

and how its contributions are assessed (and by whom). Let us consider each one in
more detail.

Human Resource Development at the

Macro Level

Some thirty years ago, Porter (1990), in his seminal study on the competitiveness of
nations, argued that sustainable competitive advantage requires a national and
concerted commitment to improvement, innovation, and change. Later, Schuler,
Budhwar, and Florkowski (2002) opined that HRD practices would increasingly be used
to help countries become knowledge economies and assist organizations to broaden
their skill bases, facilitate the sharing of tacit knowledge, and enhance the retention of
employees with appropriate skill sets. In the early twenty-­first century, the centrality of
HRD is accepted, as evidenced in rising investment in national infrastructures for HRD,
increasingly well-­ educated and mobile labor, and well-­ established norms of
participation in learning and training in the educational as well as the employment
market.
A nation’s human capital refers to the aggregate stock of competencies, knowledge,
social, and personal attributes embodied in a country that can be leveraged to create
intrinsic and measurable economic value. Investment in human capital is described by
the World Bank (2018) as a central driver of sustainable growth and poverty reduction
and by the World Economic Forum (2019) as one of the most critical factors of
productivity in the coming decade. The potential for HRD to leverage national
competitive capability rests on the presumption that investment in individual learning
can deliver valuable knowledge resources that can then be exploited for competitive
gain. The representation of employee knowledge and skill as valuable human capital
resources is largely attributable to the early work of Prahalad and Hamel (1990) on the
development of core competencies and Barney’s (1991) resource-­based view of the firm,
which calls for investment in particular human resources to yield competitive
advantage. However, it is also evident in broader perspectives relating to, inter alia, insti-
tutional theory and how its regulatory and normative environment shapes organiza-
tional practices (Meyer & Rowan, 1977), resource dependency theory with offsetting
external dependencies through increased internal resource development ( Salancik &
Pfeffer, 1978), and stakeholder theory that identified the ways in which vested interests
seek out and enact different investment options (Freeman,  1984; Friedman &
Miles, 2002).
By way of illustration, particularities of the regulatory environment, including the
legal system governing labor and employment and taxation laws and regimes, shape the
nature of the employment relationship through rights, obligations, and benefits. Human
 Human Resource Development   527

resource development may represent a valuable interest for varying actors and
stakeholders (including trade unions), who may then create different pressures or
opportunities to promote skill development within the labor pool. The quality and
standard of the higher education and continuing education systems impact critical
factors such as basic literacy and numeracy, as well as providing avenues for further
knowledge and skill development (within both the external and the internal labor
markets) and link with employment rates, productivity, and income overall.
The Organisation for Economic Co-­operation and Development provides a useful
illustration of this relationship between macro educational policies, human capital, and
HRD (Figure  24.1) and further charts human capital investment across the range of
Organisation for Economic Co-­operation and Development countries (Figure 24.2).
We can see from Figure 24.1 that, as an embedded activity, investments in human
capital and HRD are shaped by the broader macro context within which they are enacted
and which accounts then for variation in how countries and organizations may approach
the development of individuals and the implementation of HRD in different country
contexts. This HRD context is considered both highly dynamic and inherently complex
(Garavan, McCarthy, & Carbery, 2017), influenced as it is by an array of factors such as
globalization, technological developments, growth, and variation in economies. The
stage of economic development, the strength of the regulatory and institutional
environment, the relative sophistication of the educational and national skill
development systems, and the influence of the industrial relations systems will all help
to account for country-­ level differences in a nation’s human capital profile and
competitiveness indices (Tregaskis & Heraty,  2018). In addition, the landscape of
national skills markets across countries is evolving in response to a range of pressures
arising from technological advances, migration patterns and cross-­border flows of
talent, and national demographic changes including diaspora mobility, all of which

Education policies

Spending on education Spending effectiveness

Other core drivers Human capital

Multifactor productivity
Capital deepening

Per capita income

Employment rate

Figure 24.1.  Education and human capital development.

Adapted from Égert, Botev, and Turner. (2019).
528   Heraty

Enabling environment Human capital Markets Innovation ecosystem

• Pillar 1: Institutions • Pillar 5: Health • Pillar 7: Product • Pillar 11: Business
• Pillar 2: Infrastructure • Pillar 6: Skills market dynamism
• Pillar 3: Information and • Pillar 8: Labor market • Pillar 12: Innovation
communication • Pillar 9: Financial capacity
technology adoption systems
• Pillar 4: Macroeconomic • Pillar 10: Market size
stability

Figure 24.2.  Pillars of national competitiveness.

Adapted from World Economic Forum (2019).

affect the skills and knowledge base of national labor markets at any point in time. Khilji,
Tarique, and Schuler (2015) point to the active involvement of various governmental
and nongovernmental organizations in attracting and developing employees and call
attention to the complexity of the environment within which organizations develop
their talent management systems and individuals make career choices. They describe
how many governments are pursuing policies of strengthening their respective coun-
tries’ stock of human capital through targeted immigration of their highly skilled
nationals (Australia, Canada, China, India, the United Kingdom, and the United
States), while others (South Korea, Taiwan, Malaysia, and Singapore) are upgrading
national capabilities through significant investment in their educational and HRD
infrastructures.
While substantial progress in human capital development has been made globally in
recent years, the World Bank (2018) cautions that significant gaps in human capital
investments have resulted in the world being insufficiently prepared for what lies ahead.
This is echoed by the World Economic Forum (2019), which argues that countries must
improve their talent adaptability to contribute to the creation of well-­functioning labor
markets. It identifies twelve critical pillars that contribute to national competitiveness as
measured by the Global Competitiveness Index and places a premium on factors that
will grow in significance as the fourth industrial revolution gathers pace: human capital,
agility, resilience, and innovation.
Across the 141 countries analyzed in the most recent Global Competitiveness Report
ofthe World Economic Forum (Schwab (2019) reports that countries are failing to invest
sufficiently in productivity-­enhancing investments linked with research and develop-
ment and skills development for the current and future workforces (see Table 24.2). This
remains the case even within those countries that are ranked highest in terms of their
competitiveness. It identifies that the competitive value of a nation’s knowledge base is
built on key government policies designed to attract, grow, develop, and retain the
 Human Resource Development   529

Table 24.2.  Regional performance by pillar

  Human capital Innovation ecosystem

Region in alphabetical order Health Skills Business dynamism Innovation capacity

East Asia and the Pacific 83.3 67.3 66.1 54.0
Eurasia 71.3 66.1 61.9 35.3
Europe and North America 89.1 74.6 68.3 58.1
Latin America and the Caribbean 82.2 58.7 53.8 34.3
Middle East and North Africa 80.8 62.9 58.2 41.3
South Asia 68.4 50.1 57.8 36.3
Sub-­Saharan Africa 50.8 44.3 51.8 29.4

national human capital infrastructure for innovation and competitiveness. Looking

specifically at investment that is directly related to HRD, particularly with respect to
investment in employee skills and building dynamic and innovation capacity (which
have a direct knowledge/skill dimension), it is apparent that there remains considerable
scope for further targeted investment across regions (a total of one hundred is considered
competitive ready/agile).
Garavan et al. (2017) suggest that this global context will inevitably shape (and indeed
challenge) how organizational-­level HRD strategies, policies, and practices are
developed and implemented, the types of learning frameworks that are used, and the
ways in which HRD professionals build social capital and knowledge resources within
and across organizations and indeed countries.

Human Resource Development at the

Organizational Level

Effective HRD is a core means of leveraging competitiveness and delivering sustainable

superior performance to organizations (Tregaskis & Heraty, 2012), wherein perfor-
mance is built on employees acquiring appropriate knowledge, skills, behaviors, and
values in order to be able to master the complex environment in which they work. This
human capital is an intangible asset or quality that is classified as the economic value of a
worker’s experience and skills. This includes assets like education, training, intelligence,
skills, health, and other things that organizations might value, such as loyalty, punctual-
ity, and engagement. Organizations can improve the quality of their human capital by
investing in their labor pool. In this regard, Otoo, Otoo, Abledu, and Bhardwaj (2019)
highlight that equipping employees with additional or new knowledge and skills has
been shown, across several empirical studies, to deliver positive organizational outcomes.
530   Heraty

Percentage of total responses

Organization of the future 12% 88%

Careers and learning 17% 83%

Talent acquisition 19% 81%

Employee experience 21% 79%

Performance management 22% 78%

Leadership 22% 78%

Digital human resources 27% 73%

People analytics 29% 71%

Diversity and inclusion 31% 69%

The augmented workforce 37% 63%

Robotics, cognitive computing, and 60% 40%

artificial intelligence

Not/somewhat important Important/very important

Figure 24.3.  Top ten human capital trends, 2017.

Adapted from Deloitte (2017).

In all cases, investment in HRD aggregates up to improved organizational ­outcomes.

Wang, Lawrence, and Nagarathnam (2018) note that HRD is increasingly identified as a
central concern for world business leaders, as evidenced in the 2017 global human capi-
tal trends survey (see Figure 24.3).
Cohen and Levinthal (1990) described how an organization’s absorptive capacity for
competitiveness is embodied in skilled human resources and accrued through in-­house
learning efforts. Taking up this competitiveness agenda, Crook, Todd, Combs, Woehr,
and Ketchen’s (2011) meta-­analysis found that human capital resources (particularly
firm-­specific human capital) are significantly related to firm performance, though,
under certain circumstances, general human capital could also be a source of
competitive advantage. Specifically, an organization’s human capital is conceptualized
as the levels and types of education, knowledge, skills, ideas, and experience available to
the organization and is, according to Luthans and Youssef (2004), accumulated only
through time, tenure, and organizational-­specific developmental efforts. This embed-
ded nature of human capital is emphasized by both Kogut and Zander (1992, p. 385),
who describe organizational knowledge as socially constructed, and Drucker (1992),
who likens organizations to knowledge communities where knowledge is created,
 Human Resource Development   531

shared, and stored. First mooted by Polanyi (1962), who argued that all forms of learning
exchange are inherently rooted in social relationships, Ployhart and Moliterno (2011)
similarly emphasize that human capital development emerges through the interaction
of employees’ knowledge, skills, abilities, and other resources, while Noe, Clarke, and
Klein (2014) caution that human capital resources should not simply be considered an
aggregation of individual characteristics to the organizational level, but rather are influ-
enced by interactions among individual characteristics and team and organizational-­level
factors. When viewed in this way, HRD cannot be solely limited to the provision of a
number of formal training interventions. Rather, it represents an ongoing process that
spans the individual’s lifelong learning experience within and across organizational
contexts. There is, thus, considerable responsibility on the organization’s human
resource department to ensure that employees are equipped to meet the demands
required of them for this competitiveness agenda.
In 1999, Boud and Garrick (p. 4) cautioned all organizations on the dangers of ignor-
ing workplace learning, arguing that to do so would put their present and future success
at risk. This warning appears to have been heeded, since investments in maximizing the
talents and competencies of employees is recognized in 2020 as a source of sustained
competitive advantage and superior business performance (Al Ariss, Cascio, &
Paauwe, 2014; Collings & Mellahi, 2009; Farndale, Pay, Sparrow, & Scullion, 2014; Kim &
McLean, 2012; McDonnell, Collings, Mellahi, & Schuler, 2017) and of particular signifi-
cance for global organizations (Tymon, Stumpf, & Doh,  2010; Vaiman, Scullion, &
Collings, 2012). Talent management is variously conceptualized in the literature, lead-
ing Cappelli and Keller (2014) to comment that it is increasingly used as an umbrella
term for workforce planning, succession planning, employee development, and
career management or even HRM practices more generally. Gallardo-­Gallardo,
Dries, and González-­Cruz (2013) summarize that talent may be conceived in two dis-
tinct ways in organizations: inclusively or exclusively. The inclusive approach considers
all employees to have strengths and capabilities that can potentially create added value
for the organization. Viewed this way, all employees are included in the organization’s
talent pool. The exclusive approach considers that some employees are disproportion-
ately more valuable to the organization than others, and therefore they alone represent
the talent pool that should be invested in. Segmenting internal labor markets along “tal-
ent” indices can result in different sets of benefits and opportunities for identified core
talent employee groups. This differentiation is not purely academic because the
approach adopted by the organization will determine who is identified to receive HRD
opportunities beyond the training required to perform their current jobs.
Cedefop (2017) argues that maintaining and indeed improving high-­level skills and
workforce competences is essential to ensure that Europe remains competitive and
innovative against increasing global competition, fast-­changing labor market needs,
and demographic challenges. This requires concerted and expanded HRD investment at
the individual level.
532   Heraty

Micro Level: Individual Human

Resource Development

Boud and Garrick (1999), in their detailed review of work-­based learning, highlighted
that learning has moved from the periphery to the center stage in organizations and that
there are few places left for employees at any level who do not continue to learn and
improve their effectiveness throughout their working lives. They further suggested that
there is no place for managers who do not appreciate their own vital role in fostering
workplace learning. Noe et al. (2014) describe how HRD was traditionally conceptualized
as learning and development with discrete sets of (often) mandatory programs and
offerings. Development may include some forms of training, but typically refers to for-
mal education, job experiences, relationships, and personality and skill assessments that
help employees prepare for future jobs or positions.
Evidence from Eurofound (the European Union [EU] agency for the improvement of
living and working conditions) suggests that, across all countries considered, around
90 percent or more of the workforce appears to have benefitted from some type of informal
learning and most workers have engaged in several types of training. Looking at the data
on participation in job-­related HRD activity, it found that (albeit with some exceptions)
the trend across Europe overall is toward greater participation in learning and training
events (Table 24.3). This should not be surprising, particularly since overall participa-
tion rates in education (secondary and tertiary) have been growing with since the 1990s.
Similarly, data from the most recent Eurofound Adult Education Survey (2016),
which measures participation in formal and nonformal education and training, suggest
that, in 2016, just over 45 percent of people in the EU aged twenty-­five to sixty-­four took
part in education and training learning activities. An analysis by age shows that the par-
ticipation of younger persons (aged twenty-­five through thirty-­four) in the EU was
more than 20 percentage points higher than that of older ones (aged fifty-­five through
sixty-­four), while persons with a tertiary-­level education reported higher participation
rates (65.8 percent) than did those having completed at most lower secondary education
(24.0 percent). While this may be as expected, when considered in the context of the
aging global workforce, it raises some concerns about the advisability of limited invest-
ment in such a sizeable proportion of global human capital.

Evidence on Human Resource

Development from the Cranet Survey

Developing human capital requires a considerable and sustained investment in HRD

activity. It is difficult to account for an organization’s investment in HRD since there are
 Human Resource Development   533

Table 24.3.  Employed persons participating in job-­related nonformal

education and training, 2018
Geo/time 2005 2010 2015
European Union, 27 countries (from 2020) 24.4 32.3 37.0
European Union, 28 countries (2013–20) 26.4 34.0 39.0
Belgium 41.0 36.7 47.7
Bulgaria 7.7 9.5 15.9
Czechia 26.8 46.5 52.9
Denmark 36.5 44.4 38.0
Germany 25.3 37.1 41.7
Estonia 29.8 37.2 49.2
Ireland 37.9 42.3 50.9
Greece 13.4 14.0 8.8
Spain 19.2 31.1 32.0
France 24.5 25.2 40.8
Croatia 22.6 21.3 26.1
Italy 17.8 26.5 30.4
Cyprus 19.9 27.9 22.9
Latvia 21.9 29.8 34.1
Lithuania 23.0 24.2 33.8
Luxembourg 36.7 35.1 49.2
Hungary 15.8 26.9 25.5
Malta 35.3 31.8 38.4
Netherlands 31.7 49.1 50.5
Austria 37.5 41.5 43.8
Poland 26.5 33.4 35.5
Portugal 15.3 29.8 26.0
Romania 11.4 19.2 19.2
Slovenia 38.4 48.2 43.2
Slovakia 34.1 36.4 47.2
Finland 52.7 51.6 55.2
Sweden 51.6 49.1 45.4
United Kingdom 39.1 45.7 50.6

many direct and indirect factors that could be taken into account in such a calculation.
Nevertheless, the Cranet survey asked HRM professionals to estimate the percentage of
payroll costs that are allocated to HRD investment each year. Figure 24.4 provides a
broad indication of the spend on HRD activity over a ten-­year period and across three
data collection points: 2004/5, 2009/10, and 2014/15. While it is not appropriate to make
wide assumptions based on the data here, they do suggest that investment in HRD has
been reasonably incremental in most of the countries that responded to the question,
though with limited evidence of large-­scale spending. Context is particularly important
in interpreting any HRD investment because, as argued earlier, organizational-­level
spending can be strongly shaped by national institutional and regulatory human capital
strategies.
534   Heraty

4.2 5
4.17
5.6 4.2 3 2.8 2.59 3
3.875.5 2.5 2.8 3.5 3.7 2.2 4.6 3.7 4.1 5.7 3.5 3.2 4.3 4 4.4
3.3 4.1 2.6
2.8 4 2.9 2.4
4.5 2.5 2.8 4.7 6.3 4 2.4 2.7 3.1 3.4 2.9 3.3 4 3.6 5.8 4.2 4.1 5.9 4.4 3.8 2.8 2.3 4 3.3 3.4 4.3 3.6
1.4 2.2 2 3.4 3.3 3 3.2 3 2.6 2.1

Slovakia
Australia
Austria
Belgium
Brazil
Bulgaria
China
Croatia
Cyprus
Denmark
Estonia
Finland
France
Germany
Greece
Hungary
Iceland
Italy
Indonesia
Israel
Latvia
Lithuania
Netherlands
Norway
Philippines
Romania
Russia
Serbia

S. Africa
Slovenia
Spain

Switzerland
United States
USA
Turkey
Sweden
Spend 2004 Spend 2010 Spend 2014

Figure 24.4.  Percent spending on training and development.

Data from Cranet survey (2004/5, 2009/10, 2014/15).

Identifying Human Resource

Development Needs

The first critical stage in the HRD process involves the identification of learning/train-
ing needs to ensure that learning and developmental activities are targeted where there
is a valid need for them. A comprehensive needs analysis forms the basis for the organi-
zation’s investment in HRD and represents the benchmark against which any return on
investment can be evaluated. In addition to targeting investment on its core needs, the
process of needs analysis helps to generate consensus on and commitment to the
principles of continuous learning and professional development, and the needs identi-
fied feed directly into the design of appropriate HRD activities. Needs analyses at the
individual level tend to form part of the organization’s performance management system
and are typically picked up through a performance appraisal, 360-­degree feedback, or
­self-­appraisal processes.
Data from the 2014/15 Cranet survey found that, across all of the countries surveyed,
around two-­thirds of organizations report that they systematically identify their HRD
needs (see Figure 24.5); the corresponding figure for 2009/10 was 63 percent. For many
organizations, this identification of training and learning needs forms a core part of
their annual performance appraisal systems. However, it must be noted that 31 percent
of respondents suggest that they do not complete a training needs analysis: this has to
lead one to question what decision criteria are used to determine what HRD activities to
engage in. It also raises questions about the strategic value of investment decision where
skills and competency development are not aligned with core organizational priorities
or individual knowledge or skill gaps.
 Human Resource Development   535

31%

69%

Countries that complete TNA

Countries that do not complete TNA

Figure 24.5.  Countries that complete training needs analysis (2014/15).

Data from Cranet (2014/15).

Human Resource Development Activity

There are many approaches to capturing the nature and incidence of HRD at the
individual level, though it is challenging to reflect a true picture since this activity can
encompass formal and informal events that may be incidental and accidental as well
as  scheduled and planned. The Cranet survey collected data on the average days
training received by particular categories of employee each year—as a means of
allowing for comparisons of HRD activity across organizations and countries, as well as
differentiation of activity per occupational employment grouping. For comparative
purposes, three categories of employee group are presented here: manager, professional,
and manual (Figure 24.6).
The data show that professional workers, on average, receive slightly more days of
training per year than do either managers or manual employees. This pattern is consistent
across the ten years of accumulated data. A closer look at the 2014/15 data highlights that,
when aggregated out across the countries surveyed, it is possible to discern a degree of
variation, particularly across global regions of the world (Figure 24.7).
Some of this country variation can be linked with national context, specifically in
relation to a country’s stage of economic development, or a collective commitment to
investment in human capital, and the expansion of vocational education and training
and promotion of lifelong learning. By way of example, Indonesia has recently become
an attractive home for foreign direct investment, and this may be reflected in increased
HRD investment in recent years to raise the national educational profile from its low
base. Human resource development in South Africa varies considerably and is more highly
prioritized in multinational corporations and the public sector and with considerable
investment in managerial and professional competency development, but significantly
536   Heraty

5
DAYS

0
Manager Professional Manual

2004/5 2009/10 2014/15

Figure 24.6.  Average days of training per employee group.

Data from Cranet (2004/5, 2009/10, 2014/15).

Training days per country by worker category (2014/15)

18

16

14

12

10

0
Indonesia

Romania
Australia
Austria
Belgium

China
Brazil

Croatia
Cyprus

Estonia
Finland
France

Greece

Iceland

Israel
Latvia
Lithuania
Netherlands

Philippines

Serbia
Slovakia

Slovenia

Sweden
Switzerland
United Kingdom
United States
Russia

Spain
South Africa
Denmark

Germany

Hungary

Italy

Norway

Turkey

Managers: Days training Professionals: Days training Manual: Days training

Figure 24.7.  Training days per country by worker category (2014/15).

Data from Cranet (2014/15).
 Human Resource Development   537

less so in small and medium-­sized enterprises. Brazil has experienced a degree of

­educational reform since 1996, particularly in terms of its tertiary system, and increas-
ing globalization in the intervening years has seen a prioritizing of HRD investment to
attract increasing inward investment.
Human resource development is not solely limited to the provision of a number of
formal training interventions, however. It is an ongoing process that spans the individu-
al’s lifelong learning experience within the organization. Development is primarily con-
cerned with developing capabilities and skills for future roles within the organization, so
it is closely related to succession planning and ensuring a vibrant internal labor market.
This type of development is variously captured by the literatures on career development
and management development and has been more recently subsumed under the term
talent management.

Assessing the Effectiveness of Human

Resource Development Investment

While difficult to measure, HRD evaluation provides information that is critical for
effective organizational functioning since it demonstrates the impact of any learning,
training, and development investment in relation to both the cost-benefit ratio to the
organization and the value of the improved performance of those who have undertaken
HRD. Lack of evaluation can result in inappropriate interventions that are wasteful of
both financial and human resources.
When respondents to the Cranet survey (2014/15) were asked to indicate whether
they evaluate their HRD investment, just over half of them (52.4 percent) indicated that
they did; the corresponding figure in 2009/10 was 43.6 percent (see Figure 24.8). This
suggests a very low level of evaluation overall and, given the heightened interest in
human capital development and the requirement for greater investment for global,
national, and organizational competitiveness, it does raise questions about the wisdom
of investment without some assessment of whether it is worthwhile. These questions are
strengthened when earlier data suggesting a lack of systematic needs analysis are take
into account.
Figure 24.9 shows the rate of evaluation across the countries surveyed, and it is
apparent here that some countries place considerably more emphasis on evaluation
than do others, with scores of more than 70 percent in some countries and under
30 percent in others.
One of the key challenges for organizations concerns identifying a set of measurable
criteria that can facilitate the effective evaluation of HRD. Evaluation requires some sort
of systematic measurement of established objectives to determine value for money
spent. There is a well-­established hierarchy of evaluation methods available to an
organization that range from reaction, through behavior change immediately and some
 538   Heraty

60%

50%
% reported use of evaluation

40%

30%
52%
44%
20%

10%

0%

Evaluation 2009/10 Evaluation 2014/15

Figure 24.8.  Evaluation of human resource development.

Data from Cranet (2009/10, 2014/15).

90
80
70
60
50
40
30
20
10
0
Finland

South Africa
Australia
Austria
Belgium
Cyprus
Denmark
Estonia

Germany
Greece
Hungary
Iceland
Italy
Israel
Lithuania
Netherlands
Norway
Philippines

Serbia
Slovakia

Slovenia
Sweden
Switzerland
United Kingdom
United States
Turkey
France

Russia

Evaluation 2009/10 Evaluation 2014/15

Figure 24.9.  Evaluation of human resource development, 2009/10 versus 2014/15.

Data from Cranet (2009/10, 2014/15).

months after a learning event, and to some final measure of return on investment. Each
level requires a different evaluation strategy and is seen as a measure of the progressive
transfer and application of HRD content.
When the data are averaged out, it is clear that organizations use more than one
method to evaluate the effectiveness of their HRD interventions, with some involvement
 Human Resource Development   539

13%
Reaction
46%
Line manager
43%
Employee
Return on investment
45%

Figure 24.10.  Averaged use of evaluation methods. Data from Cranet (2014/15).
Note: The data are drawn only from the 54 percent of respondents who indicated that they evaluate their training.

90
Number of Companies

80
70
60
50
40
30
20
10
0
Australia
Austria
Belgium
Brazil
China
Croatia
Cryprus

Estonia
Finland
France

Greece

Iceland

Indonesia
Israel
Latvia
Lithuania
Netherlands

Philippines
Romania
Russia
Serbia
Slovakia
South Africa
Slovenia
Spain
Sweden
Switzerland
United Kingdom
United States
Denmark

Germany

Hungary

Italy

Norway

Turkey
Reaction Line manager Employee Return on investment

Figure 24.11.  Methods of evaluation utilized (2014/15).

Data from Cranet (2014/15).
Source: Adapted from Gunnigle, Heraty, and Morley (2017).
Source: World Economic Forum (2019) (abridged).
Source: Adapted from Eurofound (2019).

of more than one HRD stakeholder type (see Figure 24.10). Just under half of those who
evaluate their HRD activity measure reactions to the learning event (46 percent), which
is probably lower than one might anticipate given that it is a popular and relatively easy
measure of initial participant reaction to the event undertaken. Because it solely mea-
sures reaction and not actual learning or improvement, it is likely of limited value in
terms of assessing the true value of HRD investment. The data suggest that line manag-
ers and employees play an important role in determining the effectiveness or otherwise
of HRD activity where evaluation occurs via input from line managers (45.1 percent)
and the employees themselves (the primary stakeholders, 42.9 percent). However, when
it comes to more strategic evaluation whereby HRD investment is assessed against some
measurable return on investment, it is interesting to see that just a small proportion of
540   Heraty

respondents indicate that this is used to any degree (12.7 percent of those who evaluate
their HRD).
Again, when the data are reported for each country, they show some interesting varia-
tion, mainly with respect to reported use of return on investment (see Figure 24.11).
It should be noted also that the methods of evaluation, and indeed requirement for
evaluation, may be influenced by regulatory requirements rather than simply discre-
tional choice of organizations. If national funding agencies were involved in some
investment, for example, then there may be a particular requirement to monitor or
assess the value added that might drive specific evaluation strategies.

Conclusion

This chapter has sought to provide some discussion on the parameters of global HRD
and highlighted some of the key contextual challenges driving increased emphasis on
HRD investment. Throughout, the broad scope of HRD has been highlighted and a
multilevel perspective adopted to identify and position the key stakeholders who are
involved in any HRD intervention or activity. It is clear that the significance of HRD
extends beyond any individual level of analysis and, increasingly, issues concerned with
developing individual knowledge and skills are of global significance as organizations
and nations strive to develop their competitive human capital base. Moreover, as labor
markets become increasingly diverse and internationally mobile, they present both
opportunities and challenges for individual organizations to meet the global competi-
tiveness agenda. Organizations in turn require greater institutional and regulatory
framework support to facilitate improved human capital development. Beyond this, the
individual, as the primary stakeholder in any HRD effort, looks for opportunities to
develop valuable knowledge and skills that will improve employability and talent devel-
opment. This in turn requires improved organizational opportunity and greater system-
atics to ensure that that HRD efforts are timely, appropriate, and deliver on their
objectives—so that the return on investment accrues to all the key HRD stakeholders and
throughout the micro, meso, and macro contexts. Data from the Cranet surveys indicate
that HRD is a well-­developed organizational activity with, as expected, different levels of
investment and activity evidenced across country contexts. That said, while the value of
HRD and human capital investment is consistently highlighted by global institutions and
agencies and echoed in several international reports, it is not clear whether this is yet
being reflected in augmented strategic practices at the organizational level.

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 CHAPTER 25

W ell-Bei ng i n
I n dustr i a lized
Econom ies a n d th e
Case for Fir ms’
I n v estm en t i n
Empl oy ee L e a r n i ng

Olga Tregaskis

In industrialized economies, wealth creation fails to generate the increases in happiness

for its citizens that it once did (Easterlin, 1974). This has led transnational policy bodies
to call for a stronger emphasis on social metrics such as well-­being (Organisation
for Economic Co-­operation and Development, 2011) as a counterbalance to economic
indicators as a measure of success. This has meant the well-­being of citizens has come
into focus as a factor when examining public policy success (Organisation for Economic
Co-­operation and Development,  2017). In so doing, the well-­being of employees
through employment and skills development has gained greater emphasis in economic
growth strategies (Daniels et al.,  2018). This new performance lens challenges the
­primacy given to financial metrics over social metrics such as health and happiness
and  brings multiple stakeholder interests into play (Beer, Boselie, & Brewster,  2015).
The interconnectedness between policy, organizational, and individual interests in the
­quality of working life and the spillover effects into other aspects of social and commu-
nity life have become more evident. In response, this chapter examines the evidence

Part of the research used in this chapter was support by the ESRC UK Research Council (Grant ES/
N003586/1) Work, Learning and Well-­being programme of the What Works Well-­Being Centre
(https://whatworkswellbeing.org/). We acknowledge the support of our funding partners, administered
through the Economic and Social Research Council.
546   Tregaskis

base for employee learning as a pathway to well-­being because of its capacity to

develop the resources of individuals and organizations to adapt to the changing work
environment.
Demographic changes, global labor market competition, labor market segmentation,
and technology are among the contextual factors having a profound impact on skill
demands and the organization of work. For example, as the population ages, a larger
number of older people rely on smaller numbers of younger workers to support them.
This raises a number of questions, such as How do we organize workplaces to retain
these older workers longer and generate productive intergenerational work spaces?
Older populations have complex and demanding health needs, creating pressures on
public health service provision. How do we ensure protective well-­being capabilities
through healthy working environments to minimize demands on public health services?
The globalization of work and technological advances not only alter skill demands, but
also potentially displace workers from traditional secure economic opportunities (see
discussion in Rodriguez, Johnstone, & Procter, 2017; Findlay & Thompson, 2017). For
example, new technology-­enabled forms of work such as the gig economy have
generated concern for worker rights, pay, and conditions (Stefano,  2016). Taken
together, these changes create important challenges for the quality of our working lives,
an important antecedent of individual and societal well-­being. So we put forward the
case for a renewed focus on employee learning because of its enabling capacity to
support transformative change of the nature required to support individuals,
organizations, and society more widely to cope with the contextual challenges facing the
industrialized economies.

What Is the Relationship between

Learning and Well-­B eing?

Subjective well-­being is defined by the Organisation for Economic Co-­operation and

Development (2013, p. 29) as “all of the various evaluations, positive and negative, that
people make of their lives, and the affective reactions of people to their experiences.” The
psychological sciences underpin this approach to well-­being. While subjective
­well-­being captures how people feel about a wide range of life domains, for example,
family, environment, housing, and health, this chapter concentrates on work-­related
subjective well-­being.
Learning in or for a work context is concerned with both the acquisition and the
application of knowledge, and as such it is about building the capacity of individuals to
meet performance demands in context. While learning may be very narrowly focused
on functional or technical skills, theory frameworks recognize that skilled performance
reflects the mobilization of context-­ specific psychosocial skills (Organisation for
Economic Co-­operation and Development,  2013; Programme for the International
 Well-Being in Industrialized Economies   547

Assessment of Adult Competencies,  2013; Rychen & Salganik, 2003). Learning takes
place in a social context and part of the process of learning the tools, knowledge, and
techniques necessary for skilled performance involves interacting with others. The
social context of learning provides challenges to and reinforcement of our established
cognitive frameworks, practical strategies, values (attitudes), and beliefs about what and
how we perform. As such, the ability of employees to respond creatively, innovatively, or
flexibly relies as much on the employees’ reflexive competences, social skills, and ability
to work with others and to learn from mistakes as it does on their technical knowledge.
Research on employee learning has tended to categorize the process of learning into
two modes: formal and informal. Formal learning tends to relate to planned, highly
structured, and, usually, award-­bearing learning processes such as higher-­education
qualifications, skills, or professional-­based accredited courses. Informal learning is
much more wide-­ranging capturing nonformal training, that is, courses that are not
award bearing; informal development processes such as learning through mentoring,
coaching, or shadowing; or team working and incidental learning that can arise through
experience but is often unplanned or unexpected. There is a long tradition of inquiry
into informal learning through the work of Bandura (1986) on social modeling, K ­ olb
(1984) on experiential learning, Argyris and Schön (1974) on action learning and
organizational learning, and Brown and Duguid (1991) on communities of practice. The
social context of learning comes to the fore in understanding how informal learning
arises. However, these categorizations between informal and formal learning are
somewhat artificial because informal learning most certainly takes place within formal
learning contexts.
Psychological well-­ being is commonly defined in relation to two primary
components, referred to as eudaemonic and hedonic well-­being.

Eudaemonic Well-­Being
This approach draws from psychosocial theories of human behavior that note the
importance that individuals place on performing meaningful activities, having control
over what they do and connection to others around them (Ryff, 1989; Ryff & Keyes, 1995).
In the context of peoples’ working lives, measures frequently used aim to capture the
degree to which, or how, individuals can “flourish,” for example, through autonomy at
work, control over scheduling work tasks, opportunities for growth through formal or
informal learning, mastery, social relations at work, sense of purpose, and achievement
at work.
From this perspective, it is apparent that the experience of learning incorporates
many of the features of eudaemonic well-­being. Thus, the extent to which the process of
learning enables mastery in an area, personal growth, positive relations with others, and
a sense of purpose in what we are doing are likely to amplify an individual’s sense of
well-­being. Building such components into the design of planned, or formal, learning
experiences in the workplace would seem a fundamental component of quality training.
548   Tregaskis

However, we need to remember that individuals may learn informally via role modeling
the behavior of line managers or colleagues, for example. Employees also learn
incidentally or informally through making mistakes or problem solving. The quality of
work and the work environment (in relation to the opportunity it affords individuals to
learn, how learning is rewarded, how learning is utilized, and how tolerant the work
environment is to learning from mistakes) are arguably important antecedents to how
we experience a sense of well-­being.

Hedonic Well-­Being
Hedonic well-­being includes two approaches. One captures how a job makes an
individual feel, which can be positive or negative. Warr, Binl, Parker, and Ingeoglu (2013)
set out a two-­dimensional view of affect capturing (a) the extent of pleasure/displeasure
and (b) the activation or extent of mental energy expended on the feeling. For example,
the feeling of enthusiasm felt about a job captures both a positive emotion and a high
degree of energy. In contrast, feeling tense still expends a high degree of energy but is
less pleasant. Being relaxed expends less mental energy but is pleasant, while feeling sad
is both low energy and unpleasant. Thus, the affect measures aim to capture the intensity
and type of emotion, for example, sadness, happiness, anxiety, or excitement. Because
emotions are dynamic, they are often captured through diary methodologies such as
the experience sampling method or the day reconstruction method. We can see how the
experience of learning in the workplace may stimulate momentary emotions. In
planned learning events, educators often aim to force learners out of their comfort zone,
but in a safe and secure environment, creating supportive conditions for deep learning
that questions our cognitive assumptions or bias about how we understand
­cause-­and-­effect relations in the world. During informal or incidental learning
­episodes, the learner may be left to make sense of their emotional response to learning,
which may be both positive and negative. Here, the capability for those wider psychosocial
skills around reflexivity, learning to learn, learning from others, and seeking support
come to the fore as they help individuals learn from and engage positively with the world
in which they are situated.
An alternative hedonic approach measures how individuals evaluate their feelings
toward work and is most widely examined by asking about job satisfaction. This
evaluative approach to well-­being (Diener, 1984, 1994) is more akin to measuring an
attitude, which has a relatively enduring quality and arguably a stronger predictor of
performance behaviors. This means that organizational research has tended to focus on
job satisfaction measures as predictors of workplace behavior and a key metric
predicting productivity and performance. Hedonic measures of well-­being therefore
reflect a more stable employee attitude, which emerges from how employees make sense
of their work experiences.
Creating working environments that promote eudaemonic well-­being or hedonic
well-­being has thus become an important objective for firms because of the positive
 Well-Being in Industrialized Economies   549

Employee learning
processes and practices

Formal learning Employee

performance
Hedonic Well-being
Eudaemonic well-being
Informal learning

Figure 25.1.  Relationship between employee learning, well-­being, and performance.

association with employee performance behaviors. Learning and training that supports
employees to progress and master their job requirements is often advocated as part of
such supportive work environments and high-­commitment, or high-­performance,
work systems (Appelbaum, Bailey, Berg, & Kalleberg, 2000). However, these approaches
tend to emphasize the formal element of employee learning and downplay the value of
informal or incidental learning. If, instead, we consider how employees learn in the
workplace through a combination of formal and informal learning, we gain a clearer
insight into how learning can potentially support employee performance and the role of
well-­being within this process (see Figure  25.1). Here eudaemonic well-­ being is
construed as an important sense-­making process whereby individuals interpret what
they do by how it delivers joy, fulfillment, and purpose. As such, it is a counter, or
complement, to instrumental or transactional sense-­making. Opportunities to learn
something new in the work environment can support eudaemonic sense-­making,
whether through mastery of new job-­related skills or through improved social networks
or relations at work. In turn, positive eudaemonic sense-­making feeds into a more
positive evaluation of working life and thus greater motivational work effort enhancing
job performance behaviors.
In sum, it is suggested that engaging in learning through the workplace does more
than deliver instrumental technical skills or qualifications for trading in labor market
competitions or increasing technical efficiencies. The formal, informal, or incidental
learning opportunities that are afforded to individuals in the workplace can have an
important impact on how employees make sense of their well-­being in the context of
their working environment, which in turn impacts a range of employee engagement and
workplace productivity measures.
In the sections that follow, we consider the well-­being policy shift that has emerged
internationally in recent years and suggest that it provides an important contextual
backdrop to understanding the role of human resource development strategies at
the  country and organizational levels. We then set out the evidence base on the
­relationship between workplace learning and workplace productivity and conclude
with a consideration of the gaps in our evidence base and research challenges for
the future.
550   Tregaskis

Table 25.1.  Office for National Statistics measures of subjective well-­being

Subjective well-­being dimension Questions

Affect (positive) Overall, how happy did you feel yesterday?

Affect (negative) Overall, how anxious did you feel yesterday?
Evaluative Overall, how satisfied are you with your life?
Purpose Overall, to what extent do you feel the things you do in your
life are worthwhile?

Note: Scale, 0 to 10, with 0 = not at all and 10 = completely.

Well-­B eing as a Challenger

to Economic Measures of
How Well We Are Doing

Industrialized economies have until recently depended largely on gross domestic

product (GDP) as the means of measuring the success of a nation and its progress in
policy goals. However, this is changing as the evidence indicates increased prosperity
is  not necessarily making people happier—Easterlin’s paradox (Easterlin,  1974)—
and policy makers look toward improving well-­being (OECD,  2015; Stiglitz, Sen, &
Fitoussi,  2009; World Happiness Report,  2015). By the late 2000s, the European
Commission on the Measurement of Economic Performance and Social Progress con-
cluded the time had come to “shift emphasis from measuring economic production to
measuring people’s well-­being” (Stiglitz et al.,  2009, p. 6). Thus, political and policy
debate has begun to acknowledge that a focus on GDP as a measure of citizens’ quality of
life is insufficient and has spurred a focus on subjective well-­being as a complementary
measure. In the United Kingdom, the Office for National Statistics has since 2011 incor-
porated four questions into national policy surveys (see, for an overview, Hicks, Tinkler,
& Allin, 2013) that aim to capture affective and evaluative hedonic components of well-­
being alongside a eudaemonic component (Table 25.1). In 2018, the UK Treasury Office
adopted well-­being measures as a means of evaluating the benefits of public policy
expenditure in social policy (HM Treasury, 2018). A summative measure of subjective
well-­being, namely, life satisfaction, has been adopted as one of the common currencies
for measuring well-­being globally by the Organization for Economic Co-­operation and
Development (OECD,  2017).
Key transnational institutional norm makers in establishing alternative social
metrics have been the European Commission through the “GDP and Beyond” project
 Well-Being in Industrialized Economies   551

(European Commission, 2009) and the Organisation for Economic Co-­operation and

Development through their Global Project on measuring the progress of societies
(OECD, 2011). While distilling a complex concept such as well-­being down to a simple
universal metric is seductive in policy circles, it can be very limiting in understanding
the broader contextual causal mechanisms at play in shaping well-­being experiences.
Further, the majority of macro-­level metrics for assessing the wider benefits of learn-
ing remain focused on formal educational metrics and formal learning settings.
The UNESCO Institute for Lifelong Learning (UNESCO, 2016) has provided the
social science and advocacy platform for the role of learning to social advances
across the globe and to the 2030 Agenda for Sustainable Development. A key pillar
across these debates is the role of learning as a pathway to well-­being. An important
development within these debates is that learning is no longer treated as a stand-­
alone priority area, but instead is embedded within health, economic progress, and
inequality priorities. The (re)contextualization of learning within life experiences
and national and transnational governmental goals signals the integral relationship
between building individual learning capacity and sustainable economic and ­cultural
outcomes.
At the policy level, there is considerable variation in the emphasis on adult learn-
ing internationally, which is understandable given the differing human capital
resources and gaps at the national level. For example, sub-­Saharan Africa, Latin
America, and the Caribbean have a policy emphasis on literacy and basic skills,
which are given less priority in central and eastern Europe (UNESCO,  2017),
although worldwide it is estimated that 758 million adults cannot read or write
(UNESCO, 2016). Ethnic minorities, refugees, and adults with disabilities are among
the core groups across all societies that are excluded from or participate at lower rates
in learning opportunities (UNESCO,  2017). Young people are a particular target
group for many countries, particularly those individuals not in education, employ-
ment, or training and those in long-­term unemployment, a key policy concern in
North America and western Europe (UNESCO, 2017).
North American and western European countries, in particular, have responded
most actively to skills challenges since 2009 through introducing a range of legislative
measures to support adult learning. These included a Youth Guarantee Plan in Spain
to increase educational levels of young people not in education or employment and
the Federal Act on Continuing Education adopted in Switzerland. All of these,
UNESCO argues, represent positive political support for learning because of their
role for the health and well-­being of citizens. The percentage of countries investing at
least 6 percent of GDP on education is most extensive for North America and the
western European region and least extensive in central and eastern Europe (see
Table 25.2). However, the percentage of public funding in education, which then is
devoted to adult learning (i.e., postcompulsory education), is estimated to be less than
1 percent for 40 percent of countries, with just over 20 percent of countries spending
more than 4 percent.
552   Tregaskis

Table 25.2.  Percentage of countries where expenditure on education is

6 percent or more of gross domestic product, per region
Number of
Average GDP expenditure % of countries spending countries in
Region for the region (%) at least 6% GDP survey

North America and 5.3 33 27

western Europe
Asia and the Pacific 4.3 26 43
Latin America and the 5.0 26 34
Caribbean
Sub-­Saharan Africa 4.3 25 44
Arab States 4.7 13 16
Central and eastern 4.7 11 19
Europe

Note: GDP, gross domestic product.

Source: UNESCO Institute for Statistics (2016).

International comparisons of learning investment have tended to focus on formal

education or learning outcomes because they are more readily available at the popula-
tion level. This has spurred considerable focus on the value of the relative merits of
vocational or general education. Recent evidence (Hampf & Woessmann, 2016) from
the Programme for the International Assessment of Adult Competencies by the
OECD has demonstrated that individuals who learn and acquire their human capital
(knowledge and skills) through general education may have greater employability
opportunities over the longer term. Vocational education provides young people with
an advantage early in their working lives by transitioning more quickly and success-
fully to and in employment. This study used data from over eighteen thousand males
between the ages of sixteen and sixty-­five from ten countries and importantly con-
trolled for other factors such as age, years of schooling, and numeracy and literacy
skills. The countries were classified in terms of the intensity and extent of their
“­vocationalization” of the education system (Hanushek, Schwerdt, Woessmann, &
Zhang,  2016): nonvocational countries included Ireland, Japan, Korea, Spain, the
United Kingdom, and the United States; apprenticeship countries included Austria,
Denmark, and Germany, with strongly combined school and work-­based programs;
Australia, Finland, France, the Netherlands, Norway, and Sweden with predomi-
nantly school-­based programs; and the Czech Republic with a non-­school-­based
vocational program. There are limitations to the generalizability of such findings
given the all-­male sample, but equally the study is a reminder of the gendered nature
of vocational forms of learning.
There are a number of implications for organizations internationally arising from
these macro-­level debates and statistics. First, there is the need to recognize that
 Well-Being in Industrialized Economies   553

learning needs and priorities differ across the life course. The needs of young adults
entering the labor market are not the same as the needs of those with more experience or
those who have been displaced through technology or industrial structural change.
Second, the provision of learning opportunities can have considerable impact on
addressing inequalities, through inclusion of potentially marginalized groups and sec-
tions of the labor market, from diverse learning backgrounds. For organizations in
emerging industries and experiencing skill shortages, widening the labor pool beyond
traditional groups or skill sets may be essential, but will also require different recruit-
ment channels and skill development interventions. Third, financial investment in adult
learning by the state is low, pushing costs onto individuals and employers. This lack of
state investment only adds to the case for creating mutually beneficial learning spaces
for individuals and organizations, because the productivity costs of not doing so could
be greater.

An Alternative View: Quality of

Working Life

An alternative view is represented within the quality of working life debates. Here the
macro-­level tensions between adopting economic or social metrics in policy domains
were led by sociologists and psychologists in the study of work relations. A social
indicators policy movement in the 1970s led calls for a better assessment of the quality of
peoples’ lives. Grote and Guest (2017) charted the quality of working life movement
from the early work at the Tavistock Institute of Human Relations. Here, the importance
of job redesign came to the fore as a sociotechnical systems approach to connecting the
technological with the social context of work. By the 1960s, quality of working life began
to embrace a multilevel explanation of the value of work by connecting learning and
progression in the work domain with wider social benefits. Walton (1975) set out eight
features of quality of working life (see Grote & Guest, 2017, for an extensive discussion)
that captured opportunities for learning, personal growth, rewards, work–life accom-
modation, work organization, and health and safety at work. These features remain the
underpinnings of what we now deem to be the constellation of job and work processes
and practices that constitute quality work. The role of learning and employee capabili-
ties is integral to notions of quality work, though as an area it receives less attention.
Despite the advances within the academic communities in terms of conceptualizing
the interplay between work and life domains and individual and social benefits of qual-
ity work, policy initiatives, in the United Kingdom at least, were more restricted.
By  ­contrast, the Nordic working life model arguably gained more policy traction
(Alasoini, 2015). Explanations for cross-­country variation in the penetration of quality
of working life principles are found in institutional explanations. For example, Gallie
(2007) suggests that differences in coordinated market economies or inclusive
554   Tregaskis

employment regimes create conditions that are favorable to the adoption of quality
work. By contrast, in liberal market economies such as the United Kingdom or the
United States of America, where intervention in markets or state regulation of the work
domain is limited, transformational change at the workplace level is dependent on
employers making the change voluntarily. Some have argued (Gustavsen, 2011; Kettunen,
2012; Kristensen, 2011) that the Nordic model has successfully integrated quality work
yielding individual, organization, and social benefits because of the social partnership
regime between organized labor, employers, and government.
Thus, in the Nordic model, demand by employers for high skills and continuing
workplace learning is stimulated and reinforced by the productivity gains from
­high-­quality work. The costs and benefits of learning are shared across the social
partners. The United Kingdom, by contrast, has relied on a supply-­led approach to
skills, but it has become apparent that there is a lack of demand for skills by employers
and lack of sufficient quality jobs; and employers often do not effectively utilize the
skills they have in the workforce (Keep, Mayhew, & Payne, 2006). Recent evidence
from the Longitudinal Education Outcomes data indicates that a quarter of gradu-
ates in the United Kingdom are earning below £20,000 a decade after graduation. In
addition, despite mass expansion of higher education in the United Kingdom since
the mid-­1980s (Mason & Rincon-­Aznar,  2015), the Social Mobility Commission’s
(2017) report highlights the widening gap in society and the lack of social mobility.
This has led to debate around the capabilities of employers to create quality job
opportunities, as well as to concern over the leadership capabilities of managers to
utilize the skills available to them.

What Does the Evidence Tell Us about

the Relationship between Workplace
Learning and Workplace Productivity?

There is a strong body of evidence focusing on the organizational benefits of a healthy,

happy workforce and a robust set of evidence showing personal well-­being is important
to productivity and company value (Bryson, Forth, & Stokes,  2015; Edmans,  2012;
Ogbonnaya & Daniels, 2018).
At the organizational level, models of human resource management (HRM) have, in
recent years, focused on social exchange theory explanations, reciprocity in the
employer–employee exchange, and mutually beneficial outcomes (Glover, Tregaskis, &
Butler, 2014; Snape & Redman, 2010) and on the configuration of high-­performance
work practices (Appelbaum et al., 2000; Combs, Liu, Hall, & Ketchen, 2006). Arguably,
at the core of much of this work is the design of jobs to support eudaemonic well-­being
in relation to personal growth, relationships, and purpose, theorized as fostering
 Well-Being in Industrialized Economies   555

employee engagement. High-­ involvement people management processes such as

autonomy, voice, rewards, training, and development are critical to delivering direct
impacts to employee hedonic well-­being (Ogbonnaya, Daniels, Connolly, & Van
Veldhoven, 2017; Tregaskis, Daniels, Glover, Butler, & Meyer,  2013; Wood, Van
Veldhoven, Croon, & de Menezes, 2012). The active learning thesis (Karasek & Theorell,
1990) further suggests that psychologically demanding work and job autonomy provide
the employee with the space for informal learning, giving individuals the opportunity to
learn skills in situ, reinforcing skill utilization and mastery. The opportunity to use skills
and develop skills in situ can thus offset potentially stressful outcomes of demanding
work and enhance employee satisfaction (Boxall, Hutchison, & Wassenaar,  2015;
Morrison, Cordery, Girardi, & Payne, 2005). This in turn provides individuals with the
personal resources or resilience resources to cope with more demanding or stressful
work. However, limiting learning opportunities while emphasizing production and
performance opportunities can damage employee well-­being (Lantz Friedrich, Sjoberg, &
Friedrich, 2016).
The recognized interplay between organizational and individual-­level factors within
the learning–performance relationship, however, remains poorly understood (Van der
Klink, Blonk, Schene, & Van Dijk,  2001). Trying to unpack the causal mechanisms
explaining the beneficial impact of learning to individuals and organizations thus seems
important to advancing multistakeholder and multilevel contextual explanations of
human resource development strategies. To help address this point, systematic review
evidence from intervention studies in field settings is particularly pertinent (Aguinis &
Edwards, 2014; Daniels, 2016). Organizational intervention studies are research designs
that seek to evaluate the impact of the introduction of new organizational processes,
systems, practices, or values. The highest quality intervention work arises from studies
that are longitudinal and thus able to track change over time and/or have a control or
counterfactual group. Many designs will use multiple subjective and objective measures
of change and evaluate the impact of short, immediate, and longer-­term time frames.
Such designs are expensive and time-­consuming, and thus high-­quality evidence is
often limited.
However, recent systematic review evidence has demonstrated the important role of
employee learning processes in explaining this work context–employee performance
relationship (Daniels, Gedikli, Watson, Semkina, & Vaughn,  2017). This review
examined the best quality intervention evidence from across the industrialized
economies. The review showed that training that is instigated to equip employees with
the skills to redesign their own jobs had more robust and consistent evidence of an
impact on improving employee well-­ being and performance than participative
interventions focusing on employee involvement strategies. However, the most robust
and consistent evidence indicated that “system wide approaches, that simultaneously
enhance job design and a range of other management practices and that are focused on
worker welfare” had the greatest beneficial impacts on both employee well-­being and
organizational performance (Daniels et al.,  2017, p. 1189). In these studies, training
556   Tregaskis

support and opportunity to use skills and gain recognition for new skill use were key
motivational drivers in behavior change.
Recent systematic review evidence of workplace training interventions revealed the
significance of contextualizing training to the well-­being skill needs of the learners,
which, in turn, impact not only occupational skills development but also job
performance (Watson, Tregaskis, Gedikli, Vaughn, & Semkina, 2018). This review again
embraces the highest quality intervention studies from across industrialized economies.
Employees in high-­stress occupations (e.g., nursing, health) benefited from varying
forms of resilience training that taught them well-­being skills or coping skills. These
well-­being skills included behavioral responses such as relaxation or cognitive strategies
to reframe stressors and responses. However, the evidence also indicated that where
systemic stressors remained embedded within organizational systems, the effectiveness
of individual resilience strategies was not likely to be sustainable. Training that focused
on professional development through job-­specific skills was found to have a positive
impact on personal mastery in the job and on individual well-­being, indicating that
building professional capabilities increases not only skill effectiveness but also aspects of
employee well-­being.
Much of the evidence base on professional capabilities focused on communication
skills and interpersonal skills because these were fundamental soft skills associated with
job performance in contexts demanding high degrees of empathy and emotional
awareness, for example, health, mental health, and social care. However, some of the
studies reported on effects, particularly on organization-­wide interventions. The lack of
a training effect on well-­being prompted scrutiny of the implementation process,
leading researchers to conclude that a perceived training need or relevant skills gap is an
antecedent of change and increased well-­being. It could also be argued that it is not so
much the absence of a perceived skill gap as a common, or shared, understanding among
the variety of stakeholders about the role of skills and training to addressing the
problem. Thus, training with no perceived or commonly agreed purpose or function to
the organization or employee may result in implementation failures.
Organizational models of HRM are restrained in considering wider societal spillover
effects. One exception is the early work of Beer, Spector, Lawrence, Mills, and Walton
(1984), where their model of HRM explicitly recognized that strategic alignment of
organizational goals required consideration of the external stakeholders. They suggested
that societal well-­being was a factor that ought to be considered alongside organiza-
tional effectiveness and individual well-­being outcomes. Beer and colleagues have since
renewed calls for HRM theorists and practitioners to recognize the multiplicity of
organizational performance measures and definitions (Beer, Eisenstat, Foote, Fredberg, &
Norrgren,  2011). Academic calls for HRM to look beyond narrow organizationally
defined boundaries (Tregaskis & Almond,  2019) and decontextualized explanations
(Beer et al.,  2015) are timely because, in practice, organizational leaders are already
embracing new organizational structures that attempt to integrate services and business
solutions to address multiple stakeholder demands and global grand challenges
(Christina, Dainty, Daniels, Tregaskis, & Waterson, 2017).
 Well-Being in Industrialized Economies   557

Therefore, while much of the HRM literature has asked “What are the organizational
benefits of a healthy happy workforce?” we might also consider the organizational and
societal costs of an unhealthy, unhappy workforce. For example, in the United States of
America, Goh, Pfeffer, and Zenios (2016, p. 609) noted that “in recent years, General
Motors spent more on health care, including providing health insurance, than it did on
steel.” However, what happens when employees are not covered by organizational health
insurance, which is the case for 45 percent of workers in the United States (Kaiser Family
Foundation, 2014)? Here, we are more likely to see a shift in these costs to individuals or
to national welfare systems. In Great Britain, it was estimated that 12.8 million working
days were lost because of absence from stress, anxiety, and depression in 2018–19 (Health
and Safety Executive, 2020. Goh et al.’s (2016) meta-­analysis of studies examining the
impact of workplace stressors (e.g., long hours, shift work, insecure jobs, work–family
conflict, low job control, high demands, low social support) on employee health
­outcomes suggests that workplace-­associated deaths are comparable to those of the
fourth largest causes of death in the United States, namely, cerebrovascular disease.
Moreover, workplace healthcare costs from workplace stressors are on par with those
from diabetes. Further, Goh et al (2016) acknowledge that their models do not take
account of spillover effects (costs) on families or the communities in which these
employees are embedded. Nor did their models take account of the spillover effects on
worker productivity or absenteeism.
Taken together, the evidence base suggests that the opportunity for individuals to
learn in the workplace has not only benefits to organizational competitiveness, but also
wider societal benefits. Further, the theoretical case and empirical evidence base of these
causal links between individual learning and impacts at the organizational (meso) and
societal or community (macro) level are robust. Where our evidence gaps remain is with
respect to the science of effective implementation.

Conclusion

Coupling the learning and well-­being debates has allowed us to consider learning as not
only a mechanism for capability development, but also a space for well-­being. Given the
prior evidence on the association between well-­being and employee performance,
workplace learning has a potentially vital role. Further, treating employee learning as a
holistic process taking place in formal and informal settings requires us to revisit both
the organizational supporting structures around informal learning and the individual
“soft” skills that enable us to maximize learning from informal opportunities.
Taking the first of these points, there is an opportunity for HRM professionals and
strategic leaders to broaden their understanding of organizational-­ level informal
learning support. Mentoring and coaching are processes most frequently considered by
organizations; however, little attention is given to the capabilities of those operating as
mentors or to the leadership capabilities required to facilitate learning in the workplace.
558   Tregaskis

Less attention is focused on how jobs are (re)designed, although this is one of the most
effective ways in which organizations can change employee performance behaviors
(e.g., Christina et al.,  2017). Problem-­focused learning in teams or task forces or
temporary projects are commonplace in most organizations. Yet these spaces are often
not envisaged as learning sites, but rather as hot spots for high-­performance delivery,
where expertise is assumed to exist already rather than being developed in situ.
Therefore, across organizational systems and processes, the learning that is taking place,
or failing to take place, is often overlooked. Conscious consideration of learning through
interaction with colleagues in the workplace, through workplace problem solving and
innovation, and through re-­envisaging the workplace as a space for on-­going learning
opens the opportunity for building quality jobs and quality work organizations. When
we consider the workplace in relation to a space that can facilitate a healthy, happy
workforce, this takes us beyond the consideration of a narrow set of training provisions
for technical competence. Instead, it opens up the significance of learning as a way in
which the organization can generate well-­being as a protective capability. However,
attending to organizational structures alone is insufficient. Seizing learning
opportunities demands a degree of conscious learning effort on the part of the
individual. Skills such as reflexivity, interpersonal relations, and communications are
sometimes referred to as soft skills, social skills, or metacompetencies and are critical to
our ability to adapt in dynamic, complex environments. There is therefore an important
dynamic between the structural context of the organization and employee–manager
agency to create well-­being capabilities at both individual and collective levels. This is a
currently underdeveloped area of study. As our working environments evolve in ways
that are, as yet, unclear, it would seem that such learning dynamics are particularly
pertinent to how we build sustainable workplaces for the future.

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 chapter 26

The Di v ersit y
Con text of H um a n
R esou rce M a nagem en t

Robin Kramar and Denise Mary Jepsen

While the context of human resource management (HRM) varies between industries,
occupations, countries, and over time, the context of diversity has typically referred to
differences in personal characteristics of the workforce. Demographic diversity involves
relationships between individuals with different experiences, skill levels, information,
and contacts or networks. This diversity results in greater creative problem solving and
learning opportunities (Pelled, Eisenhardt, & Xin,  1999), facilitated by access to an
increased variety of information, some of which is derived from external networks.
Demographic diversity has been found to maximize the group’s “capacity for creativity
and effective action” (Reagans & Zuckerman, 2001, p. 512), but the diversity context is
broader than just personal characteristics. The diversity context refers also to differences
in engaging various members of the workforce, with varying family responsibilities,
health, and abilities. Dynamics also influence the diversity context over time, with
technology increasingly enabling workplace diversity opportunities.
These aspects of diversity are reflected in the nature of HRM policies. Such policies
and management programs addressing particular aspects of diversity are not merely
responses to changes in population characteristics, but also reflect context: international,
national, organizational, and personal influences. These influences are evident in
diversity approaches and the character of HRM policies and programs in different
countries. The term diversity management is widely used to include these HRM policies
and programs.
The evolution of diversity management and its desired outcomes are discussed in the
first section of this chapter. The second section briefly discusses diversity management
processes, while the third section presents a number of theories and frameworks around
diversity management and discrimination. The fourth section provides a brief overview
of some variations in HRM approaches to diversity management in different countries.
564   Kramar and Jepsen

The final section shows the variance in how some aspects of diversity are managed
across the globe.

Evolution of Diversity Management

A number of interpretations of the scope of outcomes of managing diversity have been

proposed: They have implications for the processes adopted to achieve diversity and
organizational outcomes. R. R. Thomas (1996) promoted the original view of diversity
management in the United States of America, which viewed the purpose of diversity
management initiatives as to produce competitive advantage for the organization.
Recently, however, outcomes have been interpreted more broadly, as diversity manage-
ment has been viewed as part of an organization’s corporate social responsibility (CSR)
agenda (Emmott & Worman, 2008). In the CSR view, organizations have an obligation
to make decisions and implement actions that enhance the welfare of a range of society
stakeholders, as well as further the organization’s interests (Freeman & Velamuri, 2006),
including as an employer branding strategy. Diversity-­related CSR ratings have been
positively linked to firm reputation among a broad range of stakeholders, such as female
board representation (Bear, Rahman, & Post, 2010).
The notion of managing a heterogeneous workforce consisting of individuals
with  different personal characteristics was brought to prominence in the mid-­1980s
(Thomas, 1996). The United States was predicted to experience a labor shortage in the
year 2000, so it would be imperative for organizations to manage workforces from
diverse backgrounds and with different personal characteristics (Johnston & Packer, 1987).
In addition, it was argued that the process of managing a diverse workforce would be
good for business because it would increase organizational effectiveness, employee
productivity, and morale (Thomas & Ely, 1996, p. 79).
The original approach to employee differences was to frame them broadly, not just
“race, gender, creed, ethnicity,” but also “age, background, education, function and per-
sonality differences” (Thomas, 1996, p. 114). The notion of diversity extended beyond
the relations-­oriented range of personal characteristics to task-­based diversity that
included differences in skills as well as employment terms such as employees, contrac-
tors, and outsourced providers. Relations-­oriented diversity refers to those immutable
characteristics such as gender and age that are associated with social categorization
processes. Task-­oriented diversity refers to informational and skill-­based differences
in personal attributes, including education and position in the organization (Jackson &
Ruderman, 1995). Task-­oriented diversity has been assumed to form the resource base of
an organization and to be associated with elaboration-­based processes. Elaboration-
based processes are defined as “the exchange of information and perspectives among
group members, individual information processing, gaining feedback, and integrating
information and perspectives” (Joshi & Roh, 2009, p. 600).
 The Diversity Context of Human Resource Management   565

Managing diversity has a number of interconnecting dimensions. It has demographic,

economic, and political dimensions and a focus on managing individual differences.
Initially, there was the demographic challenge and focus, then a growing awareness that
diversity included all people, which then developed into a “political” dimension, and
finally an economic dimension that developed around the business case. The emphasis
on these four phases was said to vary over time. However, rather than evolving through
four overlapping phases, as some have suggested (Lorbiecki & Jack, 2000), managing
diversity has always included these four aspects.
Managers’ and employees’ understanding of the nature of diversity management has
evolved over time, however. In Australia, diversity management was initially understood
to refer to policies that managed particular HRM issues, such as a lack of women returning
from maternity leave or resignations resulting from a lack of flexible working arrange-
ments (Australian Human Resources Iinstitute, 2002). This narrow ­understanding of
diversity management reflected a desire to comply with equal employment opportunity
legislation, rather than understanding the business ­advantages of diversity management
(AHRI, 2002). Although there is evidence that more organizations understand the drivers
for diversity management, such as values alignment, social justice, and the business case,
most organizations still consider legal compliance the main reason for a diversity
management program. Table 26.1 provides a framework for the evolution of under-
standing of diversity management and the implications for HRM policy.
Approaches and responses to diversity management have also changed over time.
A model reflecting a positive proactive approach to diversity management in four stages
has been developed. The stages are the problem-­specific stage, the integrated stage, the
culture change stage, and the inclusive workplace stage (Kramar,  2011). This model
demonstrates that as approaches to diversity management evolve, they move beyond a
response to compliance with affirmative action or equal employment opportunity
legislation and from the concept of an organization as a closed system to that of an
open system. The model also shows that the framing of diversity management broadens
from a simple strategic HRM approach to a focus on culture change and then to the
organization as part of an open system that explicitly acknowledges the interconnectedness
of internal and external stakeholders.
When diversity management is framed as an open system involving a variety of
stakeholders, the process of managing diversity is recognized as part of an organization’s
CSR. Social responsibility can be understood as contributing to the welfare of a range of
stakeholders in society and in the organization in both the short and the long term. This
does not preclude financial and competitive advantage outcomes (Porter & Kramer, 2006)
or equity outcomes. It does imply that CSR is a means of improving effectiveness and
profitability for the organization through negotiating the CSR strategy with a variety of
internal and external stakeholders (Thomsen & Lauring, 2008).
Table 26.1 illustrates the differences in the scope of diversity dimensions and the
outcomes of diversity management. It also highlights the implications for the processes
used to achieve diversity and organizational outcomes.
Table 26.1.  Evolution of diversity management characteristics, processes, and policies
Stage 1, problem specific Stage 2, integrated Stage 3, culture change Stage 4, inclusive workplace

Characteristics

Aimed at specific problems that Policies introduced because they are Focus on creating the desired future Aimed at managing internal and
impact the workplace regarded as a way of facilitating the organization external constituents, e.g., community,
Policies are developed to manage the achievement of the organization’s Part of the strategic management social groups
issues of particular demographic objectives planning process Collaborates across cultural and
groups such as women, racial groups, Policies are packaged and are consistent Part of a series of activities designed national boundaries
and people with family responsibilities with each other to build a culture that reflects Incorporates learning from a variety of
organizational values internal and external constituent groups
Policies are not integrated with Policies are reviewed to examine the
strategy extent to which they achieve their
outcomes
Focus on managing differences
between groups
Processes for development

Champions convince HRM professionals have an influential Senior management establishes Internal and external stakeholders
Reactions to external influences role parameters involved in developing parameters of
Share information with other Employees participate through culture and policies to support culture
Identify a business or legal
compliance need organizations feedback and suggestions Global teams
One manager responsible for diversity Employees, line managers, human Proactive in creating a desired future
management resource managers, and senior for the organization and community
Culture surveys managers responsible for diversity Collaboration with community groups,
management e.g., schools
 Policies

Flexible leave Diversity sensitivity training Balanced work–life programs Build teams of people with diverse
Flexible working hours Conflict resolution training Performance management indicators personal and organization-­specific
reflecting actions taken to help people characteristics
Child-­care referral Selection criteria take into account
customer base balance work and other responsibilities Associated with a diverse range of
Elder-­care referral
Celebrate and respect differences in stakeholders, e.g., customers, suppliers
values and customs Policies include community groups and
Explicitly manage unobservable members as organizational stakeholders,
individual characteristics such as e.g., potential employees
values, personality, attitudes, Simultaneously implement policies
religion, education level, contractual providing benefits for a number of
relationship with organization, job groups
tenure

Note: HRM, human resource management.

Sources: Dass & Parker (1999); Gilbert, Stead, & Ivancevich (1999); Ivancevich & Gilbert (2000); Kramar (2011); Mor Barak (2000).
568   Kramar and Jepsen

Managing Diversity: Models of

Diversity Management Processes

Each of the three latter stages of diversity management development identified in

Table  26.1 can be understood in relation to models that reflect the development of
understanding about diversity management characteristics. The three stages of develop-
ment after the reactive approach represent proactive approaches that seek to influence
their environment. These are models that:

• describe diversity management processes that can be used to respond to changing

external conditions such as market and demographic conditions (Cox,  1993;
Golembiewski, 1995; Thomas, 1996);
• focus on change management processes (Allen & Montgomery, 2001; Cox, 2001;
Dass & Parker, 1999; Thomas & Ely, 1996); and
• frame and integrate diversity management in terms of social responsibility require-
ments (Kramar, 2011).

As mentioned earlier, the initial reactive stage referred to the way organizations respond
to affirmative action or equal employment opportunity legislation. Organizations could
do nothing, react to comply with the legislation, or be more proactive and take action to
manage a diverse workforce for the benefit of the organization. The following groups of
models refer to the proactive approach to diversity management (Powell, 1993).
After the early reactive stage, second-­stage models were implicitly based on the
strategic management framework. A strategic management framework describes
processes organizations can use to deal with external and internal environmental
conditions and changes in these conditions. Such a framework has two major features.
First, it can be thought of as a formal and emergent process that facilitates an organiza-
tion to move toward its goals (Quinn, 1978). Second, the framework refers to a situation
where it performs consistently beyond the industry average, that is, to a position of
competitive advantage (Porter, 1985). Others (Cox, 1993; Golembiewski, 1995; Thomas,
1996) assert organizations can achieve a position of competitive advantage by using
the potential of their diverse workforces by changing structures and processes.
Embedded in this approach to diversity management is the resource-­based view of
HRM, which argues for the importance of creating and developing people and cultures
(Barney, 1991; Boxall & Purcell, 2011).
During the third stage of development, diversity management models integrate change
management processes into diversity management programs. These models propose
a  management learning orientation, which enables multiple perspectives to be leveraged
in decision-­making and culture building. These models also propose that the develop-
ment of policies, practices, and processes designed to manage diversity are necessary for
making progress toward a diversity culture. These actions facilitate the use of multiple
 The Diversity Context of Human Resource Management   569

perspectives, the development of interpersonal relationships, and the development of an

openness to change (Dass & Parker, 1999; Thomas & Ely, 1996). Cox (2001) argues
that actions need to be taken in relation to leadership, research and measurement,
education, alignment of human resource systems to the philosophy and vision of the
organization, and follow-­up. An alternative change process was based on Schein’s (1996)
adaptation of Lewin’s (1951) model of organizational change. This process required
organizations to unfreeze their existing vision, practices, and goals; move to a new state
through actions such as mentoring, career development, training, and outreach programs;
and then refreeze using policies such as job descriptions, reward systems, and per-
formance management systems (Allen & Montgomery, 2001). An implied outcome of
these change models is that the change process will contribute to culture change and the
building of a new culture that fosters embracing diversity.
A recent group of diversity management models takes a more comprehensive view of
diversity management. These models are represented in the fourth stage outlined in
Table 26.1. This ecosystems approach is based on an open systems model, rather than
the closed systems proposed by the previous models in stages two and three. This view
acknowledges that organizations are part of, are influenced by, and also influence the
environment in which they operate. This view explicitly acknowledges that organizational
outcomes have an impact on a variety of internal and external stakeholders. According
to this view, diversity management involves incorporating responsibility to the commu-
nity through actions such as educational programs at schools, supporting skill develop-
ment of disadvantaged groups, and recognizing the global nature of business and the
impact of organizational actions on members of a wide range of groups. This view
explicitly acknowledges that diversity management impacts not only economic outcomes,
but also social outcomes. This does not preclude diversity management improving the
effectiveness and profitability of the organization through a social responsibility strategy,
but it proposes that such a strategy involves a variety of internal and external stakeholders
(Thomsen & Lauring, 2008).
Reflecting the impact of context, this fourth-­stage approach also acknowledges that
diversity management initiatives and outcomes are influenced by factors at a number
of levels. The concept and the application of diversity management are not neutral.
They are socially, economically, culturally, and historically constructed. The actions
and outcomes of an organization represent the influence of structural conditions
such as national institutions, laws, beliefs, culture, and levels of education, as well as
organizational policies, actions, and structures, and individual identities, preferences,
power, and social interactions. A model recognizing this requires a more dynamic
and  complex understanding of diversity management. The relational framework iden-
tifies three levels that interact and influence the concept of diversity management:
Those models referred to earlier acknowledge this (Sippola & Smale,  2007; Syed &
Özbilgin, 2009).
This section has shown how understanding of and approaches to diversity and diversity
management have evolved over time. We now shift focus to theories and frameworks of
diversity and diversity management.
570   Kramar and Jepsen

Understanding Diversity: Theories

and Frameworks

A number of theories and frameworks can be applied to understanding diversity and

diversity management in the workplace. As we have seen, there are a variety of ways
in which diversity management is interpreted. These interpretations are informed by
different theoretical perspectives, including strategic human resource management,
the stakeholder approach, social categorization, social identity, and social capital
theories.

Strategic Management and Strategic Human

Resource Management
Strategic management and strategic human resource management frameworks inform
the approach to diversity management developed in the United States of America. These
frameworks focus on achieving organizational outcomes by developing plans and
­policies. The rational planning model of strategic management involves assessing external
and internal environments, identifying goals and issues, and developing plans. When
particular diversity dimensions are identified by an organization, they are deemed to be
significant for the achievement of an organization’s outcomes.
For instance, a workforce age profile, such as a high percentage of older academics in
universities, may indicate that policies need to be developed to ensure those universities
have sufficient capability to provide their services in the future. This could involve poli-
cies to manage and retain older workers or to build younger academics’ capabilities by
attracting high-­performing young graduates and providing development opportunities.
A particular HRM issue could be both a strength and a weakness. Using the previous
example, the high concentration of older academics in universities also suggests a high
stock of organizational and industry wisdom. This wisdom could be used to mentor
younger academics so they develop their capacity to foster learning and undertake
high-­quality research. Human resource management policies could encourage this
behavior through:

• work redesign, so mentoring is included in senior academics’ role descriptions;

• policies providing working arrangements that meet both younger and older
academics’ requirements to perform effectively, for example, flexible working
arrangements; and
• performance indicators that acknowledge the importance of knowledge transfer
from older to younger academics.

The implications of this framework are expressed in the second stage of Table 26.1.
 The Diversity Context of Human Resource Management   571

The Stakeholder Approach

The stakeholder approach claims organizations are dependent on a number of internal
and external stakeholders, each with their own interests. Diversity management
­recognizes these different interests and seeks to manage them. In the case of the US
and Anglo economies, these interests are managed to benefit organization owners.
In  European economies, these differences are also managed for the benefit of the
society and the individual (Avery & Bergsteiner, 2010).
Such a theoretical approach to diversity management requires skills that enable the
expression and understanding of a variety of stakeholder interests and the reconcilia-
tion of these interests. The stakeholder approach provides an opportunity to learn
what different groups need to work effectively and how the needs of the “other” can be
accommodated. A study of the development of “family-­friendly” policies (including
on-­site child-­care centers, flexible working and leave arrangements) in five Australian
organizations revealed the importance of involving a variety of stakeholders in policy
development and implementation. Board members, senior executives, managers, and
some employees needed to be persuaded about the value of the initiatives. In one
organization, a gym was built at the same time as the child-­care center. This was a way of
meeting the needs of one group with family responsibilities, while also doing something
for the “other” (Kramar, 1998a, 1998b). A broad view of the stakeholder approach is
represented in stage four in Table 26.1.

Social Categorization
Social categorization theory informs diversity management by revealing that people
categorize other people into groups. People then behave and treat individuals in
different groups in different ways (Tajfel,  1982). Dickie and Soldan (2008) refer to a
model developed by Dovidio and Hebl (2005), which describes how this social categori-
zation results in discrimination.
Figure 26.1 reveals that social categorization creates intergroup bias using the first
general evaluative bias by classifying people into in-­groups (similar to me) or out-­groups
(different from me). People in the in-­group are treated more favorably than other
people. The second cognitive processing bias influences how people gather information
about others. Individuals tend to retain more positive, detailed information about
­people who are similar to them than they do about other people. Feelings are also
­influenced by the third, general affective bias. According to Dickie and Soldan (2008,
p. 57), “Categorisation based on group membership, rather than social identity, creates
feelings of fear, lower levels of trust, lower interpersonal liking and group cohesion, and
lower identification with and commitment to the group.” However, social categorization
can also result in homogenous groups being higher performers. Within the group, a
sense of shared identity and mutual trust enables a greater capacity for communication
and better levels of coordination (Pfeffer, 1983; Zenger & Lawrence, 1989).
572   Kramar and Jepsen

Evaluative
bias

Sterotyping
Social Information
Discrimination
categorization Processing

Prejudice
Affective
bias

Figure 26.1.  Process of group identification at the individual level. Adapted from Dovidio
and Hebl, (2005, p. 12).

These biases can result in stereotyping and prejudice. Stereotypes tend to be embed-
ded in cultures, have negative connotations, and affect minority groups in society.
Prejudice involves having an opinion about members of a group based on incorrect
information. Forms of prejudice include the so-­called “isms”: racism, sexism, ageism,
and heterosexism.
The outcome of prejudice and stereotyping is discrimination. Discrimination can
be expressed in a number of forms. Direct discrimination is said to occur when
someone is treated less favorably because of a non-­job-­related personal characteris-
tic. Indirect discrimination refers to a situation in which a compulsory requirement
for a job would prevent substantial proportions of particular groups or individuals
from being able to comply. The compulsory requirement would have nothing to do
with the performance of the job. For example, height and weight limits were previ-
ously required in Australian police services. Diversity management is a means of
educating people about the processes leading to discriminatory behavior, increasing
awareness, and learning new skills. A common way of doing this is diversity training
and sensitivity training.
Discrimination, equal employment opportunity, and gender equality legislation have
been enacted in a number of countries to prevent discrimination in organizational
HRM policies. This legislation has resulted in a revision of HRM policies that discrimi-
nate directly or indirectly against particular employees groups.

Social Identity Theory

A broad theory explaining intergroup relations is social identity theory, defined as an
individual’s knowledge that they belong to certain social groups. This membership pro-
vides some emotional and value significance to the individual (Tajfel, 1978). Individuals
identifying with a group results in undertaking activities consistent with the group’s
identity. This can create in-­group favoritism and out-­group discrimination.
 The Diversity Context of Human Resource Management   573

Social Capital
Another approach explaining the dynamics within diverse groups refers to the social
capital created in a group resulting from different perspectives, access to information,
and networks. External networks provide access to information (Coleman,  1990).
People trust each other and the information they receive when these networks are close
or dense (Burt, 2005).
This section has described five theoretical approaches to diversity management
and discrimination. The focus now moves to national and international diversity
management contextual issues.

Influences on Diversity Management:

National and International Levels

The diversity management context influences HRM policies and programs in different
countries. It is rarely possible to export HRM policies from the parent country to the
subsidiary or a joint venture. Legislation, government policies, demographics, religious,
historical, and sociocultural norms, and economic characteristics each influence
HRM and diversity approaches and interpretations. These effects may be apparent
at  national, organizational, and operational levels, as well as group and individual
interactions and perceptions. This section examines general national and international
influences.
The dimensions of diversity recognized in different countries have broadened in recent
years (Singh & Point, 2004). European Union (EU) legislation outlaws discrimination on
the grounds of gender, color, race, religion, disability, and sexual orientation. However,
there are minor differences between countries with respect to scope and provision. In the
United Kingdom, organizations identified a wide range of diversity dimensions, including
beliefs, religion, and sexual orientation, while France focused on cultural aspects of the
workforce. The United Kingdom, Finland, Germany, the Netherlands, Norway, Sweden,
and Switzerland identified gender as a dimension, while age was identified in the United
Kingdom, Sweden, Holland, and Germany.
Diversity management is socially and historically constructed and therefore cultur-
ally bound (Triandis, 1995). At the macro level, countries display different assumptions
about the economy, social arrangements, political frameworks, and culture, which
influence each country’s understanding of diversity management. In countries with
strong principles of social democracy, the state intervenes in the market and other
domains of the economy and society to facilitate a range of outcomes (Yergin &
Stanislaw,  1998). Despite the differences between countries in Europe, organizations
tend to serve a range of stakeholders and to promote social justice, consensus, and
574   Kramar and Jepsen

individual freedom through a range of cooperative arrangements (Avery, 2005). This

contrasts to the approach in the United States, the United Kingdom, and Australia,
where Friedman’s (1970) view that management should serve the “best interests of the
principal (the owner of the business)” is dominant and establishes an economic
rationale for diversity management.
Culture, social arrangements, and legislation (Boxenbaum, 2006; Jonsen, Maznevski,
& Schneider,  2010; Poster,  2008; Triandis,  1995) have also been shown to influence
diversity management in particular countries. For instance, in many European
companies social responsibility was the most common discourse that informed diver-
sity management (Singh & Point, 2004, 2006).
The spread of diversity management to countries outside the United States has
involved a variety of policy responses. A central tenet of the American approach to
diversity management is that it is a strategic business issue; however, Swiss organizations
do not see diversity in this way (Filler, Fengler-­Veith, & Varan, 2006). In countries
such as France, Germany, Sweden, and the United Kingdom, diversity management
is closely aligned with equality at work, antidiscrimination, and equal employment
opportunity legislation (Klarsfeld,  2010). In the early 2000s, Danish organizations
applied the ­concept as CSR, rather than a focus on the business case (Kamp &
Hagedorn-­Rasmussen, 2004). However, more recently diversity management in
Danish organizations has involved CSR discourse, financial performance, and
employee professional development discourse (Boxenbaum,  2006; Boxenbaum &
Battilana, 2005).
The Asian region is characterized by a variety of religions, including Buddhism,
Hinduism, Islam, Christianity, and Judaism. Because the nature of management is
influenced by a country’s religious practices (Chen,  2004), organizational values
need to be congruent with the society (Harzing & Sorge, 2003). Diversity manage-
ment practices are informed by religious and cultural factors, which influence
­perceptions of appropriate roles for men and women (micro level), the implementa-
tion of HRM policies (meso level), and institutional and legislative arrangements
(macro level).
Industrial and occupational segregation and underrepresentation of women in
­positions of power and authority are widespread in Asian (Ozbilgin & Syed, 2011) and
African (Hanappi-­Egger & Ukur,  2011) countries. A link, not necessarily causal, has
been drawn between the gender gap and economic performance because countries are
not using the capabilities of the female half of their population to the extent that they
might (World Economic Forum, 2008). Muslim majority countries in the Asian region
vary in their interpretation of religion, and in countries such as Pakistan where the
interpretation is narrow and patriarchal traditions are strong, women’s position in
the  labor market and society is particularly poor (Ali,  2011). In some countries, the
expectations of Islamic conditions for female employment and behavior are stricter
than for men, so a diversity policy seeking to promote sex equality might not be well
received or implemented (Syed, Ali, & Winstanley, 2005). Although there are forty-­two
 The Diversity Context of Human Resource Management   575

Table 26.2.  The number and reach of multinationals (1970 to 2008)

Number of parent
Year corporations Number of affiliates Employment in foreign affiliates (‘000s)

1970 7,000 N/A N/A

1990 36,000 174,900 24,470
2000 63,312 821,818 45,587
2007 78,817 794,894 80,396
2008 82,053 807,363 77,386

Source: Donnelly & Dowling (2010, p. 70).

tribes with varying cultural norms in Kenya, women, individuals with disabilities,
and nonheterosexual persons are regarded as inferior and denied access to favorable
employment opportunities and education (Hanappi-­Egger & Ukur,  2011). In these
countries, the meaning of diversity management has little to do with equality.
Economic globalization has encouraged interest in diversity management. There has
been an explosion in the number of multinational organizations operating in different
countries, the number of affiliates, and employment in foreign affiliates, as shown in
Table  26.2. Consequently, organizations have workforces with a variety of cultural,
religious, and ethnic differences. Organizations also have customers, subcontractors,
and global teams from diverse cultures. To operate effectively, management needs to
understand the implication of these differences for managing their workforce, teams,
and subcontractors and for dealing with customers.
Diversity is perceived by global organizations, including multinational corporations
(MNCs), as an important or very important issue (Dunavant & Heiss, 2005). However,
diversity management in MNCs is usually based on “the ethnocentric assumption that
domestic definitions and targets are appropriate abroad” (Nishii & Özbilgin,  2007,
p. 1883). Diversity management programs are exported from the parent head office to
subsidiaries, which are rarely involved in planning for managing diversity in their
country (Dunavant & Heiss, 2005; Nishii & Özbilgin, 2007; Süß & Kleiner, 2008).
There are exceptions to this approach, such as the Finnish MNC TRANSCO, which
has a centralized global diversity management philosophy but at the same time is sensi-
tive to the variety of diversity issues in different countries (Sippola & Smale, 2007).
This diversity management approach reflects the MNC’s structure. The Finnish MNC
provides clear philosophies and goals for organizational performance, but simultaneously
provides subsidiaries with scope to account for local conditions and opportunities
(Perlmutter, 1969).
The previous discussion highlights that recognition of population, workforce, and
household diversity influences HRM practices. To provide an overview of HRM
practices in diversity management, the next section examines global variations in the
use of specific HRM practices addressing workplace diversity.
576   Kramar and Jepsen

Diversity in Diversity Management:

Recruitment Action Programs and
Flexible Work Arrangements

Many organizations use flexible work arrangements or action programs, or both, to

manage or shape their diverse workforces. Flexible work arrangements are HRM
responses to the needs of a diverse workforce, while action programs are used to target
particular parts of the HRM cycle for specific minority groups. Recruitment action
programs, for example, target women and younger, older, or disabled workers to
encourage applications or improve the quality of those applications. An analysis of the
Cranet international survey of HRM practices for the 2015/16 period reveals the extent
to which organizational participation in recruitment action programs and flexible work
arrangements range from one country to another. The Cranet results revealed that
women are targeted for recruitment in an average of 14 percent of employers in all
thirty-­five countries, the highest being 52 percent of South African respondent
organizations compared with less than 4 percent of respondent organizations who have
women’s recruitment action programs in Estonia and Norway, probably because the
legislation and the position of women are already more favorable in those countries.
Younger workers, those under the age of twenty-­five, are targeted for recruitment in an
average of 29 percent of all countries, with a high of 62 percent of Indonesian
respondents compared to less than 5 percent of responding organizations in Latvia.
Recruitment programs for older workers, aged fifty and older, are reported in an average
of 12 percent of all countries, with a high of 39 percent in France compared to less
than 3 percent in Italy and Estonia. Finally, people with disabilities were targeted for
recruitment in an average of 23 percent in all countries, with a high of 70 percent
being reported by French respondents compared to less than 5 percent in Lithuania,
Latvia, and Estonia.
Similar variance is seen in Cranet data on the use of flexible work arrangements,
where respondents indicated the approximate proportion of employees who are on
various working arrangements. Teleworking, where employees are linked electronically
from home to a fixed workplace, is used by less than 10 percent of employees, with the
highest use reported in Belgium, the Netherlands, Denmark, and China and the lowest
in Brazil, Cyprus, and Turkey. While many countries have no home-­based work, even the
most home-­based work is available to less than 5 percent of employees in the highest
users in Belgium, Slovakia, and the United Kingdom, while the lowest users are in
Norway, Croatia, Italy, Latvia, and Russia. A compressed working week, where employees
work some longer days and take a day or part of a day off with the time accrued (e.g., a
four-­day week or a nine-­day fortnight), is used by less than 10 percent of employees,
with the highest use in the Philippines and United States and the lowest use in Norway,
France, Italy, and Serbia. Part-­time work is more available, with around 11 to 15 percent
 The Diversity Context of Human Resource Management   577

or more of organizations using it in the high-­ use countries of Switzerland, the

Netherlands, Belgium, Austria, and France and the lowest use in Serbia, Croatia, and
Indonesia. Flexi-­time, or working a set number of hours within agreed limits, is the most
frequently reported of all flexible work arrangements, with a high use of 20–50 percent
of organizations using it in Norway, Germany, and Austria, but little use in Romania,
Greece, and Italy. Finally, annual hours contracts for employees who work a certain
number of hours over the whole year, with some flexibility about when those hours are
worked, is used by up to 15 percent of French, Indonesian, and Israeli organizations, but
not in Romania, Greece, Italy, and Russia.
There are two key observations from these findings. The first is regarding the lack of a
simple explanatory pattern for these differences in the provision of action programs and
flexible work arrangements. Differences in culture, regional, or national characteristics
do not seem to explain the variations. The second key observation is the low overall rate
for most of the practices and programs. Although there are some countries with strong
diversity practices and programs, we were surprised to see so many so-­called advanced
countries with very low levels of implementation, use, or offering of recruitment
action programs.
Possible reasons for a relatively low uptake of these HRM practices include positive
as well as negative reasons. On the one hand, some countries may have a well-­balanced
and diverse workforce and additional HRM practices to encourage diversity are not
required. On the other hand, managing a diverse workforce takes into account employer
and employee needs. In some countries, employers might be able to secure the labor
they need without accommodating employee needs, or major industries may not be
suitable for flexible work arrangements or action programs that target particular
workforce sectors. It is possible, too, that action plans for recruitment could be regarded
as positive discrimination and not be consistent with the principle of selection based
on merit.
However, it is more likely that the variation in the uptake of the HRM practices from
country to country is a reflection of the conditions in each country. Each country varies
on the dimensions referred to earlier in this chapter, including different age, religious,
and sex balances. Each country has different ways of working, different employment
laws, including requirements for flexible working arrangements and antidiscrimination
legislation, and different cultural expectations of its workforce.

Conclusion

Detailed studies are needed on many aspects of these results to further understand the
reasons behind these variations. A recent study incorporating national culture into an
understanding of how flexible work arrangements impact absenteeism and turnover
(Peretz, Fried, & Levi, 2018) is an example of a more complete and detailed analysis, such
578   Kramar and Jepsen

as controlling for the existence of national antidiscrimination legislation. Demographic

shifts will continue to create or heighten workforce challenges, such as the large number of
mature workers in many countries and workforce elder-­care programs (Cheng, Jepsen, &
Wang, 2020). Researchers are encouraged to seek out explanatory relationships with, for
example, the average working age of the populations, the percentage of the workforce
under the age of twenty-­five or over sixty, or the degree of religious diversity in each
country. Further, trends may emerge if these analyses were conducted over time to see
how the use or implementation of the various HRM practices has changed in different
countries.
It is apparent that organizations are aware of the term diversity management as a
means of managing a diverse workforce context. However, we conclude that beyond a
dictionary definition, there is no single meaning or common understanding of diversity,
diversity initiatives, diversity management, or the HRM policies that constitute diversity
management. Instead, the emergence of a full range of HRM policies and programs
labeled as diversity reflects their local diversity context. We have shown how national
factors such as culture and legislation influence the nature of diversity management
initiatives. These national factors need to be understood for HRM policies to be effectively
developed and implemented to manage a diverse workforce. These understandings are
particularly important for global organizations operating in different countries. Further,
because there appears to be no consistent interpretation or practice of diversity
­management across geographic regions, caution should be used in any attempts to
group countries into geographic or other categories.
In many respects, diversity management has been interpreted and linked to
“equality in employment.” However, diversity management is not a unified process.
In some organizations, diversity management is integrated into the strategic management
and strategic HRM framework, while other broader approaches include diversity man-
agement in an inclusive, social responsibility agenda. The dimensions of diversity are
evolving with the way work is accomplished and the location where work is done.
Not only is diversity management concerned with effectively managing different
personal characteristics of workers, but also it will no doubt continue to evolve to
acknowledge and address the challenges posed by a global workforce, ever-­increasing
complex technologies, and intergenerational workforces.

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 chapter 27

H um a n R esou rce
M a nagem en t
Ou tsou rci ng

Mila Lazarova and Astrid Reichel

Outsourcing is the process of transferring one or more of an organization’s business

processes to an outside service provider or a vendor. Accordingly, human resource man-
agement (HRM) outsourcing (HRO) involves contracting out activities traditionally
performed by the organization’s HRM department to an outside organization (Society
for Human Resource Management, 2004). Human resource management outsourcing
is a well-­researched area within HRM. The scientific discourse has evolved around ante-
cedents of HRO and HRO-­related outcomes and HRO tends to be viewed in a positive
light. Both research and practice maintain that HRO reduces HRM costs and allows
HRM departments to take over core, strategic HRM activities instead of “wasting” their
time with (outsourced) administrative tasks. Empirical evidence suggests a small positive
effect of HRO on company performance and mixed effects for HRO implementation on
outcomes related to the functioning of HRM departments. Overall, these findings point
to complex relationships between HRO and motivation, structural variables, and favorable
or undesirable effects. For better understanding of these relationships, a differentiation
between outsourcing activities in various HRM subfunctions appears to be a promising
approach given that a number of findings (e.g., Reichel & Lazarova, 2013; Sheehan, 2009)
point to systematic differences in motivation and outcomes between HRO in different
areas of HRM.
While the majority of practice-­oriented and scholarly literature is optimistic about
HRO, there is no consensus regarding the extent to which organizations implement HRO.
Consulting companies, vendors of human resource (HR) services, and the popular press
report very high levels and continuous growth of HRO implementation. Academic
research overall has been more cautious in its assessment of both implementation and
alleged growth of HRO and reports a broad range of descriptive statistics. The variety in
these numbers is partly driven by the predominance of single-­country studies, often
584   Lazarova and Reichel

in combination with targeted rather than representative national company samples. In

addition, most studies do not differentiate between levels of outsourcing but rely on
yes-­or-­no answers. Longitudinal or quasi-­longitudinal studies investigating trends of
HRO implementation are by and large missing.
This chapter will provide an overview of the current literature on HRO and will examine
issues such as the theoretical foundations of outsourcing, outsourcing of different types
of HRM functions, factors that influence organizations to outsource, and outcomes of
HRO. We will present empirical data from a comparative HRM study on the extent of
outsourcing to give further insight into the contested question of how widespread
HRO really is. In the discussion section we will sum up the central findings concerning
why companies outsource and the effects they expect from HRO, how prevalent this
phenomenon is, and, finally, we suggest future directions for HRO research.

Why Do Companies Outsource?

Empirical Findings
The spread of HRO has been attributed to many reasons, most notably the overwhelming
demand to decrease HRM costs. A close second is technological change, which has allowed
for alternative service delivery options (Adler, 2003; Cooke, Shen, & McBride, 2005;
Ordanini & Silvestri,  2008; Woodall, Scott-­ Jackson, Newham, & Gurney,  2009).
Organizations have been advised to consider outsourcing HRM activities because HRO
vendors are in a position to not only provide cost savings but also provide consistent
service of higher-­quality, specialized expertise and/or access to specialized technology,
reduce liability and risk, ensure compliance with relevant labor regulations, and allow
more flexibility and responsiveness. HRO can enable decentralized structures that support
innovation and can bring fresh ideas into the organization (Adler, 2003; Belcourt, 2006;
Cooke et al., 2005; Galanaki, Bourantas, & Papalexandris, 2008; Greer, Youngblood, &
Gray, 1999; Klaas, McClendon, & Gainey, 1999; Patel, Budhwar, Witzemann, & Katou, 2017;
Shaw & Fairhurst, 1997).
Another core argument in the literature is that outsourcing can help HRM depart-
ments in organizations shed their administrative responsibilities and become strategic
partners. They can develop deep knowledge of the business, organizational design,
organizational change, analytics, intervention, and so on, and can work with top man-
agement to “assess, diagnose, and develop the assignment of the organization with
strategy and aspirational values” (Beer, 1997) (see also Adler, 2003; Cooke et al., 2005;
Ordanini & Silvestri, 2008; Shen, 2005). Thus, instead of laboring over administrative
minutia, in-­house HRM specialists can focus on strategic issues that contribute to the
organizational competitive advantage. The latter point has been much debated in the
literature (e.g., Delmotte & Sels, 2008) and we will return to it later in the chapter.
 Human Resource Management Outsourcing   585

Research has examined a multitude of specific HRO antecedents, such as size of

the firm (Sheehan,  2009; Sheehan & Cooper,  2011; Teitsdóttir & Edvardsson,  2015),
or­gan­i­za­tional sector and ownership (Sheehan, 2009), industry (Klaas, McClendon, &
Gainey, 2001), availability of service providers, in-­house investment and expertise in a
specific HRM function (Galanaki et al., 2008; Nguyen & Chang, 2017), outsourcing by
competitors (Klaas et al.,  2001; Teitsdóttir & Edvardsson,  2015), internal resource
adequacy, relational capabilities of the service provider, strategic involvement of the
HRM personnel (Nguyen & Chang, 2017; Ordanini & Silvestri, 2008), organizational
strategy (Abdul-­Halim, Che-­Ha, & Geare,  2009; Abdul-­Halim, Che-­Ha, Geare, &
Ramayah, 2016), idiosyncratic approaches to managing HRM (Klaas et al., 2001), uncer-
tainty about the firm’s demand for labor (Klaas et al.,  2001), and the firm’s product
(Nguyen & Chang, 2017).
Beyond looking at specific factors predicting HRO, Alewell, Hauff, Thommes, &
Weiland (2009) discussed the specific triggers of HRO decisions (e.g., organizational
changes, introductions of new HRM policies). Recent research has also examined
whether companies are more likely to outsource HRM changes during times of eco-
nomic crisis. Looking at companies in Iceland, which went through major economic
upheaval in 2008–11, Teitsdóttir and Edvardsson (2015) found evidence that while the
overall number of firms engaging in HRO did not increase, firms that were already
outsourcing expanded their HRO activities, most frequently citing cost reduction and
flexibility as key drivers.

Theoretical Background
Mirroring the body of research on outsourcing other parts of the production and service
delivery process, research on HRO rests on a theoretical basis provided by several theories,
notably, transaction cost economics and the resource-­based view of the firm (Butler &
Callahan,  2014; Cooke et al.,  2005; Dickmann & Tyson,  2005; Espino-­Rodriguez &
Padron-­Robaina,  2006; Gilley, Greer, & Rasheed,  2002; Glaister,  2014; Klaas et al.,
1999, 2001; Patel et al., 2017; Sheehan & Cooper, 2011; Szierbowski-­Seibel & Kabst, 2018;
Woodall et al., 2009).
The transaction cost economics perspective (Coase, 1937) suggests that the decision
to outsource depends on the relative cost for doing something in-­house compared to the
cost of obtaining it on the free market. Beyond the cost of obtaining HRM services from
an outside provider, a company must also consider the costs of managing the contrac-
tual relationship with the HRO provider and monitoring the quality of the service pro-
vided (Klaas, 2008).
The resource-­based view of the firm (Barney,  1991) puts forward that resources
viewed as critical to the firm’s success (typically valuable, rare, and difficult to imitate)
should be managed internally. Thus, it suggests that noncore activities can be outsourced,
while activities providing competitive advantage are retained in-­house. Somewhat
586   Lazarova and Reichel

related to this, the human resource architecture framework (Lepak & Snell, 1999) has
also been invoked to inform what kind of HRM activities, related to managing what
kind of employees, are likely to be sought out externally (Klaas, 2008).
Further, some studies have also relied on the institutional perspective (Powell & Di
Maggio, 1991), suggesting that industry trends in HRO may also prompt an organization
to outsource, as it seeks to confirm its legitimacy (Chiang, Chow, & Birtch,  2010;
Dasborough & Sue-­Chan, 2002; Klaas, 2008). The institutional perspective considers
the broader context of HRO and the various pressures faced by HRM departments
(Glaister,  2014). Examining questions beyond determining the antecedents of HRO,
more recent research has also drawn on structuration theory (Glaister, 2014), game the-
ory (Braun, Pull, Alewell, Störmer, & Thommes, 2011), and social network perspectives
(Yan, Francesco, Zhang, & Chen, 2013).

Outcomes of Outsourcing

Outsourcing of Core versus Noncore Activities

While many organizations outsource some aspects of HRM, complete HRO is rarely, if
ever considered, and the motivation to outsource differs across HRM functions (Patel
et al., 2017), that is, different aspects of the HRM function are outsourced at different
rates. This appears to be true around the globe. For example, in a study of Australian
organizations, Sheehan (2009) reported that 48 percent of organizations outsource
some training and development activities, but only 21 percent outsource performance
management tasks. Reporting different numbers but similar trends, Susomrith and
Brown (2013) showed evidence that 16.3 percent of organizations they studied outsource
training activities but less than 1 percent outsourced parts of performance management.
In Malaysia, Abdul-­Halim et al. (2016) reported that 83 percent of organizations out-
source some recruitment tasks, but only 10.6 percent outsourced employee relations
issues. In Germany, training services tend to be outsourced much more frequently than
selection of personnel (Alewell, Hauff, Thommes, & Weiland, 2009). In Hong Kong,
13 percent of organizations outsourced parts of training and development, with another
7 percent planning to outsource them, but no companies outsourced or planned to out-
source any tasks associated with job analysis (Chiang et al., 2010).
Although it is difficult to discern stable patterns in such diverse findings (admittedly,
at least some of this variability is the result of national-­level contextual differences and
differences among the characteristics of specific samples, yet sometimes even studies
conducted within the same country paint a different picture of HRO [e.g., Sheehan, 2009;
Susomrith & Brown, 2013]), what is certain is that companies deploy HRO selectively,
with some functions being more likely to be outsourced than others. One distinction
that is relevant here is that of core versus noncore HRM activities. Core HRM activities
are those that ensure that the organization has an optimal supply of necessary employee
 Human Resource Management Outsourcing   587

skills that can help enhance the organization’s competitive advantage and involve
control of key organizational assets, whereas noncore activities involve routine adminis-
trative tasks that have little bearing on performance. Beyond this basic demarcation,
there is no widespread agreement on what HRM practices are core/noncore. For exam-
ple, benefits administration is largely considered transactional and thus noncore,
whereas knowledge management would typically be kept in-­house. But some functions,
like training and development, can fall within either group, depending on the type of
training the organization offers. For example, general training (e.g., basic safety training
or implicit bias training) tends to be similar across organizations and can be thought of
as noncore. On the other hand, training about specific company products or patents or
involving confidential or sensitive information, pertaining to the core business of the
organization, is unlikely to be outsourced (Galanaki et al.,  2008; Lepak, Bartol, &
Erhardt, 2005). Similarly, the literature has suggested that there are core and noncore
components within the same HRM function—for example, within recruitment and
selection, there are many administrative aspects (e.g., job advertising, prescreening)
and more strategic aspects (e.g., final candidate selection), and whether they are out-
sourced is determined by different reasons (Ordanini & Silvestri, 2008).
In this context, Cooke et al. (2005) maintain that what constitutes core and noncore is
not static and is being continuously reassessed by organizations, and Gilley and Rasheed
(2000) make an argument for a customized definition of core and peripheral activities,
in line with the argument that what constitutes “core” likely differs across firms operat-
ing in different environments (Greer et al., 1999; Lepak et al., 2005). Thus, Lepak and
Snell (1999) distinguished between idiosyncratic, peripheral, traditional, and core
activities on the basis of two dimensions, value and uniqueness of HRM activities, and
recommended that core HRM activities be handled internally, peripheral and traditional
activities be outsourced, and idiosyncratic ones be offered though custom-­fitted
partnerships. In sum, while what core and noncore HRM functions are may differ
across organizations, the literature recommends that organizations only outsource what
they consider noncore HRM activities and handle the core HRM activities in-­house.

Performance Outcomes of Outsourcing

Early on, the lists of benefits and downsides of HRO were based mostly on anecdotal
accounts and on a limited number of high-­profile HRO cases. Rigorous research and
solid empirical evidence for the effects of HRO is only emerging now, and reported
results are not always consistent. Mirroring Kosnik, Wong-­MingJi, and Hoover’s (2006)
findings that very few organizations monitor whether outsourcing HRM activities
actually leads to cost reductions, there are also very few studies considering proximal
(Dyer & Reeves, 1995) performance indicators like HRM or employee outcomes.
Nguyen and Chang (2017) found that HRO success, defined as the satisfaction of the
benefits attained from using HRM providers from both an economic and a relational
perspective, is linked to characteristics of the HRO relationship between a firm and an
588   Lazarova and Reichel

HRO provider. Using fuzzy set qualitative comparative analysis (fsQCA), the authors
found several combinations of causal conditions that bring about HRO success and
identified trust as the core component for successful HRO (Nguyen & Chang, 2017).
When it comes to perceived HRM effectiveness and service quality, Shih and Chiang
(2011) suggest that HRO of some functions may be positively related to the effectiveness
of the in-­house HRM department as perceived by line managers (Shih & Chiang, 2011).
A study from Germany provided evidence that perceived service quality is higher when
the service is procured externally, especially for HRM functions that are considered
complex (e.g., involve interacting with other areas of operation) (Braun et al., 2011).
Also, Patel et al. (2017) reported a quality increase of service delivery as a result of HRO,
but also a decrease of flexibility of HRM service delivery and conclude that it remains
somewhat unclear under what specific conditions HRO may be most effective. Patel and
colleagues (2017) are not alone in raising critical questions about the (presumed) effec-
tiveness of HRO. Studies have suggested that HRO can cause an organization to lose
control over its HRM function (Cooke et al., 2005), can lead to loss of in-­house knowl-
edge and capacity (Belcourt, 2006; Cooke et al., 2005; Kosnik et al., 2006; Schlosser,
Templer, & Ghanam, 2006), and can have a negative impact on the company culture
(Belcourt, 2006). HRO can also affect the quality and the continuity of HRM services
offered to organizations’ internal customers, the employees (Belcourt, 2006; Cooke et al.,
2005; Kosnik et al., 2006; Shaw & Fairhurst, 1997; Shen, 2005). In some organizations,
HRO may result in employees being uncertain about whom to contact when HRM
issues arise (Woodall et al., 2009). Breaches of privacy may occur when information is
shared with outside providers (Cooke et al., 2005).
Chaudhuri and Bartlett (2014) investigated employees’ workplace attitudes as an
employee outcome and suggested that they are related to employee perceptions about
outsourced training. Their study found that perceived supervisory support toward out-
sourced training and perceived relevance of the training were related to employee
or­gan­i­za­tional commitment. Specifically for outsourcing recruitment activities, Wehner
and colleagues examined the impact of this on potential job applicants and found evidence
that there was a negative relationship between the extent of recruitment outsourcing
and respondents’ satisfaction with the recruitment process and company attractiveness,
the latter of which was, in turn, related to job-­acceptance intentions (Wehner, Giardini, &
Kabst,  2012). Related work from the same researchers suggested that these negative
reactions can be lessened to some extent by a strong employer image and strong service
provider image. They also suggested that some parts of recruitment (e.g., administrative
tasks, initial screening) can be outsourced without risking negative applicant reactions,
but once recruitment proceeds (e.g., to the interview stage), it is the potential employer
itself that must get involved (Wehner, Giardini, & Kabst, 2015).
For relationships between HRO and more distal performance outcomes on the
or­gan­i­za­tional level, results are also mixed. For example, Gilley et al. (2002) found
support for a positive relationship between outsourcing training and payroll activities
and firm performance. In contrast, Gilley and Rasheed (2000) did not find direct
relationships between outsourcing core and noncore activities and performance. Sheen
 Human Resource Management Outsourcing   589

and Copper (2011) examined the role of organizational size as a moderator and found
that the relationship between HRO and perceived financial performance is positive for
small organizations but negative for large organizations. Butler and Callahan (2014)
used archival financial data to show that there is a positive short-­term capital market
effect on a firm’s announcement of HRO (i.e., significant increase of equity gained on the
day following the HRO announcement), particularly when conducted in service industry
firms and when transactional HRM tasks (e.g., benefits administration, income and
employment verification) were being outsourced. However, the study also indicated
that long-­term operating performance (return on assets and operating return on assets)
suffers if the HRO decision is not optimal.

Outcomes for the Human Resource

Management Department

A key reason for HRO is the assumption that it can free HRM departments from the
necessity to deal with administrative and inconsequential tasks and will enable them to
become true strategic partners in organizations. Therefore, not surprisingly, a key
question that has been occupying the attention of HRM researchers is what HRO
means for the organizational HRM departments. Specifically, HRO can pick up the
increasing workloads of HRM specialists and liberate them from performing mundane
transactional tasks. No longer preoccupied with operational issues, they can focus on
developing core competencies and high-­value-­added skills and “can pursue the Holy
Grail of strategic HR planning” and strategy formulation (Turnbull, 2002, cited in
Shen, 2005, p. 283).
However, serious doubts have surfaced regarding whether HRO will indeed enable
the HRM function to take on a more strategic role in organizations (Chartered Institute
of Personnel and Development, 2009; Patel et al., 2017). Human resource management
outsourcing may lead to a reduction of HRM staff (Smith, Vozikis, & Varaksina, 2006)
and may result in limited career opportunities for them (Greer et al., 1999). It can create
work intensification problems, increased levels of stress, loss of morale, and turnover
among in-­house HRM staff (Cooke et al., 2005). Cooke et al. (2005) have noted that sim-
ply “dumping” HRM activities through HRO will not automatically lead to an increased
strategic role for the HRM department, at least not unless the department was already
considered a strategic partner. They highlight a study (Vernon, Phillips, Brewster, & van
Ommeren, 2000, cited in Cooke et al., 2007) that found no significant changes in the
formal position and influence of the HRM function that covaried with HRO trends.
Outsourcing HRM is often a business decision, and the impact it might have on the
HRM department can be more of an afterthought than a strategic objective. This idea is
also reflected in a report by the UK’s Chartered Institute of Personnel and Development
(2009) that suggests that HRM professional staff have only limited involvement in
590   Lazarova and Reichel

decision-­making regarding HRO. If involved at all, they manage the administrative end
of things (monitoring, managing vendor relations, and providing end-­user feedback).
Szierbowski-­Seibel and Kabst (2018) found a positive relationship between HRO and
the relative size of the HRM function (the HRM-­to-­employee ratio), that is, those orga-
nizations that engage in more HRO are better staffed. They comment on the fact that
their findings go against the tide of assuming that HRO drives HRM staff downsizing.
They are careful to note that their sample consists of European organizations, and most
European countries are characterized by strict labor legislation, which limits their
flexibility in terms of staff downsizing. They also point out that it is plausible that HRO
goes hand in hand with HRM professionalization (i.e., HRM’s participation in strategic
formulation, change management, and facilitation). Further, HRO involves forming
new connections with HRM providers and monitoring their service delivery. Both HRM
professionalization and HRO monitoring may be associated with increasing HRM-­to-­
employee ratios.
Findings in different contexts, however, show that HRO can also be associated with
work intensification for HRM services, decrease in satisfaction of HR managers (Patel
et al., 2017), and a drop in the size (and associated labor cost) of the HRM department
(Abdul-­Halim et al., 2016). Sheehan and De Cieri (2012) advised caution as their respon-
dents were wary that HRO may lead to a loss of HRM capacity and decreasing opportu-
nities to embed skills in the company’s own HRM staff. Patel et al. (2017) also suggested
that HRO can lead to decreased flexibility of the HRM department, slowed down HRM
processes, and decreased satisfaction of HRM specialists, which raises questions of
whether the strategic position of HRM is enhanced through HRO. Similar results were
reported by Glaister (2014). Her study indicated that HRO influences HRM role trans-
formation negatively. She reported that in companies where HRM was outsourced,
HRM specialists reported limited skill development and an increased focus on cost
reduction at the expense of HRM’s strategic position. In contrast, their peers in organi-
zations that did not outsource HRM reported they were more actively engaged with
other parts of the business and were thus in a position to develop competencies that can
gain their senior managers’ trust and support.
Several papers have specifically examined the relationship between the extent of
HRO and the status of the HRM department. Reichel and Lazarova (2013) reported
that outsourcing of core HRM tasks was not related to HRM department power,
whereas outsourcing of noncore HRM tasks had a significantly positive relationship
with HRM department power. They suggest that it is important to differentiate between
core and noncore activities, because shifting away the “right” tasks can help the HRM
department attain power and increase its strategic status. Supporting these findings,
Szierbowski-­Seibel and Kabst (2018) reported a positive relationship between HRO of
pay and benefits, training and development, and workforce reduction and “HR strategic
integration” (a variable capturing the strategic influence of the HRM function) and
inferred that this positive relationship gives credence to the view that the use of HRO
enables the HRM function to focus on a more strategic agenda. Findings by Nguyen and
Chang (2017) also supported a positive relationship between the strategic position of the
 Human Resource Management Outsourcing   591

HRM department and HRO; however, they argued for reversed causality (see also
Ordanini & Silvestri, 2008). Thus, at present, the available evidence suggests that there
may be a positive relationship between HRO and the strategic position of the HRM
department—but given the cross-­sectional nature of the data, no causality can be
established.
Reviewing the HRO literature to date in 2005, Cooke et al. (2005, p. 422) concluded
that the idea that HRO would enable a more strategic role for in-­house HRM depart-
ments “remains largely aspiration rather than reality.” The same sentiment was expressed
by Glaister (2014) nearly a decade later. Evaluating the results of her study, Glaister sug-
gested that the benefits of HRO for the organizational HRM department appear limited
and that an internal HRM community “is better placed to enhance HRM departmental
roles” (Glaister, 2014, p. 211; see also Patel et al., 2017).
Less commonly examined is the perspective of HRM service providers. In one excep-
tion, Kock, Wallo, Nilsson, and Höglund (2012) interviewed employees of HRO provid-
ers who said that they believe that they create value for their members, offer a wide
spectrum of services, and collaborate with them for being able to offer good service.
Interestingly, this study suggests that these HRM intermediaries too find aspects of their
jobs unappealing (e.g., having to act as “firefighters” to solve administrative problems)
and they too wish for more strategic rather than administrative tasks.

How Prevalent Is Human Resource

Management Outsourcing?

Not only is HRO present in many organizations, but there is mounting evidence that it is
changing how HRM services are delivered and how HRM departments function.
Despite steady research on HRO-­related topics, however, we still have no precise data on
the extent to which organizations use HRO and whether HRO use is growing over time.
Consulting companies and vendors of HRM services report very high—and continu-
ously growing—levels of HRO. The HRM popular press in many countries is dominated
by descriptions of large-­scale outsourcing deals (e.g., Steria Mummert Consulting, 2010);
statements claiming that HRO is “one of the fastest growing trends in the business world
today” (Pioneer Human Resource Management, 2019) are not uncommon, and some
analysts estimate that the HRO market will exceed $43 billion by 2024 (Global Industry
Analysts Inc., 2019). Academic research has been more cautious, however, in its assess-
ment of the extent, and of the alleged growth, of HRO and reports a broad range of
descriptive statistics. Here are some examples: A study conducted by the Society for
Human Resource Management in 2004 (n = 291 organizations) showed that 58 percent
of the companies used outsourcing for at least one subfunction (Society for Human
Resource Management, 2004). In another US sample, based on 129 large organizations,
92 percent of the companies reported that they used outsourcing (Hewitt &
592   Lazarova and Reichel

Associates, 2005). A Russian sample covering large, medium-­sized, and small Russian

organizations as well as subsidiaries from foreign MNCs, however, showed numbers
similar to the size-­wise heterogeneous US sample, with 61 percent of the companies
reporting HRO (Smith et al., 2006). In an Indian sample of seventy-­nine firms ranging
from small to large across thirteen industries, 87 percent reported they used HRO
(Karthikeyan, Bhagat, & Kannan, 2013). In contrast, in a sample of ninety-­nine organi-
zations of varying size located in Hong Kong, only 25 percent reported using HRO for at
least one HRM subfunction (Chiang et al., 2010).
A factor that complicates the task of estimating the extent of HRO further is that, as
discussed previously, not all HRM functions are outsourced at the same rate
(Sheehan, 2009; Susomrith & Brown, 2013). Lacking precise data on HRO prevalence at
various points in time presents the additional challenge of being unable to determine
any trends regarding HRO growth—or decline. One source of longitudinal data is the
Cranet database. Cranet is a research network of universities and research institutions
that, in its recurring rounds of data collection, has been gathering information on the
extent of outsourcing found in countries worldwide. Cranet covers a long list of coun-
tries, each contributing a representative country sample, and is longitudinal because
comparable data have been collected over the course of several decades (Tregaskis,
Mahoney, & Atterbury,  2004). As such, the Cranet database can provide important
insights about the extent to which organizations worldwide use HRO and about the
development of HRO use over time.

Cranet Data Background

Cranet’s core goal is to regularly collect data on HRM practices from representative
samples of companies with over one hundred employees in all member countries with
a standardized survey at regular intervals. The first round of data collection within
Cranet was conducted in 1989, when only five countries participated. At the time of
writing, in 2020, Cranet has over forty member countries. In 1999, during the fourth
round of data collection, questions on outsourcing of HRM activities were asked for
the first time (at the time, Cranet had twenty-­four member countries). Outsourcing
data were also collected in each subsequent data collection round, in 2004/5, 2009/10,
and 2014/2015. Each questionnaire included a question on the use of external provid-
ers for HRM activities, divided into HRM subfunctions. This division became more
fine-­grained over time, starting with four subfunctions in 1999/2000: pay and bene-
fits, recruitment and selection, training and development, and workforce outplace-
ment/reduction; these four categories increased to nine in 2009/10 and 2014/15. The
response format also changed over time, from asking respondents to indicate in a yes/
no format if they outsourced specific HRM subfunctions in 1999/2000, to a more fine-
grained, five-­point (continuous) scale ranging from 0 (no use of external providers) to
4 (outsourced completely) in 2009/10 and 2014/15. Despite such changes, the core of
the question, “Do you use external providers for carrying out HRM activities in a
 Human Resource Management Outsourcing   593

number of typical HRM areas” stayed the same, which allows us to draw some conclusions
about the trends in HRO.

Cranet Results
Table 27.1 shows the overall percentages of organizations using external providers for at
least one area of HRM activities for countries that took part in at least two of the three
survey rounds in 1999/2000, 2009/10, and 2014/15. (In 2004/5 the outsourcing question
focused on the change in the use of external providers during the past three years—
increased, decreased, or remained the same—so we are unable to incorporate these data
in our analyses). The countries included are organized in country clusters following the
geographic clusters created by Ronen and Shenkar (1985) and the authors’ classification
for countries that were not part of the original Ronen and Shenkar clustering (presented
in Table 27.1 in italic type). The results clearly show that HRO is and was extremely
common in organizations worldwide. In 1999/2000, the mean share of organizations
outsourcing HRM activities was already well above 80 percent. In the majority of coun-
tries, HRO numbers exceeded 80 percent, even exceeding 90 percent in seven countries
(Australia, Belgium, the Czech Republic, France, Italy, Sweden, and the Netherlands).
Numbers below 70 percent in 1999 were found in Bulgaria, Greece, Japan, and Finland.
All the countries with low numbers in 1999/2000 (or 2009/10 where data was not avail-
able for 1999/2000) show an increase in the share of organizations using HRO by
2014/15. About half of the countries with numbers above 80 percent in 1999/2000 show a
slight decrease, whereas the other half show a slight increase. Over the fifteen-­year
period, there seems to be a general upward trend in the number of organizations using
HRO in most countries worldwide. Comparing 2009/10 and 2014/15, however, suggests
that we are not witnessing a clear linear trend toward final convergence at 100 percent.
In most countries—especially when a high level is reached—the number of organizations
using external providers seems to fluctuate in the range of a few percent. Pronounced
decreases are rarely found.
The percentages provided in Table 27.1 include all organizations that report outsourc-
ing any HRM activity, but do not provide information about the extent to which HRO is
done (i.e., how much of a function is being outsourced). Fortunately, Cranet data
collected in 2009/10 and 2014/15 allow us to zoom in and examine this issue. Table 27.2
shows the mean extent of outsourcing across all HRM subfunctions for all organizations
in a country that use external providers (anchors: 0 = not outsourced at all, to 4 = full
outsourcing; organizations that reported no outsourcing for any HRM activity were
excluded from the analysis). We can see that in 2014/15, the mean level of outsourcing
over all outsourced activities in all countries lay in a range between 1.8 and 2.48, with
most countries reaching an average level slightly below or above 2. These indicators are
similar to what emerges from the 2009/10 data (ranging from 1.9 to 2.58). Comparing
the outsourcing levels between 2009/10 and 2014/15 per country, changes are overall not
large; however, more countries show a decrease (sixteen of twenty-­six countries) than
594   Lazarova and Reichel

Table 27.1.  Overall trends: Share of organizations outsourcing any human resource
management (HRM) activity in at least one HRM subfunction
Cluster   1999/2000 (%) 2009/10 (%) 2014/15 (%) Change

Anglo Australia 94.2 90 88.6 Decrease

Ireland 84.3 94.1   Increase
South Africa   84.3 66 Decrease
United Kingdom 89.3 84.4 89.4 Stable with 2009 drop
United States   86.7 87.4 Stable
Latin European Belgium 94.7 99.1 97.5 Increase
France 93.3 88.6 96.2 Increase with 2009 drop
Italy 100 97.8 94.1 Decrease
Spain 89.8   95.9 Increase
Eastern Bulgaria 65.3 68   Increase
European Czech Republic 100 78.9   Decrease
Hungary   92.6 79.9 Decrease
Serbia   88.1 93.8 Increase
Slovakia   72.6 75.7 Increase
Slovenia   88.4 81.2 Decrease
Ukraine   55.3 68.2 Increase
Germanic Austria 89.6 86.8 86.4 Decrease
Germany 82.5   93.5 Increase
Netherlands 93.2 92.2   Stable
Switzerland 88.7 90.6 94.8 Increase
Nordic Denmark 86 86.8 85 Stable
Estonia   97.1 91 Decrease
Finland 28.6 85.7 90.3 Increase
Iceland   85.5 81.5 Decrease
Sweden 92.6 99.2 99.3 Increase
Independent Israel 76.3 90 87.4 Increase
  Japan 65.9 87.9   Increase
Near Eastern Greece 68.4 87.5 89.9 Increase
Greek Cyprus 89.8 84.9 90.8 Stable with 2009 drop
Turkey 80.2   94.3 Increase
    N = 6,849 N = 3,974 N = 4,467  

Note: Italic type indicates countries that were not part of the original Ronen and Shenkar (1985)
clustering.
 Human Resource Management Outsourcing   595

Table 27.2.  Levels of outsourcing (mean across all sub-­functions of all

organizations from a country) in 2009 and 2015
clusters countries 2009 2015 change

↘
↘
Anglo Australia 2.21 1.91

↗
South Africa 2.35 2.25

↘
United Kingdom 2.13 2.24
USA 2.19 2.15
↗
↘
Latin European Belgium 2.26 2.34

↘
France 2.05 1.92
Italy 2.21 2.14
↘
↘
Eastern European Hungary 2.54 2.39

↗
Russia 2.27 2.13

↗
Serbia 2.35 2.49

↘
Slovakia 1.97 2.39
Slovenia 2.19 1.86
↗
↘
Germanic Austria 1.93 2.02

↗
Germany 2.00 1.80

↗
Netherlands 2.03 2.34
Switzerland 1.92 2.04
↘
↗
Nordic Denmark 2.02 1.93

↘
Estonia 1.97 2.14

↗
Finland 2.11 2.09

↘
Iceland 2.00 2.19

↘
Lithuania 2.44 2.04
Sweden 2.05 1.95
Far Eastern Philippines 2.20 2.10 ↘
Independent Israel 2.30 2.06 ↘
↘
↗
Near Eastern Greece 2.33 2.25
Greek Cyprus 1.99 2.17
    N = 4,219 N = 4,927  

Note: Italic type indicates countries that were not part of the original Ronen and Shenkar (1985)
clustering.

an increase. This comes in contrast to simply accounting for whether a company engages
in some outsourcing versus none (see Table 27.1), which suggests a general increase in
the share of organizations reporting HRO in more countries. Aligning Tables  27.1
and 27.2, we see that in a number of cases (e.g., Austria, Estonia, Iceland), over time fewer
organizations use HRO, but those that use it do so to a greater extent. More frequently
(e.g., Finland, Germany, Sweden), we see an increase in the number of organizations
engaging in HRO, but the average extent of HRO decreases over time. The level of
outsourcing (possible range is 1–4) appears to be generally low. This is partly because
596   Lazarova and Reichel

some functions are not being outsourced at all (i.e., companies’ HRO is restricted to
selected HRM subfunctions) and partly because of broad—but limited in scope—
HRO (i.e., outsourcing many types of HRM activities but only to a small extent).
Thus, to better understand the average numbers provided, in Table 27.3 we differenti-
ate between core (recruitment, selection, training, and development) and noncore
(administering payroll, pensions, and benefits) HRM activities (see Reichel &
Lazarova, 2013). Table 27.3 provides the average level of outsourcing by subfunction for
all organizations that reported that they used HRO in the respective area (organiza-
tions that marked no HRO for the respective subfunction were excluded). We find a
clear pattern of noncore activities being outsourced more than core activities in all coun-
tries but one. This finding strongly underlines the need to distinguish between differ-
ent activities within the HRM function (e.g., Belcourt, 2006; Cooke et al., 2005). Only
in the Greek community in Cyprus were HRM core activities outsourced to a larger
extent than noncore activities. In Slovakia and China, the level of outsourcing core and
noncore HRM subfunctions is relatively similar. The remaining twenty-­three countries
show a clear picture of outsourcing noncore subfunctions to a greater extent than core
ones. The difference between the levels of outsourcing core and noncore HRM activi-
ties is very pronounced in the Anglo-­Saxon countries and in most countries in the
Nordic cluster and is less significant in the Germanic cluster, most of Latin Europe, the
Far-­Eastern country cluster, Turkey (Near-­Eastern cluster), South Africa (sub-­Saharan
cluster), and Brazil (Latin American cluster). The biggest overall differences are found
in Hungary, Spain, and Finland. In the first two countries this result is driven by high
levels of outsourcing noncore activities, whereas for the latter it is caused by a low level
of outsourcing core subfunctions. From the six subfunctions explored in almost all the
countries described, the administration of pensions is outsourced the most, followed
by payroll and benefits as the noncore subfunction that is outsourced the least. Among
the core functions, activities associated with training and development are outsourced
the most in all countries observed. The levels for recruitment and selection are very
similar in almost all countries.

Conclusion

Summing up the current literature on HRO, we agree with Cooke et al. (2005), who note
that the decision to outsource HRM is not always rational, the HRO process is not
always successful, and the outcome is not always positive. Who wins and who loses is
often unclear. Our descriptive data support prior findings that the large majority of
organizations worldwide do outsource parts of their HRM activities. This makes HRO a
highly relevant topic for HRM research and practice alike. Decisions on HRO, however,
are not necessarily made in HRM departments (Vernon, Phillips, Brewster, & van
Ommeren, 2000, cited in Cooke et al., 2007) and are mainly driven by cost-­cutting rea-
sons. Data confirming that this proximal anticipated outcome is indeed realized are
Table 27.3.  Levels of outsourcing core and noncore human resource management activities (mean per subfunction for all
organizations of a country) in 2014/15
Core Non-­core

Recruit­ Mean
Clusters Countries ment Selection T&D Mean Core Payroll Pensions Benefits Non-­core

Anglo Australia 1.46 1.45 1.91 1.60 2.77 3.33 2.16 2.75
South Africa 2.14 2.22 2.32 2.23 2.11 3.11 2.59 2.60
United Kingdom 1.58 1.33 1.74 1.55 2.69 2.95 2.20 2.61
USA 1.60 1.55 1.76 1.63 2.62 2.98 2.50 2.70
Latin European Belgium 1.74 1.77 1.90 1.80 2.57 2.72 2.35 2.55
Croatia 1.61 1.63 2.19 1.81 2.53 2.71 2.43 2.56
France 1.63 1.65 1.77 1.68 2.37 2.69 1.90 2.32
Italy 1.78 1.63 1.99 1.80 2.68 2.93 2.05 2.55
Spain 1.79 1.55 2.04 1.79 3.30 3.37 2.65 3.11
Eastern European Hungary 1.83 1.65 2.05 1.84 3.65 3.64 2.77 3.35
Romania 1.54 1.45 2.11 1.70 2.62 2.61 2.59 2.61
Russia 1.77 1.97 2.26 2.00 2.89 3.30 2.23 2.80
Serbia 1.96 1.89 2.39 2.08 2.82 2.87 2.36 2.68
Slovakia 1.77 1.60 2.32 1.90 1.95 1.92 1.85 1.90
Slovenia 1.37 1.42 1.95 1.58 2.86 3.42 2.28 2.85
Near Eastern Greece 1.66 1.44 2.14 1.74 3.26 2.93 1.96 2.71
Greek Cyprus 1.79 1.83 2.52 2.05 1.88 1.75 1.75 1.79
Turkey 1.73 1.70 2.32 1.92 2.40 2.55 1.98 2.31
Germanic Austria 1.41 1.17 1.83 1.47 2.87 2.92 1.77 2.52
Germany 1.52 1.36 1.84 1.57 2.77 2.78 2.02 2.52
Netherlands 1.60 1.46 1.96 1.67 2.48 2.98 1.77 2.41
Switzerland 1.38 1.36 1.78 1.51 2.25 2.96 1.98 2.40
(Continued)
Table 27.3.  Continued
Core Non-­core

Recruit­ Mean
Clusters Countries ment Selection T&D Mean Core Payroll Pensions Benefits Non-­core

Nordic Denmark 1.46 1.36 1.63 1.49 2.66 3.07 1.84 2.52
Estonia 1.72 1.54 2.38 1.88 2.06 2.33 2.00 2.13
Finland 1.44 1.17 1.78 1.46 3.41 3.24 1.70 2.78
Iceland 1.38 1.30 1.79 1.49 2.32 3.53 2.22 2.69
Latvia 1.57 1.39 2.72 1.89 3.29 3.00 2.29 2.86
Lithuania 1.71 1.56 2.52 1.93 2.84 4.00 2.22 3.02
Sweden 1.68 1.51 2.24 1.81 2.36 2.52 1.77 2.22
Far Eastern Indonesia 1.94 1.90 2.00 1.95 1.93 2.39 2.03 2.12
Philippines 1.77 1.83 2.14 1.91 2.92 2.79 2.24 2.65
Independent
Brazil 1.90 1.79 2.10 1.93 2.71 3.21 2.56 2.83
Israel 1.95 1.86 2.27 2.03 2.61 2.81 2.50 2.64

Note: Italic type indicates countries that were not part of the original Ronen and Shenkar (1985) clustering.
 Human Resource Management Outsourcing   599

largely missing, and whatever estimates exist do not account for costs such as managing
the interaction between the organization and external vendor, nor do they consider
externalities such as HRO’s unfavorable impact on organizational culture and current
and potential future employees (Belcourt, 2006; Wehner et al., 2012). Attempts to link
HRO to more distal performance measures yield similarly mixed results.
So, does HRO pay off? Given the immense diversity of antecedents and outcomes
studied, the only reasonable answer to this question is “It depends.” It depends on what,
who, and how HRM is outsourced. One important discriminating dimension seems to
be the content of the outsourced HRM activities. This is theoretically supported by the
resource-­based view of the firm that suggests that resources can be more or less critical
for competitive advantage, that critical resources should be kept in-­house, and that
HRM can be one such critical resource (Boxall, 1996). Also, a number of empirical
research studies have distinguished between core and noncore HRM subfunctions and
have shown that there seems to be systematic variation alongside classic HRM subfunc-
tions and that the outcomes of outsourcing different HRM activities are different (e.g.,
Reichel & Lazarova, 2013). The descriptive data presented in this chapter additionally
support the differentiation of activities concerning their content. Regardless of the
­differences in overall levels of outsourcing, these numbers illustrate that a significant dif-
ference between the extent of outsourcing core and noncore activities can be observed
in almost all the countries considered: Organizations outsource critical HRM activities
significantly less than they outsource noncritical activities. Future research should
investigate in more detail the differences surrounding the outsourcing of different HRM
subfunctions. For example, they could examine the origin of HRO decisions, integration
of the in-­house HRM function, type of task, type of contract, interaction, type of deliv-
ery, and outcomes.
Thinking of future research, we note, a few exceptions notwithstanding (e.g.,Yan
et  al.,  2013), that the HRO literature is informed by a very limited set of theoretical
frameworks (e.g., transaction cost economics, resource-­based view) and the field can
benefit from new theoretical developments dealing specifically with outsourcing.
Examining the range of outcomes studied, we found that most studies examine out-
comes at the organizational or departmental (HRM department) level. Given that HRM
activities are ultimately aimed at employees, future studies should include a more exten-
sive consideration of employee-­related outcomes (a good example of such research is
provided by the work of Wehner and colleagues: Wehner et al., 2012, 2015).
In relation to organizational practice, organizations need to think clearly about the
potentially far-­reaching effects of their outsourcing decisions. Depending on what and
how they outsource, HRO could have favorable or unfavorable outcomes. Research
zooming in on HRO is needed to untangle the mixed blessing of HRO for better under-
standing the phenomenon per se. When it comes to how HRO should be done, organi-
zations should consider including HRM experts in the outsourcing decision because
they are likely to have better insight into which activities are core and should be kept
­in-­house and which can be outsourced to create beneficial outcomes.
600   Lazarova and Reichel

Zooming out also appears necessary: There is little research on a macro level, leaving
the organization as the main perspective and considering the field level of HRM. There
is clear evidence that HRO is widespread, because only a very few organizations world-
wide report not using any HRO. But there is virtually no research on how HRO affects
the occupational field of HRM, especially what role HRO plays in HRM’s ongoing
­professionalization project and associated power and resource issues (Greenwood,
Suddaby, & Hinings, 2002). This is particularly challenging because more recent pro-
fessionalization literature focuses on the organizational level, suggesting corporate
professionalism as a promising alternative to traditional professionalism strategies
(Hodgson, Paton, & Muzio, 2015). Integrating the perspective of the external HRM
service providers seems to be key for this occupational field perspective. Conceptual
work should clarify how HRM service providers impact the occupational field and the
professionalization of HRM. Empirical work could then deal with the question of who
these external providers are. Possibilities range from sole proprietors offering one
specialized type of training, to business units of large consulting firms, to multinational
companies whose sole business purpose is selling HRM services to firms of other indus-
tries, bearing in mind online platforms. Depending on who the external providers are,
what HRM services they offer, and how they deliver them, they could take over different
roles with varying effects on the occupational field.
Summing up, research has accumulated a large body of knowledge on HRO at the
organizational level. Zooming in on processes leading to outsourcing decisions and out-
comes of outsourcing activities in different subfunctions on specific groups in and near
(future employees) the organization, as well as zooming out to the occupational level,
integrating companies actually providing the outsourced HRM activities, are promising
paths to increase our understanding of HRO.

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 chapter 28

The Profil e of th e
H um a n R esou rce
M a nagem en t Dir ector
One Size Fits All?

Anna Sender, Bruno Staffelbach,

and Wolfgang Mayrhofer

The role of the human resource management (HRM) function and the specialists
working in the area of HRM have significantly evolved since the 1980s (Lepak &
Snell, 1998; Ulrich & Beatty, 2001; Ulrich, Kryscynski, Brockbank, & Ulrich, 2017).
Such changes are driven by the dynamic environments in which organizations
operate. Global competition has caused increased pressure for efficiency in HRM
processes. Technological changes and the importance of innovation have led to
the critical role of human resources for organizational success, putting pressure
on HRM professionals (Baill, 1999). Until the 1980s, these specialists were called
personnel managers and were mainly responsible for servicing the workforce.
Since then, their tasks have come to encompass strategic partnerships involving
strategic planning and the alignment of HRM strategy and organizational goals.
As a result, the HRM function has become more strategic (Jackson, Schuler, &
Jiang, 2014), with the most senior human resource (HR) manager (in this chapter,
the HRM director) often being an integral member of the top management team
and influencing strategic decisions in organizations (Lazarova, Mayrhofer, &
Brewster, 2013).
The profile of the HRM director (e.g., education, experience, and personal attri-
butes) influences their competencies (Ulrich et al.,  2017) and thus the ability to
manage tensions that may arise from different HRM tasks (Lazarova et al.,  2013;
Reichel, Brandl, & Mayrhofer, 2009; Sheehan, De Cieri, Greenwood, & Van Buren,
2014). Specifically, the recent changes in the HRM function have generated compet-
ing roles for the function (Brown, Metz, Cregan, & Kulik,  2009; Kochan,  2004;
606   Sender, Staffelbach, and Mayrhofer

Sheehan et al.,  2014). For example, scholars have argued that fulfilling a role of
­strategic partner and simultaneously promoting employee well-­being may result in
conflict (Brown et al.,  2009). Similarly, Kochan (2004) has suggested that the
employee-­centered roles and those of strategic partnership are difficult to reconcile.
Importantly, research has shown that the appropriate profile of HRM profes-
sionals may reduce tensions resulting from the integration of different roles
(Sheehan et al., 2014). For example, to mitigate tensions, organizations should
attract HRM professionals who focus on serving the business rather than assisting
people (Sheehan et al., 2014). Additionally, the knowledge, skills, and abilities of
the HRM director are likely influence their ability to understand the business
environment and shape the strategic role of the HRM function (Lazarova et
al., 2013; Truss, Gratton, Hope-­Hailey, Stiles, & Zaleska, 2002). Moreover, research
has demonstrated that, depending on cultural context, men and women are not
equally effective in shaping the strategic HRM function (Brandl, Mayrhofer, &
Reichel, 2008a; Reichel, Brandl, & Mayrhofer, 2010, 2013). Thus, the profile of the
HRM director may influence the effective design and implementation of aspects
of HRM in organizations.
Given the increasingly strategic role of HRM and the importance of HRM directors in
shaping HRM and business strategy, it becomes important to shed more light on who
the most senior HRM specialist is in terms of major profile characteristics. Importantly,
whereas some required competencies of HRM directors are general, other competen-
cies may depend on situational factors and thus be context specific. In particular,
research has demonstrated that the HRM function differs across sectors (Budhwar &
Boyne, 2004; Teo & Rodwell, 2007; Veloso, Tzafrir, & Enosh, 2015), industries (Laursen,
2002), regions, and cultures (Brewster,  2007; Brewster, Houldsworth, Sparrow, &
Vernon, 2016; Brewster, Mayrhofer, & Farndale, 2018; Parry, Stavrou, & Lazarova, 2013;
Schuler, Dowling, & De Cieri,  1993). In a similar way, the required competencies of
HRM directors might differ across contexts as well (Ulrich et al., 2017). As a result, some
differences in the demographic profile can likely be observed. This chapter provides an
overview of the profile of an HRM director by distilling the general profile characteris-
tics and indicating selected contextual differences. Whereas the profile of an HRM
director potentially covers several characteristics, in this chapter we focus on their edu-
cation, experience, gender, and personal attributes (see Figure 28.1).

Competencies of Human Resource

Management Professionals

Human resource management professionals are persons whose primary specializa-

tion lies in the development of HRM policies and practices in employee resourcing,
relations, reward, and development in the organization. These professionals operate at
 The Profile of the Human Resource Management Director   607

External environment Internal environment Human resource function

• Industrial relations • Strategic objectives

and unions (e.g., innovation, General and
• Industry and market growth) context-specific
conditions • Organizational culture competencies
• Labor market • Organization Profile:
• National and regional biography (e.g., • Education
cultures ownership) • Experience
• Laws and regulations • Organization structure • Gender
• Technologies (e.g., geographic scope, • Personal
structure of the human attributes
resource function)

Figure 28.1.  Factors that influence the profile of the HRM Director (using the Aspirational
Framework for Strategic HRM; Jackson et al., 2014).

different levels in the organization. The definition of HRM professional includes the
following positions: chief human resources officer (a member of the board responsi-
ble for HRM), head of the HRM department, HR business partner, or professional
within the HRM department (e.g., compensation expert). Considering potential
devolution of HRM, that is, moving HRM tasks away from specialists to line manage-
ment (Kulik & Bainbridge, 2006; Mesner Andolšek & Štebe, 2005), this group may
also include the line managers as people managers. However, in line with previous
research, in this chapter we refer to HRM professionals as individuals working in the
specialist HRM function in the organization and to HRM directors as the most senior
HR managers.
The required competencies of HRM professionals have attracted significant attention
from scholars since late 1970s. Competency is “an underlying characteristic of an employee
(i.e., a motive, trait, skill, aspect of one’s self image, social role, or a body of knowledge) which
results in superior performance” (Boyatzis, 1982, p. 21). Research on HRM professional
competencies began in the late 1970s, and a number of competency models have been devel-
oped since then (Brockbank & Ulrich, 2003; Cohen, 2015; Huselid, Jackson & Schuler, 1997;
Ulrich et al., 2017). For example, Huselid et al. (1997) differentiate functional competencies,
that is, competencies related to the delivery of HRM operations such as recruitment, selec-
tion, compensation, and strategic competencies, such as business-­related competencies that
enable HRM practitioners to align HRM strategies with business strategies.
In the 1980s, Ulrich and colleagues began the global, longitudinal Human Resource
Competence Study (HRCS), which continues in the second decade of the twenty-­first
century. The results of this study indicate that key HRM competencies that contribute to
organizational success change over time. As the HRM function evolves (Ulrich &
608   Sender, Staffelbach, and Mayrhofer

Brockbank, 2005), so do the competencies that HRM professionals need to perform

effectively in their job. Increased volatility and complexity of the economic environment
have contributed to changed expectations of HRM professionals from top management.
Specifically, approximately 30 to 40 percent of HRM competencies evolve and a compe-
tency shift from reactive problem solver (mostly in administrative issues) to proactive
change consultant and adviser has been observed. This is especially the case for senior-­level
positions in the organization (Cohen, 2015).
In 1989, Ulrich, Brockbank, and Yeung underlined three core competencies of HRM
professionals: knowledge of the business, delivery of HRM practices, and change manage-
ment, which were subsequently supplemented with technology expertise (Brockbank &
Ulrich, 2003). Information technology has recently been identified as a critical driver of
HRM professionals’ transition from completing administrative tasks to taking on a strate-
gic business partner role (Bell, Lee, & Yeung, 2006). Given that technology allows HRM
professionals freedom from some of their routine responsibilities, opportunities for
HRM professionals to become a strategic partner have emerged (Bell et al., 2006). In line
with these developments, the newest competency models based on HRCS Round 7 (2016)
indicate seven main competencies that HRM professionals, including HRM directors,
need to bring to the table to effectively support organizations (Ulrich et al.,  2017)
(see  Table 28.1).

Competencies and the Profile of the

Human Resource Management Director

The elements of the demographic profile of the HRM director in relation to work experi-
ence, education, and personal attributes shape the HRM competencies (Boxall &
Burch, 2007; Cohen, 2015). Here we discuss the key profile elements of education, expe-
rience, personal attributes, and gender and, building on previous research, we argue
how these relate to HRM competencies as identified by Ulrich et al. (2017).

Education
Although competencies evolve, the traditional HRM skills, knowledge, and abilities will
not be completely replaced but need to be supplemented with additional skills that allow
for successful execution of new tasks (Baill, 1999). Consequently, scholars have under-
lined the importance of thorough knowledge of HRM topics and specialized training in
related fields (Cohen, 2015). For example, in a qualitative study with participants from
the HRM function and top management, Laine, Stenvall, and Tuominen (2017) find that
the key competencies expected by top management from the HRM director still relate to
delivery of HRM practices and include expertise in HRM specialties, such as employee
relations and staffing. Indeed, research on competencies has demonstrated that HRM
 The Profile of the Human Resource Management Director   609

Table 28.1.  Competencies of human resource management professionals based

on Human Resource Competence Study, Round 7 (2016)
Ability to position the business to win in its
Core drivers Strategic positioner market

  Credible activist Ability to build relationships of trust

  Paradox navigator Ability to manage tensions
Strategic enablers Culture and change champion Ability to make change happen and manage
or­gan­i­za­tional culture
  Human capital curator Ability to manage flow of talent
  Total rewards steward Ability to manage employees via financial
and nonfinancial rewards
Foundational enablers Compliance manager Ability to manage processes in line with
regulatory guidelines
  Analytics designer and Ability to use analytics for decision-­making
interpreter
  Technology and media Ability to use technology and social media
integrator to drive performing organizations

Source: Ulrich, Kryscynski, Brockbank, and Ulrich (2017).

professionals must possess technical HRM expertise (Cohen, 2015). Such expertise may
come, at least in part, through education, for example, having a university degree in a
related field (Farndale & Brewster, 2005), and result in greater competencies in relation
to, for example, human capital curator or total reward steward.

Experience
Although it is important, obtaining an undergraduate or graduate degree in HRM does
not automatically prepare someone to successfully contribute in a strategic HRM role
(Cohen, 2015). It is primarily through experience that HRM professionals accumulate
consultation skills and develop a critical mindset, leadership skills, and business acu-
men (Cohen, 2015). Research indicates that HRM directors on the board spend 30 to
50 percent of their time with board-­related tasks rather than on their functional respon-
sibilities (Kelly & Gennard, 2000). As work experience improves credibility and pro­
fessional recognition, it qualifies HRM directors for various roles, for example, credible
activist and strategic positioner. Thus, the accumulation of interesting and relevant
experience not only improves the skill set, but also develops the professional personally
and, therefore, is crucial to becoming effective in the HRM role (Boxall & Burch, 2007).
Research on the importance of strategic competencies has led to the belief that suc-
cessful HRM directors may come from outside the HRM function, thereby reducing
610   Sender, Staffelbach, and Mayrhofer

barriers of entry into the HRM profession (Brown et al.,  2009; Caldwell,  2008; Lo,
Macky, & Pio, 2015; Wright, 2008). Research on career paths of HRM professionals and
HRM directors indicates that to gather business-­related skills and competencies,
some HRM professionals have chosen to leave HRM for an operational role and
acquired training in finance or marketing (Cohen, 2015). Kelly and Gennard (2000)
have identified three career paths of HRM directors: (1) a vertical mobility within the
personnel function (promotion to HRM director’s role from the HRM function), (2)
vertical and horizontal moves between and within different functions, including HRM,
and (3) recruitment from another function without any prior HRM experience. Their
empirical results indicate that, in a sample of sixty organizations, the majority of HRM
directors (thirty-­four individuals) made the vertical and horizontal move, twenty-­one
chose vertical mobility, and only five were recruited from other functions.

Personal Attributes
In addition to education and experience, personal attributes will also serve as shapers of
the competencies of HRM professionals (Lo et al., 2015). For example, research has indi-
cated that self-­confidence and self-­knowledge are critical for successful performance in
a strategic HRM role, as well as for managing change and uncertainty effectively
(Buckley & Monks, 2004). For instance, change champion is a role that demands a sig-
nificant understanding of human behavior during the change process and thus specific
competencies, which result from the individual’s personality. The competencies related
to the credible activist role, such as being able to meet commitments and having politi-
cal savvy, do require a personality component (Laine et al., 2017). Consequently, top
executives pay attention to personality aspects of their HRM directors and have the
highest priority in the selection of individuals with effective interpersonal and team-
work skills for these roles (Kelly & Gennard, 2000).

Gender
The effectiveness of HRM directors is not only related to the competencies they bring into
the job, but also influenced by the perception of other decision-­makers in the or­gan­iz­ a­
tion. For example, cultural values and stereotypes may hinder female HRM directors in
strategic integration. Since the 1990s, the HRM profession has become more feminized
(Lazarova et al., 2013). Whereas in 1995 in western Europe females accounted for approxi-
mately 23.0 percent of all HRM directors, in 2004, this number rose to 41.2 percent
(Reichel et al., 2010). These developments are more pronounced for HRM directors than
for HRM staff more broadly (Reichel et al.,  2010), presumably because the share of
women in the HRM function was initially higher. Organizations have recognized that
gender diversity may contribute to organizational performance (Kelly & Dobbin, 1998)
 The Profile of the Human Resource Management Director   611

and have made efforts to follow guidelines of equal opportunity standards (Reichel
et al., 2010). At the same time, by including women as HRM directors in top management
teams, organizations meet their diversity standards (Reichel et al., 2010).
Whereas the educational background of the HRM professional has received less
scholarly attention, significant research has explored whether the gender of HRM pro-
fessionals influences the HRM function in organizations. For example, scholars have
explored whether the gender of the HRM director influences the level of strategic
integration (Brandl, Mayrhofer, & Reichel, 2008b; Reichel et al., 2010, 2013) or the
implementation of HRM practices (Brandl et al., 2008b). Some arguments have been
raised that the inclusion of female HRM directors because of sex stereotypes may
mean the loss of the influence of the HRM function (Lazarova et al., 2013; Sheehan
et al., 2014). Specifically, the stereotypical perceptions of gender roles may influence
a female HRM director’s ability to contribute to strategic decision-­making (Brandl
et al., 2008b). However, female HRM directors may be more skilled in managing role
tension and more able to convince employees to develop a broader business perspec-
tive (Reichel et al.,  2010; Sheehan et al.,  2014). Interestingly, in the newest HRCS
Round 7 (2016) on HRM professionals’ competencies, female HRM professionals
generally scored higher than males across all nine competence domains (Ulrich
et al., 2017).

Factors Influencing the Competencies

and the Profile of the Human Resource
Management Director

Given that HRM competencies are defined as situated, idiosyncratic constructs, they are
often treated as context specific (Lo et al., 2015). Although global HRM competencies
exist, geography, industry, and size of the organization may influence competencies
required for them to perform successfully in an organization (Ulrich et al., 2017). Thus,
contextual factors influence which HRM competencies are required for HRM profes-
sionals to contribute to organizational performance (Laine et al., 2017). Specifically, in
the HRCS study, Ulrich et al. (2017) have shown that whereas 40 to 50 percent of the
competencies do vary by setting, the remaining competencies are context independent.
Thus, the required competencies include both general competencies, which HRM
professionals need independent of the setting, and context-­
­ related competencies
required, for example, in a given industry, culture, or legal environment. Consequently,
what it takes to be successful in HRM roles in relation to the profile (e.g., education,
experience, and gender) may vary to some extent by setting. In a review of the strategic
HRM literature, Jackson et al. (2014) indicate several factors that influence the imple-
mentation of strategic HRM in organizations. Building on this research, we have
612   Sender, Staffelbach, and Mayrhofer

i­dentified major factors in the external (e.g., cultural, economic, or legal) and internal
(e.g., ownership, organization, and culture) environment that shape the HRM function
and, consequently, the required competencies and profile of an HRM director (see
Figure 28.1).

External Environment
External environment encompasses legal, economic, labor market, technological,
industrial, and national culture components, as well as the role of trade unions. Cultural
and institutional differences (see Chapters  2 and  3 for a discussion on these two
approaches) have an impact on HRM in organizations (Aycan, 2005; Brewster, 2007;
Easterby-­ Smith, Malina, & Yuan,  1995; House, Hanges, Javidan, Dorfman, &
Gupta, 2004). Consequently, research indicates that the profile of the HRM professional
and the HRM director may differ depending on the cultural or institutional context
(Brandl et al., 2008a; Laine et al., 2017; Lazarova et al., 2013; Reichel et al., 2013). For
example, cultural differences may influence the likelihood of a female HRM director
being invited “to the table” in discussions on strategic matters. Specifically, in countries
with higher gender egalitarianism, gender role differences for strategic integration tend
to be less pronounced than in less gender-­egalitarian countries. In addition, in countries
with social policy environments that facilitate female workforce participation, the stra-
tegic integration of female HRM directors is greater (Brandl et al., 2008a). In a similar
vein, Lazarova et al. (2013) found differences in the profile of HRM directors in relation
to education and experience in different cultural clusters.
In addition to culture, the regulatory environment may influence the HRM function
and, as a result, both the competencies and the profile of the HRM director. For exam-
ple, Wolf and Jenkins (2006) demonstrated that selection practices differ depending on
the regulatory environment, with objective recruitment processes (e.g., personality and
competency tests) used in environments with regulatory pressures. With regard to labor
relations, unionization tends to hinder the adoption of high-­performance work systems
(Liu, Guthrie, Flood, & MacCurtain,  2009). Additionally, in countries where trade
unions play a major role, competencies related to bargaining processes become essen-
tial, as does some legal training or experience in dealing with trade unions. Moreover,
the rate of unionization has a positive effect on strategic integration (Vernon &
Brewster, 2013).
In addition to institutional and cultural contexts, sector and industry specificity have
an influence on the profile of the HRM director. Differences in technological innovation
and reliance on knowledge management may strengthen the role of the HRM function
(Datta, Guthrie, & Wright, 2005) and thus, for example, result in an increase in the size
of the HRM department (Brewster, Wood, Brookes, & Ommeren, 2006). Conversely, in
industries focused on low-­cost mass production or in the public sector, the HRM func-
tion may be more technical and focused on administrative tasks rather than a strategic
contribution (Brewster et al., 2006; Klingner & Lynn, 1997). Organizations operating in
 The Profile of the Human Resource Management Director   613

economically challenging environments with intense market competition and volatility

are more likely to implement high-­performance HRM systems (Patel & Cardon, 2010).
Depending on the industry, business realities differ. In turn, this has consequences for
the profile of HRM directors with regard to the design and implementation of HRM sys-
tems, including certain experience or education. For example, in manufacturing indus-
tries, an educational background in natural sciences and engineering may be more
common, considering that such a background allows HRM directors to better understand
the business and contribute to organizational strategy development. Given that scholars
have indicated that HRM professionals must understand business and the language of
top executives and line managers to effectively contribute to strategic decision-­making
(Bell et al., 2006), it is likely that there are sector and industry differences in relation to
the profiles of HRM directors.

Internal Environment
Internal environment reflects the organizational structure (e.g., geographic scope), cul-
ture (values), objectives (e.g., diversification, growth), and ownership (e.g., public, pri-
vate). These elements shape the tasks and challenges HRM directors face and thus the
required competencies for their job. For example, in organizations operating across
national and cultural borders, HRM professionals’ competencies may include cultural
intelligence (Earley & Peterson, 2004). Organizations operating in growing businesses
at early stages of their life cycle arguably have different challenges (e.g., recruitment and
selection) than organizations in later development stages and those operating in more
mature markets. The challenges organizations face influence the competencies required
from HRM professionals and are therefore likely have an effect on the profile of the
HRM director.
In relation to size, smaller firms have limited possibilities to use economies of scale
and may be more dynamic (Brewster et al.,  2006; Cardon & Stevens,  2004). Thus,
smaller firms are likely to have fewer bureaucratic procedures and a more informal
approach to HRM than larger firms (Bartram,  2005; Sheehan & Cooper,  2011).
Importantly, larger organizations may be subject to greater external pressure to adopt
HRM practices that meet general approval, to be positively evaluated by society, and to
be compliant with external regulations (Bayo-­Moriones & Merino-­Díaz de Cerio, 2001;
Cohen & Pfeffer, 1986). Consequently, such pressures may require more often a profile
of an HRM director with some education in law or experience in communicating with
regulators. Additionally, in smaller organizations, the most senior HRM person in the
organization must fulfill different roles since there are few, if any, persons specializing in
various HRM tasks, for example, recruitment (Bayo-­Moriones & Merino-­Díaz de
Cerio, 2001). Thus, in smaller organizations, broader education and experience of HRM
directors may be required.
A significant number of studies have explored the differences between HRM in the
public and the private sectors (Budhwar & Boyne, 2004; Veloso et al., 2015). Despite
614   Sender, Staffelbach, and Mayrhofer

the  trend whereby public organizations adopt HRM practices pursued by private
­or­gan­i­za­tions (see Chapter 19), several factors differentiating their management and
HRM still exist. The specific characteristics of public organizations include, among
others, a paternalistic management style (with emphasis on protection of employees’
well-­being), standardized employment practices (e.g., along jobs or locations), and
­collectivized industrial relations (extensive staff participation and consultation; Boyne
et al., 1999). Additionally, in public-­sector organizations, the HRM function may involve
more administrative tasks than strategic activities (Brewster et al., 2006; Klingner &
Lynn, 1997). Such a set of responsibilities may influence both the education and the
experience HRM directors need to successfully fulfill their roles.

Human Resource Management Function: Strategic Integration

and Human Resource Management Devolution
The positioning of the HRM function in the organization in relation to both strategic
integration and devolution of HRM may influence the competencies needed to be suc-
cessful in the HRM role and therefore the profile of the HRM director. Strategic integra-
tion captures whether the HRM director is invited to the table as a member of the
top management team and is involved the development of business strategy. Human
resource management directors must demonstrate certain competencies to justify their
role in strategic decision-­making. Although a study by Guest and King (2004) showed
that approximately 30 percent of chief executive officers indicated that they see the HRM
director as a source of ideas, a similar number indicated that the HRM directors failed to
make a case as to why they should be on the board (Guest & King, 2004). Given that stra-
tegic integration reflects the status and power of HRM in the organization, it may require
a different profile for the HRM director (Brandl et al., 2008a). For example, a university
education provides a useful body of knowledge and intellectual skills of analysis, criti-
cism, and synthesis (Watson, 1993). Thus, having completed higher education may enable
HRM directors to successfully discuss strategic matters with the top management.
The devolution of HRM responsibilities entails transferring such HRM tasks as
recruitment, selection, pay, and workforce reduction to line managers (Brewster,
Brookes, & Gollan, 2015; Cascón-­Pereira, Valverde, & Ryan, 2006). Devolution of HRM
changes the HRM function in the organization. Human resource management profes-
sionals in organizations with greater devolution can free up their time for more strategic
tasks (Perry & Kulik, 2008). However, they are expected to provide support to line man-
agers who are often less knowledgeable and experienced in HRM responsibilities
(Conway & Monks,  2010; Hutchinson & Purcell,  2010). This may result in certain
­tensions. Therefore, it is likely that different degrees of devolution of HRM require dif-
ferent competencies and HRM director profiles. For example, the age differences between
line managers and HRM professionals can influence the degree of agreement between the
line and HRM professionals on devolution in the organization (Op de Beeck, Wynen, &
Hondeghem, 2016).
 The Profile of the Human Resource Management Director   615

The Profile of the Human Resource

Management Director: Empirical
Results

In this section, we explore the extent to which selected factors from the external and
internal environment relate to the profile of the HRM director. Additionally, we explore
how the HRM function (devolution of HRM and strategic position of HRM) influences
the profile of the HRM director. Finally, we examine whether the profile of the HRM
director relates to selected organizational performance measures. We build our argu-
ment on the results of the Cranet study conducted in 2014/15 in thirty-­two countries and
the findings of the HRCS (Ulrich et al., 2017). We examined the profile of the HRM
director in relation to experience, education, and gender using selected cultural clusters
from the Global Leadership and Organizational Behavior Effectiveness study (House
et al., 2004) and the Cranet study1 (see Table 28.2).

External Environment and the Profile

of a Human Resource Management
Director

As Figure 28.2 highlights, most HRM directors in all cultural clusters have a university
degree and are recruited from the HRM department. Although some similarities are
apparent, interesting differences in the profiles of HRM directors in different clusters
have been observed, pointing to the important role of the external contextual environ-
ment in shaping the profile of the HRM director. For example, compared to other clus-
ters, in Germanic Europe, the HRM director is less likely to have a university degree
(t(3,115) = 15.726, p < .01). This educational difference may result from the education ­system
in Germanic Europe that stresses the important role of vocational education (Graf, 2013).
Consequently, in 2019 the percentage of individuals with a tertiary education in
Germany amounted to 29.9 percent, whereas in other European countries, it was sig-
nificantly higher (e.g., United Kingdom, 47.2 percent; France, 37.9 percent; Sweden,
44.0 percent; Organisation for Economic Co-­operation and Development, 2020).
An exposition of aspects of the Nordic cluster is instructive in calling attention to
the  influence of national culture on the profile of the HRM director. Specifically,

1  For the purpose of this analysis, we excluded two countries from the Cranet data set: Belgium and
South Africa. Belgium is not included in the Global Leadership and Organizational Behavior
Effectiveness country clusters. In the case of South Africa, in Global Leadership and Organizational
Behavior Effectiveness study White and Black samples are included in different clusters.
616   Sender, Staffelbach, and Mayrhofer

Table 28.2.  Countries, cultural clusters, and number of organizations

Sample with human resource
GLOBE cluster Country Entire sample director being the respondent

Eastern Europe Estonia 83 60

Greece 188 90
Hungary 273 —
Latvia 67 33
Lithuania 145 100
Cyprus 87 50
Romania 225 41
Slovakia 262 76
Slovenia 218 80
Croatia 171 73
Russia 131 75
Serbia 160 44
Latin America Brazil 354 211
Latin Europe France 158 89
Italy 168 100
Spain 98 61
Israel 119 32
Confucian Asia China 256 157
Nordic Europe Denmark 206 121
Finland 182 137
Sweden 291 231
Iceland 119 82
Norway 196 88
Anglo United Kingdom 210 101
United States 509 159
Australia 395 175
Southern Asia Indonesia 87 40
Philippines 138 66
Germanic Europe Austria 229 148
Germany 278 156
Netherlands 167 85
Switzerland 212 114
 The Profile of the Human Resource Management Director   617

Middle East Turkey 154 52

Not included in the Belgium 143 75
GLOBE clusters
South Africa 121 74
N across clusters   6,800 3,276

Note: GLOBE, Global Leadership and Organizational Behavior Effectiveness study.

99% 100%
93% 96% 58%
91% 91%
85% 87% 86%
64% 79% 82%
74% 54% 74% 76% 75%
68% 72% 71%
66% 67% 66% 65%
60% 56% 59%
51% 49% 52%
47%
42% 40% 42% 41%
37%
33%
25% 26%

Eastern Latin Latin Confucian Nordic Anglo Southern Germanic Middle Total
Europe America Europe Asia Europe Asia Europe East

University degree
Degree in business studies and economics
Recruited from personnel/human resource specialists (within or outside the organisation)
Female

Figure 28.2.  Profile of a human resource director in Global Leadership and Organizational
Behavior country clusters.

c­ ompared to other clusters, in the Nordic cluster, the HRM director is more likely a
female (t(3,119) = 2.916, p< .01) with higher education in human and social sciences (42.2
percent vs. 18.4 percent; t(2,698) = –12.224, p< .01). Greater representation of female
HRM directors may result from higher levels of gender egalitarianism in the Nordic
cluster (House et al., 2004). The educational background in human and social sciences
indicated previously may point to the importance of competencies of Ulrich et al.’s
(2017) human capital curator domain in this region. Neither a lack of business and eco-
nomics education nor being female seems to hinder HRM directors in Nordic countries
being invited to the top table, as evidenced by the relatively strong strategic integration
of HRM in Nordic countries (Lazarova et al., 2013). In support of these results, the study
of Ulrich et al. (2017) also indicates that, worldwide, female HRM professionals score
more highly in strategic positioner competencies.
618   Sender, Staffelbach, and Mayrhofer

The role of laws and regulations as external institutional factors shaping the profile of
HRM directors may be reflected in the educational background. For example, in Latin
Europe, the share of HRM directors with business and economics education is relatively
small compared to other clusters t(2,698) = 5.313; p < .01). A closer look into the data
indicates a significantly higher share of HRM directors with an educational background
in law in Latin Europe (33.1 percent; t(2,698) = –10.529; p < .01) and in Germanic Europe
(16.7 percent; t(2,698) = 2.325; p < .05) when compared to other clusters (9.5 percent).
This may indicate the importance of the competencies classified under compliance
manager in this European region (Ulrich et al., 2017). Indeed, in all European coun-
tries, the share of HRM directors with education in law is greater (15.2 percent;
t(2,820) = –7.010; p < .01) than in other regions (e.g., 4.1 percent in the Middle East, in
the data set represented by Turkey; or 1.9 percent in Confucian Asia, in the data set rep-
resented by China). These results are not surprising considering that, in many European
countries, unions play an important role and labor unions shape HRM in organizations
(Gooderham, Nordhaug, & Ringdal, 1999). These results correspond to the findings of
Ulrich et al. (2017) that, in Europe, HRM professionals score highest on compliance
manager competencies compared to other competency domains.
The profile of the HRM director also differs across industries. In the tertiary sector
(services and public administration), the HRM director is less likely to have a business
and economics education (39.4 percent; t(2,283) = 3.534, p < .01) when compared to the
secondary sector (46.9 percent). Looking into specific industries, we see that HRM
directors in public administration and compulsory social security (44.4 percent) as well
as in education (41.8 percent) are more likely to have a social and human sciences educa-
tion (t(2,762) = –5.691, p < .01) than in other industries (29.4 percent). In fields such as
education or public administration, education in social and human sciences may consti-
tute a good prerequisite for strategic integration. For example, because of public fund-
ing, organizations in education as well as in public administration must comply with
various regulations related to equal opportunity (Buck & Watson, 2002), which may
require a different HRM director profile than in the secondary sector.
Additionally, in the tertiary sector, the HRM director is more likely to be female
(60.7 percent; t(2,624) = 4.776, p < .01) when compared to the secondary sector
(51.3 percent). These results have been attributed to an aspect of gender-­led selection
processes, with females generally more likely to choose a work environment with a
greater probability of allowing a balanced portfolio between different spheres of life
(Niederle & Vesterlund, 2007). The public sector, included in the tertiary sector, places
more value on employees’ well-­being and thus is likely less competitive (Boyne, Poole, &
Jenkins, 1999). In the private sector, we observe the highest share of female HRM direc-
tors in telecommunications and information technology (77.8 percent), accommoda-
tions and food service, and the publishing and broadcasting industry (67.4 percent). The
fewest female HRM directors are found in construction (47.7 percent) and financial and
insurance activities (52.2 percent). In the secondary sector, HRM directors are more
likely to have an education in natural sciences or engineering (6.9 percent) than in the
tertiary sector (2.6 percent; t(2,283) = 4.902, p < .01). Thus, in manufacturing industries,
 The Profile of the Human Resource Management Director   619

the background in engineering and natural sciences may facilitate an understanding of

the business and an ability to speak the language of frontline managers.

Internal Environment and the Profile

of the Human Resource Management
Director

The analysis indicates that differences in the profiles of HRM directors operating in
the public and the private sectors are not very pronounced. In the public sector, the
HRM director is more likely to have a university degree (90.5 percent vs. 84.4 percent;
t(2,985) = –3.959, p < .01), whereas in private organizations, the HRM director is more
likely to have a business and economics background (44.8 percent vs. 31.6 percent;
t(2,583) = 5.780, p < .01). However, HRM directors in these two sectors do not differ in
terms of gender (t(2,991) = .188, p > .10). Interestingly, our data on private organizations
indicate that the HRM director is more likely to be recruited from the HRM department
(72.9 percent vs. 67.6 percent; t(5,381) = 2.794, p < .01), something that is at variance with
the results of the study by Kelly and Gennard (2000). They found, using much smaller
numbers than here, that a vertical career path (i.e., promotion to the role of HRM
­director from within the HRM department) was more common in the public sector.
Significant differences emerge when we look at the effects of organizational size (see
Figure  28.3). Compared to other organizations, small organizations are less likely to
have an HRM director with a university degree (t(3,237) = 3.103, p < .01), more likely

94%
84% 86%
79% 81%
76% 75%
73%
69% 68%
65%
62%
56% 56%
46% 44% 44%
39% 40% 41%

Below 100 100–249 250–499 500–999 More than 1,000

University degree Business and economics Recruited from human resources Female

Figure 28.3.  Profile of the human resource management director by size.

620   Sender, Staffelbach, and Mayrhofer

to have a female director (t(3,242) = 3.342, p < .01), and less likely to have a director
recruited from the HRM department (t(6,188) = 7.377, p < .01). A slightly larger share of
HRM directors in organizations with fewer than 250 employees have a business and eco-
nomics background than in larger organizations (t(2,799) = –2.117, p < .05). One reason
for this finding is that, in smaller organizations, HRM professionals often combine the
HRM function with other functions, such as finance (Bayo-­Moriones & Merino-­Díaz
de Cerio,  2001). Education in business and economics may allow HRM directors to
combine different roles in the organization.
Looking into education in more detail, we find that the share of HRM directors
with an education in law increases as the size of the organization increases (7 percent
in or­gan­i­za­tions smaller than one hundred employees and 13 percent in organiza-
tions larger than one hundred employees). This corroborates the importance of com-
petencies related to the compliance manager role of an HRM professional in meeting
external regulatory requirements in large firms. Interestingly, as the size of the
­organization increases, so does the education level (higher share with HRM directors
holding a university degree) and the probability that the HRM director was recruited
from the HRM department. Overall, as the size of the organization increases, the
professionalization of the HRM director, in terms of education and experience, rises.
Additionally, the larger the organization is, the less likely it is that the HRM director
is female. Although an overall increase in female HRM directors has been observed
for decades now (Lazarova et al., 2013; Reichel et al., 2010, 2013), the predominance of
male HRM directors in large organizations (above one thousand employees)
remains.

The Human Resource Management

Function and the Profile of the Human
Resource Management Director

As the results in Table 28.3 indicate, organizations with different levels of strategic

integration also differ in relation to the profile of the HRM director. If the HRM direc-
tor has a higher education, has a background other than business and economics, was
recruited from the HRM function, and is male, the strategic integration of HRM is
greater. These results corroborate previous findings that greater HRM experience and
higher education positively influence strategic integration (Reichel et al.,  2009).
Interestingly, whereas having a university degree facilitates strategic integration,
results indicate that education in business and economics is not a prerequisite for stra-
tegic integration of the HRM function. It may be that the competencies of HRM direc-
tors coming from a field different from business and economics (e.g., human and
social sciences or law) may provide a complementary element and contribute to HRM
 The Profile of the Human Resource Management Director   621

directors being included to a greater extent in strategic decision-­making in some

contexts.
Additionally, our results indicate that gender plays a role. Overall, female directors
are less likely to be included in the strategy development in organizations. However,
research indicates that female HRM directors successfully assume strategic roles in
HRM. For example, Ulrich et al. (2017) found that female HRM professionals bring
more competencies in the strategic positioner domain. Additionally, Reichel et al. (2010)
showed that feminization of the HRM profession has been accompanied by an increase
of strategic integration. Brandl et al. (2008b) demonstrated that strategic integration of
male HRM directors is similar to that of female HRM directors. Note, however, that
Brandl, Mayrhofer, and Reichel (2007) found significant differences across countries in
the level of strategic integration of men and women.
We observed that devolution of HRM is more likely to occur in organizations in
which HRM directors do not have a university degree (see Table 28.3). These results are,
however, confounded by the fact that in smaller organizations, where devolution of
HRM is more common (Mesner Andolšek & Štebe, 2005; Poole & Jenkins, 1997), HRM
directors are less likely to have a university degree. Looking into the experience of the
HRM directors, we find that in organizations with greater devolution of HRM, the HRM
director less often comes from the HRM function. Devolution of HRM requires
HRM professionals to increasingly cooperate with line managers on HRM-­related issues
(Kuvaas, Dysvik, & Buch, 2014; Whittaker & Marchington, 2003). This cooperation may
be easier when the HRM director has experience in functions other than HRM.
However, scholars have also argued that there are substantial challenges related to the
effective implementation of the devolution of HRM (McGovern, Gratton, Hope-­Hailey,
Stiles, & Truss, 1997; Renwick, 2003). Research indicates tensions between the HRM
department and line managers in sharing the responsibility of HRM in organizations
(Op de Beeck et al., 2016).

Profile of the Human Resource

Management Director and
Organizational Outcomes

Prior research on the competencies of HRM professionals suggests that they have an
impact on organizational results (Brockbank & Ulrich, 2002; Truss et al., 2002; Ulrich
et al., 2017). For example, the results of the global HRCS indicate that HRM competen-
cies are relevant in relation to their impact on organizational financial performance
(Brockbank & Ulrich, 2002). Whereas strategic contribution and personal credibility
explain 3 to 5 percent of the variance in financial performance, HRM delivery and busi-
ness knowledge account for 1 to 2 percent of the variance in financial performance. If the
622   Sender, Staffelbach, and Mayrhofer

profile of the HRM professional influences organizational results, we may see a

­different profile of the HRM director in organizations that differ in their profitability,
turnover, and absenteeism. Given that the causal link between the profile of the HRM
director and organizational results may be contingent on numerous factors, we do not
provide a detailed discussion in this chapter. Instead, we hope that our initial results
encourage further research on this topic by exploring potential mediators and moderators
as well as theoretical explanations.
The results of the Cranet study indicate that, interestingly, organizations with female
HRM directors are more successful in terms of profitability, productivity, and rate of
innovation (see Table 28.3). Moreover, female HRM directors are generally found in
companies operating in industries with growing markets. Interestingly, the HRM direc-
tor is more likely to be recruited from the HRM function and have a business and eco-
nomics education in organizations that are more successful. It seems that having a
business or economics education may constitute a good prerequisite for the HRM func-
tion in order to contribute to organizational results. If the HRM director comes from the
HRM function, he or she likely developed appropriate expertise to contribute to strate-
gic decision-­making (Lazarova et al., 2013).
Employee turnover rates and absenteeism may be important key performance indica-
tors for the HRM function. Given that organizations are becoming more knowledge
intensive, the position of HRM is stronger, especially in relation to human resource
development and retention (Laine et al., 2017). Consequently, in knowledge-­intensive
organizations, employee loyalty is almost as important as customer loyalty (Laine et al.,
2017). Results indicate that when an HRM director (1) has a business and economics
education, (2) is female, and (3) is recruited from within the HRM function, turnover is
higher. Additionally, absenteeism is higher in companies with male HRM directors (see
Table 28.3). These results are summarized in Table 28.4.

Conclusion

The profile and competencies of HRM directors are crucial in shaping the role of HRM
in organizations (Ulrich et al., 2017). In addition to maintaining expert knowledge in
core HRM areas, HRM professionals in senior and executive-­level positions must
understand the business and the language of top executives (Bell et al., 2006; Laine et al.,
2017; Suff, 2004). The profile of the HRM director shapes both their functional and their
strategic competencies and, consequently, the ability to contribute to strategic decision-
making in the organization (Cohen, 2015; Lazarova et al., 2013).
Although generally required competencies exist, research shows that the competen-
cies of HRM directors are often context specific (Lazarova et al., 2013; Ulrich et al., 2017).
The aim of this chapter was to extend this research and provide an overview of how the
profile of the HRM director differs depending on context. Overall, we have found that there
are significant contextual differences in the profiles of HRM directors. Two mechanisms
Table 28.3.  Profile of the human resource management director by function, market, and performance
  Being recruited Being
Having a Not having a Having business from human recruited
university university and economics Having other resource from other Being Being
degree degree t test education education t test department functions t test male female t test

Strategic Place on the 0.66 0.55 –4.64* 0.66 0.66 0.18 0.66 0.61 –3.43* 0.65 0.64 –1.10
position board
of HRM Involvement in 2.22 2.06 –2.74* 2.17 2.26 2.31* 2.15 2.13 –0.80 2.30 2.13 –4.46*
strategy
development
Devolution of HRM 2.33 2.52 5.30* 2.32 2.36 1.32 2.33 2.60 –2.61* 2.33 2.38 1.78
Organizational Service quality 4.06 4.07 0.35 4.12 4.02 –3.36* 4.05 4.04 –0.21 4.03 4.08 1.82
performance Productivity 3.72 3.76 0.84 3.77 3.69 –2.18* 3.76 3.72 –1.34 3.67 3.77 3.18*
Profitability 3.50 3.53 0.61 3.54 3.46 –2.00* 3.54 3.47 –2.31* 3.42 3.56 3.95*
Rate of 3.56 3.64 1.56 3.58 3.54 –1.02 3.60 3.48 –3.81* 3.51 3.61 2.66*
innovation
Stock market 3.30 3.03 –2.37* 3.30 3.27 –0.30 3.36 3.16 –3.17* 3.22 3.30 1.00
performance
Environmental 3.58 3.56 -0.35 3.65 3.53 –2.88* 3.65 3.56 –2.82* 3.62 3.55 –1.89
matters
(Continued)
Table 28.3.  Continued
  Being recruited Being
Having a Not having a Having business from human recruited
university university and economics Having other resource from other Being Being
degree degree t test education education t test department functions t test male female t test

Employee turnover (in %) 11.33 10.39 –1.24 12.40 10.58 –3.12* 11.40 10.54 –2.01* 9.84 12.26 4.56*
Absenteeism 9.57 9.14 –0.42 10.18 9.07 –1.38 9.92 10.39 0.67 10.54 8.71 –2.50*
Market (growing) 3.29 3.19 –1.89 3.25 3.31 1.30 3.33 3.27 –1.73 3.20 3.33 3.31*

Note: HRM, human resource management. For results on HR director being recruited from HR department the entire sample was used in the analysis. Otherwise, the sample with HR
human resource director being the respondent was used. Mean values and t-­test values are indicated. * p < .05 with statistically significant differences in bold. Place on the board was
measured with the question: “Does the person responsible for HR have a place on the Board or equivalent top executive team?” (1 = yes; 0 = no). Involvement in strategy development
was measured with the question: “If your organisation has a business/service strategy, at what stage is the person responsible for personnel/HR involved in its development?” (0 = not
consulted; 2 = on implementation; 3 = through subsequent consultation; 4 = from the outset). Devolution of HRM was measured with the averaged answers to the question “Who has
primary responsibility for major policy decisions?” on the following issues: pay and benefits, recruitment and selection, training and development, industrial relations, and workforce
expansion/reduction (1 = HR department, 2 = HR department in consultation with line management, 3 = line management in consultation with HR department, 4 = line management).
Organizational performance was measured across different dimensions with the following question “Compared to other organisations in your sector, how would you rate the performance
of your organisation” (1 = poor or at the low end of the industry, 2 = below average, 3 = average or equal to the competition, 4 = better than average, 5 = superior). Employee turnover
reflects annual employee turnover in %. Absenteeism was measured in days per year. To measure the market growth respondents indicated on a scale from one to five whether the market
their organization currently serves is declining or growing (1 = declining to great extent, 5 = growing to a great extent).
 The Profile of the Human Resource Management Director   625

Table 28.4.  Overview of the differences in the profiles of human resource

management directors
Factor type   Examples of differences in profiles of HRM directors 

External Regional differences Organizations in Germanic Europe are less likely to have
environment (e.g., cultural, HRM directors with a university degree, presumably because
institutional, and the educational system stresses vocational education. In the
regulatory factors) Nordic cluster, an HRM director is more likely to be a female,
which can be explained by the gender egalitarian culture. In
Europe, the share of HRM directors with education in law is
higher, likely because of importance of industrial relations.
Industry In the tertiary sector, the HRM director is more likely a
female and is more likely to have a background in human/
social sciences and law, rather than business and economics.
Market In organizations operating in growing markets, HRM
directors are more likely to be female.
Internal Size In smaller organizations, the HRM director is more likely to
environment be a female without a university degree, with a background
in business and economics, and not recruited from the HRM
department.
Ownership In private organizations, the HRM director is less likely to
have university degree, more likely to have a business and
economics background, and more likely to be recruited from
HRM when compared to public organizations.
Factors related Devolution Devolution of HRM is greater in organizations where an
to human HRM director does not have a university degree and is not
resource recruited from the HRM department.
function Strategic integration Strategic integration is greater in organizations where the
HRM director has a university degree, has a different
background than business and economics, was recruited
from the HRM department, and is male.
Performance Service quality, In more successful organizations, HRM directors are more
productivity, likely female, are more likely recruited from the HRM
profitability, rate of department, have a business and economics background,
innovation, stock and have a university degree.
market performance,
and environmental
matters
Employee turnover Employee turnover is higher when the HRM director has a
business and economics education, was recruited from the
HRM department, and is female.
  Absenteeism Absenteeism is higher in organizations where the HRM
director is male.

Note: HRM, human resource management.

626   Sender, Staffelbach, and Mayrhofer

explain significant differences in such profiles. First, it is likely that some sectors
attract individuals of different profiles to top HRM positions. For example, in line with a
somewhat stereotypical view of male and female primary interests, the manufacturing
sector attracts more male HRM professionals and the education sector attracts more
females (Charles & Bradley, 2002; Hinz & Gartner, 2005). Similarly, the secondary sector
attracts more individuals with education in engineering and natural sciences than the
tertiary sector does. The second mechanism results from the business requirements and
cultural aspects of being successful in senior HRM positions in different environments.
For example, we found that in more unionized environments, the HRM director is more
likely to have a higher education in law. Thus, the competencies linked with a compliance
manager role (Ulrich et al., 2017) may be more valued in such organizations.
Overall, the evidence presented in this chapter suggests significant differences in the
profile of HRM directors in various settings. Although some of these differences have
already been discussed in the literature (Lazarova et al., 2013), this chapter provides a
comprehensive overview of factors from the external and internal environment as well
as the HRM function itself with respect to strategic integration and devolution that con-
tribute to the diversity of HRM directors’ profiles. Our results indicate that the
­one-­size-­fits-­all approach is not justified, because organizational realities such as exter-
nal and internal factors, as well as positioning of the HRM function in organizations,
shape the required competencies of HRM directors and therefore influence their profile
in relation to education, experience, and gender.

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 chapter 29

Is the H um a n
R esou rce M a nagem en t
Depa rtm en t Becomi ng
Mor e Str ategic?
Exploring the Latest Global Evidence

Elaine Farndale and Maja Vidovic

This chapter focuses on the historical development of human resource management

(HRM) departments’ strategic orientation in different regions of the world, providing
both a theoretical base and an overview of current practices and trends. By observing
data on HRM departments across the globe over more than a decade, we paint a pic-
ture of the HRM department’s strategic evolution. Importantly, we consider how the
national-­level context affects the strategic activities of HRM departments, focusing on
cultural values and levels of economic development. As support departments embed-
ded in different organizational contexts, HRM departments are keen to demonstrate
how they can contribute to the performance of the firm. Similarly, organizational
leaders are interested in seeing a return on their investment in HRM department
activities.

Why Does It Matter whether the

Human Resource Management
Department Is Strategic?

Having a strategic HRM department means being able to support organizational goals
through people. This can be measured on a number of levels, such as being able to
632   Farndale and Vidovic

­ rovide financial indicators associated with the implementation of HRM policies and
p
practices, or HRM department members having a say in the business decision-­making
processes (often referred to as having a seat at the table). The question arises, therefore,
why does it matter whether the HRM department is strategic?
This debate started in the mid-­1990s, with much of the current theorizing stemming
from Pfeffer’s (1994) proposition that strategic HRM (versus more operational personnel
management) involves demonstrating the link between specific HRM practices and
enhanced organizational performance. Pfeffer called them best practices, although today
other related terms include high-­performance work systems, high-­commitment work
systems, or high-­involvement work systems. The idea behind this proposition is that the
HRM department can support the business by doing much more than traditional
operational administrative or “housekeeping” activities. By being more proactive,
appropriate HRM practices would lead to meeting organizational needs in relation
to the quantitative and qualitative supply of employees who are both engaged and
high performing. Pfeffer’s (1994) argument was that by observing the actions of high-
performing companies, “best” HRM practices could be identified in the way they
managed their employees. These best practices included selective employee sourcing,
systematic training and development, and a performance management system that
­provided a clear career path.
Since then, the link between HRM practices and organizational performance has
been explored extensively in both academic and practitioner literatures. In one of
the first published academic studies, Huselid (1995) demonstrated a positive corre-
lation between the degree of sophistication of HRM systems and the market value
per employee. Since then, commentators have proceeded to claim (e.g., Combs,
Liu, Hall, & Ketchen, 2006; Huselid & Becker, 2000), caution against (e.g., Wall &
Wood,  2005; Wright & Gardner,  2003), or disclaim (e.g., Hesketh &
Fleetwood, 2006; Keegan & Boselie, 2006) evidence of a clear impact of HRM on
bottom-­line performance. To highlight the popularity of this area of research, the
HRM/performance question has been the largest single topic of academic HRM
research in the United States and the United Kingdom since the mid-­1990s, filling
71 percent of US journal space and 45 percent in the case of British journals (Batt &
Banerjee, 2012).
Despite all the knowledge we have of the value of HRM systems and bundles of HRM
practices, we know much less about how the HRM department itself adds value. Here,
we explore what affects the way the HRM department contributes to the organization
through its strategic activities from two complementary perspectives: time and context.
Observations of how strategic the HRM department is in the early twenty-­first century
are based on the historical development of the function over time. Moreover, this
historical development has taken place at different rates in different countries worldwide
because of the different contexts within which organizations are operating. We discuss
these two perspectives, incorporating data from available studies to landscape what is
happening in practice.
 Human Resource Management Department Strategic?   633

How the Human Resource Management

Department’s Strategic Role Has
Developed over Time

Historically, the value of employees as an organizational resource has increasingly been

recognized since the industrial age and the specialization of labor. In the most recent
digital age (also known as the information age), which brought with it the concept of a
knowledge-­based society, availability of information and ease of global communication,
as well as globalization of businesses, markets, and workforces, talent-­centered business
practices have risen even further to the fore. The management of employees was initially
termed personnel management, whereby administrators dealt with the administration
of employee benefits and training and development. With the introduction of strategic
HRM in the 1990s, financial indicators provided solid and compelling reasons to
embrace this new way of thinking about personnel (e.g., Huselid,  1995; Delery &
Doty, 1996; Ulrich, 1997), and so the HRM department was born.
This has been a process of evolution that HRM departments have undergone to claim
strategic influence in organizations (Eaglebarger,  2016). Personnel management was
about administration, payroll processing, and compliance. Since then, the HRM
department has progressed through becoming experts on running a whole range of
employee programs, such as benefits, new hire orientation and on-­boarding, and
performance management. The HRM departments have become more strategic and
business oriented (with HRM as a business partner now being commonplace), while
line management has taken on some of the more operational HRM activities (Poór,
Szabó, Óhegyi, & Farkas, 2014). Vidovic and Farndale (2016, p. 23) provide a continuum
that summarizes these developments whereby HRM has developed from simply
focusing on delivering good business practice to being a tool for creating organizational
competitive advantage (see Figure 29.1). Furthermore, with the most recent trends of
new employee generations actively pursuing not only work–life balance but also a sense

HRM as a mediator
HRM as a HRM as a source of HRM as
HRM as merely between human HRM as a
contributor to competitive chief
1980s good business
organizational
capital and competitive
advantage (direct
strategic
happiness
2020s
practice advantage (indirect partner
performance contribution of HRM) officer…?
contribution of HRM)

Figure 29.1.  Historic perspective on the contribution of the human resource management
(HRM) department. Based on Vidovic and Farndale (2016, p. 23).
634   Farndale and Vidovic

of happiness in the workplace, and with research results showing the connection
between employee engagement and happiness (e.g., Joo & Lee, 2017), we might even see
the more frequent emergence of the role of HRM departments as chief happiness offi-
cers, following the lead taken by, for example, organizations as diverse as Google and the
Social Security Ministry in Belgium (Messinger, 2015)!
Connecting HRM practice to performance arguably paved the way for HRM depart-
ments to adopt a strategic role. As part of this process, some propose that HRM
­measurement has been a crucial driver of the professionalization of the HRM depart-
ment and its role as a strategic partner to top management (Amalou-­ Döpke &
Süß, 2014). The desire to demonstrate (or counter) a link between HRM and perfor-
mance has meant that HRM measurement has become a central topic in HRM research
and practice. The growth and sophistication of HRM have been paralleled and sup-
ported by the growth in information technology capability (Marler & Fisher, 2017, p. 1).
Not only has technology provided an easy and efficient solution for many of HRM’s
administrative tasks, but also it has provided new opportunities for HRM departments.
For example, trust in the HRM department has been found to be developed through the
adoption of relational e-­HRM systems, according to one study of Generation Y employ-
ees in Italy (Bissola & Imperatori, 2014).
Regardless of what has facilitated the HRM department’s rise and visibility in
organizations, scholars and practitioners alike are keen to understand what stage of
strategic development the department has reached. A primary measure of development
is the formal recognition of the strategic role of the HRM department, often
demonstrated by the head of the HRM department being granted a position on an
organization’s executive board (Farndale, 2005). Over the years, this has become a holy
grail for HRM practitioners, with many HRM professional associations advocating such
a position to influence business decisions. Research shows that how and when HRM
departments are afforded board representation are linked to the perceived value of the
function (Buyens & De Vos, 2001). Having board representation (Mäkelä, Björkman,
Ehrnrooth, Smale, & Sumelius, 2013) and being perceived as adding value (Buyens & De
Vos, 2001) are important factors affecting the ability of the HRM department to deliver a
valued contribution to the organization.
Moreover, the presence of a full-­time HRM director on the board makes a substantial
difference to the department’s involvement in top-­level decision-­making processes
(Kelly & Gennard, 2001) and confers symbolic status and professionalism at least, if not
influence (Farndale,  2005; Truss, Gratton, Hope-­ Hailey, Stiles, & Zaleska,  2002).
Similarly, extant research has established that having high organizational status is
typically associated with those capable of demonstrating functional effectiveness (Kim
& Ryu,  2011) and with larger HRM departments (Brewster, Wood, Brookes, & van
Ommeren, 2006). However, it is not yet clear whether having a seat at the table results in
greater organizational contribution or if that level of contribution must be achieved to
win a seat at the table. Either way, we might assume that this is a mutually reinforcing
relationship. Later in this chapter, we address some of these questions by exploring
empirical data.
 Human Resource Management Department Strategic?   635

Contemporary Challenges Facing a

More Strategic Human Resource
Management Department

In many organizations, administrative, day-­to-­day HRM tasks have been moved from
the HRM department either to line managers or to employee self-­service systems
supported by advanced e-­HRM technology (Johnson & Gueutal, 2011) or HRM shared
service centers (Collier & Levita Schallenbach, 2017). This has created space for HRM
department members to take on responsibility for more strategically oriented
HRM  tasks and decisions. Arguably, the HRM department’s main contributions
to HRM practice implementation in the early twenty-­first century are developing
­high-­quality HRM practices and adequate technical advice to line managers (Guest &
Bos-Nehles, 2013). Practitioners of HRM see becoming a strategic partner as a “release”
from previous administrative constraints, but with tensions developing as strategic
partners attempt to retain a say in transactional issues (Pritchard, 2010). From the other
side of the table, line managers are resisting taking on administrative HRM tasks or per-
forming them poorly (Woodrow & Guest, 2014). It appears that the battle that has long
been fought for HRM to develop a strategic reputation has now shifted to being a battle
to convince line managers and employees of the importance of HRM practices. As
Becker and Huselid (2006) caution, achieving a match between HRM practices and an
organization’s strategy does not guarantee effective implementation: When HRM
departments remain passive, implementation is likely to fail (Trullen, Stirpe, Bonache,
& Valverde, 2016).
The HRM department is also faced with the option of outsourcing a range of HRM
activities. From an initial reluctance toward using outside resources to deal with the
organization’s most valuable resource—its talent—times have changed. The HRM
outsourcing trend began with transactional recruitment and selection tasks, allowing
HRM to become more strategic (Bagga, 2015). In other words, as HRM activities are
outsourced, there is less need for people in the HRM department, but also more
opportunity for the department to tackle more strategic activities (Brewster et al., 2006).
In the early twenty-­first century, organizations are most likely to outsource talent
acquisition (i.e., recruitment and selection in the broadest sense), administration
(including payroll processes and employee benefits), and development (including
training, assessment, surveys, and performance management support) (Bagga, 2015).
Considerable differences remain, however, between countries in the extent of
HRM outsourcing. For example, one study in German-­speaking countries noted that
outsourcing has had a slower start than in other nations; in general, larger HRM depart-
ments are more likely to outsource activities (Wahrenburg, Hackethal, Friedrich, &
Gellrich, 2006) (see Chapter 27 of this text for a discussion on human resource [HR]
outsourcing).
636   Farndale and Vidovic

Human resource management departments not only have an impact on people

inside their organization (either directly on employees or indirectly through line
managers, information technology systems, or outsourcing arrangements), but also
affect HRM practices in other firms and potentially in other parts of the globe, espe-
cially when they are housed in large multinational corporations (MNCs) (Vidovic &
Farndale,  2016). Through the transfer of HRM practices within an MNC, HRM
departments influence the quality of HRM practices across the firm’s operations, as
well as other firms mimicking what they perceive as best practice. With such pro-
found influence, not only inside the organization but also far beyond, we need to
re-­examine thoroughly the strategic contribution of HRM departments on a global
scale. As Schultz and van der Walt (2015) advocate, the time for the HRM depart-
ment to rise is now, and not only to become more relevant but also to become trend-
setters in the arena of “people” management, seeing employees as people rather
than organizational resources. Being consistent and strong advocates of these people
can lead to promoting respect for humanity at work (Cleveland, Byrne, &
Cavanaugh, 2015).

How the Human Resource Management

Department’s Strategic Role Varies by
Context

Given what it means to be a strategic HRM department, seeing the value of this to
organizations and how it has developed over time, we might expect that HRM
departments have universally adopted such a role across the globe. There are, however,
several factors that mean that both the value of being strategic and the ability of the
HRM department to be strategic are more limited in certain national contexts than in
others. Here we explore trends in strategic development by comparing different clusters of
countries across the world based on cultural values and levels of economic development.
We start by considering how cultural values might affect the way HRM is perceived
and valued inside organizations. The extent to which an HRM department takes on a
strategic role is closely related to power distance and hierarchical structures in
organizations (e.g., Santos, Bronzo, Oliveira, & Resende, 2014). Power distance is the
willingness of people to accept unequal power distribution in society or in organizations
(Hofstede, 1980). In an organization with a flat organizational hierarchy (i.e., low power
distance), there could be many opportunities for HRM department members to be
involved in organizational strategy development or decision-­making because of the
flatter structure. In contrast, in an organization with multiple hierarchical levels (i.e.,
high power distance), it may be more challenging for HRM department members to
earn the right to participate in top-­level decision-­making.
 Human Resource Management Department Strategic?   637

Moreover, another cultural value that can affect HRM’s involvement in strategic
activities is masculinity. Masculine cultures place great value on performance, money,
achievement, and assertiveness (Hofstede,  1980). Human resource management
departments embedded in organizations in such cultures are expected to be more
driven to make a difference in organizations, particularly in relation to demonstrating
high performance, added value, and a bottom-­line contribution. In such societies, job
enrichment (including job enlargement) has, for example, been found to meet employee
personal work goals because it provides employees with greater autonomy (Hsu, 1999).
In contrast, feminine societies place greater emphasis on developing a nurturing
environment in which employees can develop and feel supported. Although such values
might be part of an HRM strategy, HRM department members are expected to be less
assertive in demanding a strategic role, and hence if they are not demanding it, such a
role is likely slower to emerge.
In addition to these cultural values, among others, the level of economic develop-
ment of a country can also provide significant insight into the level of strategic
­development of HRM (Sparrow, Scullion, Farndale, & Vidovic, 2019). Higher levels
of economic development mean greater potential for employee programs to be
­developed, beyond the basic requirements of hiring, paying, and firing employees.
As economic development increases, we might expect to see the implementation
of  more strategic programs for employee development, career, and performance
management, for example. For organizations to adopt such programs, the HRM
department would need to adopt a more strategic role, emphasizing the value of such
programs to the organization, rather than merely conducting traditional transactional
administration.
Based on these cultural and economic contextual factors, for the purpose of illustra-
tion, we identified four clusters of countries from across the world that we compare here
in relation to the level of HRM department strategic activity. These clusters are summa-
rized in Table 29.1. There are three clusters that on average have a higher level of eco-
nomic development (Anglo-­Saxon, Germanic, Nordic) and one with a lower level of
economic development (Slavic). We expect the more economically advanced clusters to
have HRM departments with higher levels of strategic activity. Beyond economic devel-
opment, the cultural values of power distance and masculinity allow us to distinguish
between the clusters further. The Anglo-­Saxon group has a medium level of power dis-
tance combined with relatively high masculinity. This is similar to the profile of the
Germanic group, with the exception of the Netherlands, which has very low masculin-
ity, and Austria, which has a very low power distance (deviant scores are noted in
Table 29.1 in italics). In contrast to both of these clusters, despite also being highly eco-
nomically developed, the Nordic cluster has mid to low power distance and low mascu-
linity values. The less economically developed Slavic cluster shows less cultural
homogeneity, but the countries have similar levels of transitional economy states.
They also have in common that they became members of the European Union in
2004, which can be argued to have influenced how HRM is conducted in these countries
638   Farndale and Vidovic

Table 29.1.  Cultural value scores of country clusters

  Power distance Masculinity

Clusters with higher economic development

Anglo-­Saxon
Australia 36 61
United Kingdom 35 66
United States 40 62
Germanic
Austria 11 79
Germany 35 66
Netherlands 38 14
Switzerland 34 70
Nordic
Denmark 18 16
Finland 33 26
Iceland 30 10
Norway 31 8
Sweden 31 5
Cluster with lower economic development
Slavic
Estonia 40 30
Hungary 46 88
Slovakia 100 100
Slovenia 71 19

Note: Deviant scores are presented in italics.

Source: Hofstede, Hofstede, and Minkov (2010); Hofstede Insights.

as each member state has gradually incorporated relevant directives related to the
employment relationship.

Empirical Evidence

To understand current trends, we present here results from the Cranet survey, which
focuses on gathering data on HRM policies and practices from countries across the
globe. Here we draw on data collected from HRM managers during the last three rounds
of the survey, spanning 2004/5 to 2014/15. In total, we employ data collected from more
than fourteen thousand companies across the four country clusters described previously
(see Table 29.2). We also draw on other available comparable data sources to provide
additional evidence of current and historical data trends.
As noted, a primary indicator of an HRM department’s strategic position is whether it
is represented directly on the corporate board, that is, whether it has a seat at the table.
 Human Resource Management Department Strategic?   639

Table 29.2.  Total number of responses (organizations) per country cluster and
percentage per cluster per data collection round

  2004/5 2009/10 2014/15

Total number of responses (%) (%) (%)

Anglo-­Saxon 4,114 31 35 29
Germanic 3,049 26 22 23
Nordic 3,619 31 26 26
Slavic 2,090 12 17 22
TOTAL 14,124      

Source: Cranet survey (2004/5, 2009/10, 2014/15).

Based on Cranet data (see Table 29.3), in 2014/15, an average of 66 percent of responding

organizations report the HRM department having a place on the corporate board or
equivalent top executive team—a substantial rise compared to 55 percent in 2004/5. The
general trend shows the majority of organizations providing the department with a
place on the board, with the figures steadily increasing, attesting to gaining an
increasingly strategic position in organizations.
Across the regions, this figure is highest in the Nordic cluster (2014/15, 77 percent)
and lowest in the Germanic (2014/15, 57 percent) and Slavic (2014/15, 58 percent) clusters.
All but the Germanic cluster shows an increasing percentage of organizations reporting
the HRM department having a place on the board over time. From an economic
development perspective, these data are somewhat in line with our reasoning, in that we
would expect the Slavic cluster to show the lowest level of HRM representation on the
board. The Germanic cluster, however, goes against this reasoning. This can in part
be  explained by the two-­tier supervisory board structure in German and Austrian
­organizations, with comparable one-­tier structures in the Netherlands and Switzerland,
in which employees have direct representation at the board level and as such perhaps
have less need for an HRM department presence. However, the Nordic countries also
have corporate governance structures that provide employee representation rights at the
board level, yet also have a strong HRM department presence, so the two do not need to
be mutually exclusive. We might explain this from a cultural perspective because of the
higher level of femininity in the Nordic countries, with the focus on employee
­well-being being more prominent on the corporate agenda and therefore giving the
HRM department a greater voice to support it.
Central to the issue of the HRM department holding a strategic position is its
size  (and the extent of outsourcing) relative to the number of employees served
(Brewster et al., 2006). Typically, the proportion of employees in the HRM depart-
ment tends to be smaller in larger organizations because of economies of scale,
­particularly in some service-­sector industries (i.e., retail and distribution), while it
tends to be larger in public-­sector organizations (Brewster et al., 2006). Extant studies
640   Farndale and Vidovic

Table 29.3.  Percentage of organizations where the human resource management

department has a place on the corporate executive board

  2004/5 2009/10 2014/15

Anglo-­Saxon 46 64 71
Germanic 59 55 57
Nordic 69 76 77
Slavic 33 76 58
Mean 55 67 66

Source: Cranet survey (2004/5, 2009/10, 2014/15).

have demonstrated substantial differences between organizations in their average

ratios of HRM department members to full-­time equivalent employees (Walker,
1988), although these ratios have been found to be reasonably stable over time
(Brewster et al., 2006).
Based on Cranet data, median HRM department staff-­to-­employee ratios have fluc-
tuated slightly in each year of data collection, but overall remain relatively stable (around
1 HRM staff member to 90 employees) (see Table 29.4). The Anglo-­Saxon cluster ratio
has reduced over time (from 1:91 to 1:75), while the other cluster ratios have increased,
most markedly in the Nordic cluster (from 1:94 in 2004/5, to 1:118 in 2009/10, to 1:113 in
2014/15). The survey findings appear to indicate increased intensity of HRM department
work over time in most clusters. It could be argued that the HRM departments in coun-
tries with higher levels of masculinity have placed more focus on achieving their goals in
supporting employees, thus resulting in ensuring optimal numbers of HRM department
staff members.
Comparing the Cranet data with other available evidence, data from the United
States of America indicate that the median ratio of HRM department staff to total
employee headcount decreased to 1.1 full-­time equivalent staff members for every
100 employees served by the department in 2015, from 1.3 HRM staff per 100 employees
in both 2013 and 2014 (Bloomberg BNA, 2015). This trend is more in line with other
country clusters, countering the Anglo-­Saxon trend noted previously. In line with the
Cranet data, a study of HRM departments in Austria, Germany, and Switzerland reported
an average ratio of HRM department staff to total staff of 0.03, that is, approximately 1 HRM
department member to 30 employees (Wahrenburg et al., 2006), leading us to conclude
that the Germanic countries have the greatest capacity in their HRM departments to
provide a range of services, including focusing on employee flexicurity and sustainability
(Schneider & Flore, 2017).
Women have historically played a substantial role in HRM departments (Reichel,
Brandl, & Mayrhofer,  2010), and the Cranet data support this continuing trend: on
average, women constitute 73 percent of HRM department members (see Table 29.5).
This percentage has been increasing in all clusters except the Slavic cluster, although in
 Human Resource Management Department Strategic?   641

Table 29.4.  Median human resource management department staff-­to-­employee

(full-­time equivalent) ratio

2004/5 2009/10 2014/15

Anglo-­Saxon 1:91 1:79 1:75

Germanic 1:71 1:78 1:85
Nordic 1:94 1:118 1:113
Slavic 1:98 1:96 1:100
Mean by data collection round 1:89 1:91 1:90

Source: Cranet survey (2004/5, 2009/10, 2014/15).

Table 29.5.  Mean percentage of female human resource management (HRM)

department staff in the HRM department

2004/5 2009/10 2014/15

Anglo-­Saxon 72 78 80
Germanic 63 71 73
Nordic 69 73 80
Slavic 82 89 62
Mean by data collection round 70 76 74

Source: Cranet survey (2004/5, 2009/10, 2014/15).

the Slavic cluster the initial percentage was high (2004/5, 82 percent), increasing in
2009/10 (89 percent), but dropping back to 62 percent in 2014/15. It will be interesting to
monitor this trend in the future to see whether this is just a temporary dip in the data or
a real phenomenon that counters the trend in other global clusters.
Table 29.6, based on Cranet data, shows that the most common source of talent for the
HRM department is through the recruitment of HRM specialists from other organiza-
tions (on average, around 40 percent of organizations report using this source for each
data collection round). This is particularly dominant in the Anglo-­Saxon cluster (2004/5,
55 percent; 2009/10, 52 percent; 2014/15, 54 percent of organizations). It implies that it is
important for firms to find skilled HRM talent to run their HRM departments, which
may again be explained by high masculinity driving the impetus for the department’s
high performance. In contrast, the Slavic cluster is almost equally likely to source senior
HRM leadership from within the HRM department, from HRM specialists outside of the
organization, or from non-­HRM specialists already inside the organization. We can
speculate that this may be a result of the lack of HRM professionals available given the
relatively recent move toward more strategic HRM as the countries have d ­ eveloped
642   Farndale and Vidovic

Table 29.6.  Percentage of organizations reporting from where the person

responsible for human resource management was recruited
  Anglo-­Saxon Germanic Nordic Slavic Mean

2004/5 Within HRM department 24 24 18 30 24

Internal non-­HRM specialists 13 23 31 27 25
External HRM specialists 55 43 34 30 40
External non-­HRM specialists 8 11 17 13 11
2009/10 Within HRM department 22 30 19 26 25
Internal non-­HRM specialists 14 22 22 35 25
External HRM specialists 52 36 46 26 39
External non-­HRM specialists 12 11 13 13 11
2014/15 Within HRM department 26 29 18 30 28
Internal non-­HRM specialists 12 19 22 25 20
External HRM specialists 54 43 48 35 42
External non-­HRM specialists 9 9 12 11 9

Note: HRM, human resource management.

Source: Cranet survey (2004/5, 2009/10, 2014/15).

economically. The Nordic cluster is least likely to promote a member of the existing HRM
department to lead the function (only 18–19 percent of organizations reported taking this
approach). Change over time has been minimal, but perhaps most marked in the Nordic
cluster, where the shift to the recruitment of more external HRM specialists is notable
(rising from 34 percent of organizations in 2004/5 to 48 percent in 2014/15).
The Cranet data also provide insights on the extent to which the HRM department
takes a formalized role in the organization. In 2014/15, 68 percent of responding organi-
zations reported having a written HRM strategy (see Table  29.7). This figure has
increased substantially since previous rounds of data collection (57 percent in 2004/5
and 55 percent in 2009/10). The Nordic and Anglo-­Saxon clusters are most likely to have
a written HRM strategy. The formalizing of the HRM strategy can be taken as an indica-
tor of an explicit commitment to developing a more strategic HRM department.
Beyond having a seat at the table and formalizing HRM strategies, the Cranet data
allow us an insight into the extent to which HRM departments are involved in the devel-
opment of business strategy (see Table  29.8). This occurs either from the outset or
through subsequent consultation in around three-­quarters of all respondent organiza-
tions. Looking in more detail at data on specific organizational activities, close to half of
the HRM departments report that they are consulted from the outset in merger, reloca-
tion, or acquisition situations, although interestingly this has declined in each of the
successive rounds of data collection (from 50 percent in 2004/5, to 49 percent in
2009/10, to 42 percent in 2014/15).
 Human Resource Management Department Strategic?   643

Table 29.7.  Percentage of organizations reporting having a written human

resource management strategy
  2004/5 2009/10 2014/15

Anglo-­Saxon 61 62 68
Germanic 47 40 61
Nordic 70 73 78
Slavic 48 44 63
Mean 57 55 68

Source: Cranet survey (2004/5, 2009/10, 2014/15).

Table 29.8.  Percentage of organizations reporting the stage at which the human
resource management department is involved in developing the business strategy
Anglo-­Saxon Germanic Nordic Slavic Mean

2004/5 Not consulted 11 13 8 12 11

On implementation 9 10 10 19 11
Subsequent consultation 30 25 23 26 26
From the outset 50 52 59 44 52
2009/10 Not consulted 12 15 5 8 10
On implementation 8 12 9 17 13
Subsequent consultation 33 29 26 21 27
From the outset 47 45 61 53 51
2014/15 Not consulted 9 16 6 15 11
On implementation 12 9 9 16 13
Subsequent consultation 30 21 20 27 25
From the outset 49 54 64 42 51

Source: Cranet survey (2004/5, 2009/10, 2014/15).

The Slavic cluster shows the lowest strategic involvement either from the outset or
through subsequent consultation in business strategy development (increasing from
70  percent of organizations in 2004/5 to 74 percent in 2009/10, but falling again to
69 percent in 2014/15). We might argue that this is again evidence of the transitional
economy conditions in firms in this region, in part at least because there is little tradi-
tion  of the HRM department having anything beyond an administrative role. The
medium to high levels of power distance in these countries might also explain why
the department has a more limited role to play in organizational decision-­making; the
HRM department is likely still in the phase of earning the right to become more involved.
644   Farndale and Vidovic

We raised the issue of the extent to which the HRM department was creating a more
strategic role for itself by assigning transactional HRM activities to be implemented
through line managers. Based on Cranet data, on average across the countries studied,
the HRM department appears to be moving away from working jointly with line man-
agement, taking sole responsibility for major policy decisions across a range of HRM
activities including pay and benefits, recruitment and selection, training and develop-
ment, industrial relations, and workforce expansion/reduction (see Figure 29.2). Line
management is most active in taking sole responsibility or leading in a collaboration
with HRM in the area of workforce expansion policy decisions and least active in estab-
lishing industrial relations policies.
The most notable exception to this trend is the Slavic cluster, where organizations
report line managers having much more autonomy in deciding on policy, especially
related to pay and benefits (2014/15, 41 percent of Slavic organizations compared to 8
percent of Anglo-­Saxon organizations). Again, the less developed HRM traditions
across these countries are likely to mean that line managers have been used to handling
such matters, and it is only gradually that HRM departments are able to demonstrate the
added value that they can contribute to these processes.
Although Cranet data were not available to explore trends of HRM department activ-
ities in Asian countries (which are largely high on power distance and masculinity, but
lower [with notable exceptions such as Japan and South Korea] on economic develop-
ment), other studies provide an insight into developments that have taken place over
recent years. The little data available on India indicate that 91 percent of both public and

40%
37%
35%
32% 32%
30%

25%

20% 18% 18%

15% 14%
11% 11% 11% 12% 10% 10%
10% 8% 9% 8%

5%

0%
Pay and benefits Recruitment and Training and Industrial relations Workforce
selection development expansion/reduction

2004/5 2009/10 2014/15

Figure 29.2. Percentage of human resource management (HRM) departments with sole

responsibility for HRM activities. From the Cranet survey (2004/5, 2009/10, 2014/15).
 Human Resource Management Department Strategic?   645

private organizations have an HRM strategy, with almost all these organizations reporting
that HRM had become more proactive over the previous five years (Budhwar &
Boyne, 2004). Regarding Chinese firms, Cooke (2010) notes that traditionally, the per-
sonnel/HRM department of a Chinese firm played a mainly administrative role with lit-
tle autonomy, similar to what we noted in the Slavic region. Over time, the traditional
personnel management policies once characteristic of the dominant state-­owned sector
have since been replaced by a diverse range of HRM practices (Cooke & Rowley, 2010).
In the early twenty-­first century, the HRM capacity of firms in China remains relatively
limited, however, with little training or professional development for HRM practitio-
ners. Cooke (2010) concludes that HRM practitioners therefore have little capacity or
input in formulating HRM strategies and policies, implementing HRM initiatives, and
aligning HRM outcomes with business performance. Focusing on China, Sumelius,
Smale, and Björkman (2009) explored the role of the HRM department in MNC subsid-
iaries from 1999 to 2006. They observed an increase in the strategic role, especially in
larger subsidiaries. Larger departments were found to be more strategic, that is, they
were more involved in the strategic planning process, they were viewed by others as
business partners, and there was an explicit effort to align business and HRM strategies.
The trend, therefore, appears to indicate an increasingly strategic role.

Conclusion

In this chapter, we have attempted to outline the strategic development of HRM

departments, exploring what has happened over recent years, comparing different
national contexts. Is the HRM department becoming more strategic? Our conclusion is
a qualified yes. Being strategic has become an important objective for HRM practitioners
in many countries around the world, with such a role being strongly encouraged by
HRM professional bodies. The argument behind why it is so important to become more
strategic is that this enables the HRM department to deliver more value to the
organization and to help it develop sustainable competitive advantage.
From a temporal perspective, if we look at how the HRM department has developed
over time, we can see specific times that have represented fundamental shifts in how we
think about HRM. Historically, the most influential shift occurred in the late 1980s/early
1990s when “personnel” departments became “HRM” departments, signifying the
greater emphasis on making a strategic contribution to the organization. Since this time,
we have witnessed the rise of the HRM business/strategic partner and the HRM
department taking its seat at the decision-­making table. Research evidence shows that
this presence on the board of directors continues to increase across organizations in
many countries worldwide. As the digital age takes hold, future research might focus on
the extent to which technological innovations such as artificial intelligence and
robotization might influence the HRM department’s role in organizations. Will this
facilitate the HRM department having a greater impact on the bottom line for the
646   Farndale and Vidovic

­ rganization, or will the HRM department gradually become more marginalized as the
o
need for its expertise decreases?
A strategic role for the HRM department also has implications for line managers: As
HRM attempts to move away from transactional HRM, line managers are asked to pick
up some of these activities. This was a clear trend in the 1990s as HRM was focused on
establishing its strategic role. Since then, what we have witnessed is the HRM
department starting to work less in collaboration with line managers and instead
claiming back control over the policy areas that traditionally belong to the HRM domain
(recruitment, training and development, pay and benefits, industrial relations, and
workforce expansion/reduction), although the extent of change is also dependent on
contextual factors. Arguably, this could be a sign that HRM is looking to re-­establish the
value of its specialist knowledge, perhaps in reaction to the emerging digital trends. A
similar pattern has been seen previously in the area of outsourcing (Cooke, Shen, &
McBride, 2005): After a trend of extensive outsourcing of HRM activities, it is common
to see activities being reclaimed in-­house to establish control over practices to ensure
they serve the organization as closely as possible. It will be important in future research
to monitor this trend of assignment of HRM activities between the HRM department
and line management to understand HRM’s strategic role.
In addition to developments in the HRM department and its core activities over time,
we have also explored here how the broader context in which organizations are operat-
ing can affect the strategic role of the department. We found a clear connection between
how advanced an economy is and the extent to which the HRM department can be more
strategic. Observing the less economically developed Slavic countries, in comparison to
the other country clusters, this showed the lowest level of HRM board representation, a
high ratio of employees per HRM department staff member, a less exclusive career path
into senior HRM positions, and the lowest strategic involvement in business strategy
development. We also posited that this may be a result of higher levels of power distance
in these countries, which could mean that the HRM department is having to work hard
to establish its position in the organizational hierarchy.
In contrast, the Nordic cluster is somewhat exemplary in terms of how the HRM
department has developed its strategic role. Organizations there are most likely to have a
seat at the table, high efficiency in terms of the number of HRM staff to employees
served, selective processes to find HRM experts to fill senior positions, strong
formalization of HRM through a written strategy, and the highest frequency of being
involved from the outset in business strategy development. Given the strong feminine
values of Nordic society, it is perhaps unsurprising that these countries have systems in
place to develop their employees and help them feel supported in the workplace.
In conclusion, the trends over time and across contexts appear to suggest directional
convergence in the HRM department moving toward achieving a more strategic role.
The pace at which this is being achieved, and even what the ultimate goal might be, is
dependent on the context in which the organization is operating. What is the next step
for the strategic HRM department? It will be interesting to observe the changes to the
role of the HRM department across clusters and countries, as contextual factors have
 Human Resource Management Department Strategic?   647

demonstrated a substantial impact on shaping the path of the department. Additionally,

it will be interesting to see what new activities HRM is able to undertake to continue to
contribute to the bottom line of the firm, while also finding ways to support employee
well-­being. Building on the data and the insights provided here, future research might
further explore the extent to which patterns of economic development and cultural
values (perhaps extending beyond masculinity and power distance) shape the approach
that HRM departments take to adopting a strategic role to foster employee well-­being as
well as impacting organizational performance. Consequently, we also need to continue
our exploration to understand the outcomes of a strategic role for the HRM department
in terms of employee and organizational productivity. Substantial opportunities
therefore remain for future research in this field.

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 Index

For the benefit of digital users, indexed terms that span two pages (e.g., 52–53) may, on
occasion, appear on only one of those pages.
Note: Page references followed by a “t” indicate table; “f ” indicate figure.

Abdul-Halim, H.  586 globalization effects in  320–1

ability 505 home-country practices  317
Abledu, G.  529–30 HRM departments  310t
absenteeism, for management directors  622 ideal-type management systems  316–17
absolute convergence  370–1 inclusion strategies in  311–13
Abu Bakar, R.  350 industrial relations in  318–21
achievement-ascription perspective  29–30 Japanese practices in  315
action learning  547 knowledge systems in  316
action programs, for minorities  442–3, labor markets in  309–11, 319–20
443t, 444t labor unions in  318
recruitment, for diversity management  literature on, lack of  307
576–7 migration patterns  310
active learning thesis  554–5 MNCs in  307–9, 314, 317
Adam, J.  241–2 policy-setting for labor markets in  319–20
Adams, K.  321 political transformation in  308
Adisu, K.  117–18 regional subdivision of  308
Adler, P. S.  74 research context for  308–9
adult learning  551 terrorism in  138
affective autonomy  30–1 trade unions in  321t
Afghanistan, terrorism in  141 transitional economies in  307
Africa, HRM in. See also North Africa; ubuntu concept in  123, 314–17
Sub-Saharan Africa; specific countries unemployment rates in  309
adoption of  313–15 Western influences on  315–16
Black middle class in  317–18 written strategies, organizations with  310t
China management influences in  315–18 African Growth and Opportunity Act,
collective bargaining in  319 U.S. (2000) 319–20
colonial history in  311 Ahmed, R. O.  144
cross-cultural diversity in  307–8 Alewell, D.  585
dependency theory and  316 Alfes, K.  437–8
diversity management in  308, 311–13 Ali, A. J.  332
economic growth rate in  308–9 Allende, Salvador  293
emerging markets in  123–4 Allinson, C. W.  37
EMMNCs in  121 Allio, M.  460, 467–8
empirical studies on  308 Almhedie, A.  34
employment relations  318–21 Almond, P.  497–8
flexible labor regimes in  310 Alvesson, M.  72–3
652   index

Amable, B.  382, 507 collectivism in  350

Amankwah-Amoah, J.  307 colonial legacy of  348–9
Amante, M. S. V.  377–8 Confucian values in  345
Amram, S.  144 contextual factors for  348
Anakwe, U. P.  382–3 distinctiveness of  348–9
Andersen, L. B.  101–2, 419 diversity management in  359–60, 574
Anglo-Saxon countries, HRM in. See also economic reforms in  346–8
specific countries education systems in  348–9
capitalism in  159–60, 172 employee well-being in  355, 359
CMEs in  161 financial rewards and  358–9
collective bargaining in  169–70 future research for  357–60
comparisons between  165–71, 166t gender inequality in  352–4
cultural influences on  10–11 harmony in, as social value  349–50
cultural theories for  160 institutional logics in  350
definition of term  159 institutional reforms in  346–8
electoral systems and  10, 171 labor force in, median age for  360f
Germanic cluster influenced by  178 leadership research for  356–7
Hall’s framework for culture in  28–9 MNCs in  345, 355, 359–60
institutional theories for  160–1 MNEs in  397–8, 402–7
labor movements in  169–70 ownership in, types of  353
LMEs in  159–64 paternalism in  350
social protection mechanisms in  169 performance management in  359
Angola, economic growth rate in  308–9 population demographics in, aging issues
annual hours contracts  576–7 in 353
antiperformativity 73–5 privately-owned companies in  345
complacency and  74 recruitment mechanisms in  357–8
critical reflexivity and  74 research on  346–7, 356–7
cynical distance and  74 selection mechanisms in  357–8
Apospori, E.  38, 381 skill shortage issues in  354–5
Appelbaum, E.  505 societal cultural values in  349–52
appraisals. See performance appraisal terrorism in  138
apprenticeship education systems  552 training and development in  358
April, K.  124 women in labor markets in  352–3
Arab Spring  337–8 workforce diversity in  360
Aranoff, C.  460–1, 464 assertiveness 31–2
Argentina assumptions, in institutional approaches 
GDP growth in  294 56–64
industrial relations systems in  298 Astrachan, J.  466, 469
labor markets in  294 Australia
left-wing governments in  295 domestic markets in  163–4
political systems in  293 electoral systems in  168–9, 171
trade unions in  292 Industrial Relations Reform
Argyris, C.  547 Act 509
Ashcraft, R. F.  440 labor market deregulation in  170
Asia, HRM in. See also specific countries managerial autonomy in  509
challenges to  354–6 right-wing populism in  170
characteristics of  346–56 work-based education system in  552
 index   653

Austria Bartol, K.  356–7

apprenticeship education system in  552 Bartram, T.  440
business structure  182 Baruch, Y.  34
collective bargaining in  182 Basu, S.  359–60
corporatism in  182–4 Batt, R.  380, 505
economic context for  182 Baum, M.  357
education systems in  184 Bazargan, M.  334–5
employment legislation in  182 Becker, B. E.  504–5, 635
governance structure  182 Beer, M.  97–101, 104–5, 556
institutional context for  182–4 benefit mechanisms and schemes
manager recruitment in  197 in not-for-profit sector  445–6, 446t
population demographics in, for age  185 in public-sector organizations  422t
social partnership model for  182–4 Bennington, L.  35
trade unions in  164 Berber, N.  38–9
vocational training systems in  184 Berg, P.  505
autocratic environments, in CEE Berman, S.  464
countries 249–50 Bersin, J.  521
autonomy. See affective autonomy; best fit view, in CMS  71
conservatism versus autonomy; firm best practices
autonomy; intellectual autonomy; in critical management studies  71–2
managerial autonomy in diversity management  83
Aycan, Z.  35 in human resource management  4
Aydınlı, F.  380 in strategic frameworks  632
Ayentemi, D. T.  377–8 Beutell, N. J.  144
Bévort, F.  79–81
Bacouel-Jentjens, S.  348 Bhardwaj, A.  529–30
Bader, A. K.  141–3 Bhorat, H.  117–18
Bader, B.  142, 148–9 bias
Bae, J.  348 general affective  571
Bahadur, A.  320 intergroup 571
bahala na concept  351–2 Binl, U.  548
Bahrain, in Gulf Cooperation Council  333–4 Birtch, T. A.  38
Bai, X.  35 Björkman, I.  644–5
Bai, Y. T.  356–7 Black Economic Empowerment programs 
Bailey, S. K.  101–2 311–12
Bailey, T.  505 Blštáková, J.  248–9
Baluch, A. M.  454 Boehm, S. A.  359–60
Bandura, A.  547 Bolivia, in customs union  287
banking systems Boncella R. 459–60
in Canada  165–7 Bondarouk, T.  355–6
in New Zealand  165–7 Boselie, P.  97–9, 105–6, 108
in Switzerland  188–9 Botswana  310, 318–19
in U.K.  165–7 Boud, D.  531–2
Barney, J.  461, 526 bounded convergence  370–1
Baron, J. N.  78 Bowen, D. E.  505
Barth, E.  467–8 Boxall, P.  427–8
Bartlett, K. R.  588 Boyer, R.  167
654   index

Boyne, G.  379, 420–1, 430 instability of  62

Bozeman, B.  101–2 institutional theory and  116
Brandl, J.  621 in Latin America, varieties of  289t
Braverman, H.  116–17 in LMEs  507–8
Brazil Sheikho-capitalism 332
emerging markets in  119 variegated 62
HRM in, strategic characteristics of  301t in varieties approach  57, 507–8
industrial relations systems in  298 Cappelli, P.  3, 525, 531
left-wing governments in  295 career management and development
MNEs in  397–8 strategies 422t, 423–4
political systems in  292–3 Carmona, B. P.  429
trade unions in  292 Carney, M.  460, 467–8
Treaty of Ouro Preto  287 Carr, C.  380
Brekić, J.  245 Cassia, L.  467–8
Brewer, G. A.  103, 419 Cedefop 531
Brewster, C.  5–6, 97–8, 377–8, 380–2, 425, CEE countries. See Central and Eastern
440, 506, 513 Europe countries
BRICS countries. See Brazil; China; India; Central and Eastern Europe countries, HRM
Russia; South Africa in. See also specific countries
Brockbank, W.  608 access to information systems  256t
Brookes, M.  381–2, 425, 513–14 in autocratic environments  249–50
Brown, A.  586 capitalist systems in, establishment
Brown, J. S.  547 of 239–40
Brown, K.  377–8 collective distribution principles in  242
Brown, W. A.  440 commonalities in  249–53
Browning, V.  379 Communist Party and  241–2, 257
Budhwar, P. S.  115–16, 348, 375–6, 526 competencies in  252
Bulgaria 240 contemporary economic developments
bureaucracy, in public-sector organizations  in 247–9
429–30 development of HRM in  240
bureaucratic logic  80–1 differences in, among different countries 
Burgess, J.  377–8 249–53
business partner model  193 employment levels  254f
Butler, M. G.  588–9 endowments in  239–40
in European Union  240
Cai, Z. Y.  358 evolution of  241–9
calculative HRM  504–5 export economies in  247–8
Callahan, C. M.  588–9 external service providers for  256–7, 257f
Canada FDI in  247–8, 251–2
banking systems in  165–7 functional mechanisms for  255
electoral systems in  168–9, 171 governance arrangements in  239–40
capitalism HRM departments, percentages of  255t
in Anglo-Saxon countries  159–60, 172 income levels in  240
in CEE countries  239–40 industrialization in  242–3
in CMEs  507–8 labor legislation in  251
convergence and  374–5 mass layoffs in  247
dynamism of  64 migration of workers in  245
 index   655

MNCs in  247–8, 257–8 management practices in  124

national cultures in  249–50 manufacturing industry in  345
organizational-level empirical evidence MNEs in  397–8
of 253–8 private ownership in, transition to  354
ownership structures in  251–5, 254f skill shortage issues in  354–5
people management in  241 state-owned enterprises in  345, 354
personnel management in  241–5 strategic frameworks in, for HRM
political transition period for  246–7 departments 644–5
private-sector organizations in  259t training and development in  37
public-sector organizations  259t Chiu, R.  379
during socialist period  241–6 Chow, I.  376
socialist systems in, history of  239–40, 245 Choy, C. L.  377–8
social welfare regimes in  250–1 Chrisman, J.  460, 470–1
structural mechanisms for  255 Chua, J.  460, 470–1
trade unions in  252, 258f, 259t Chudzikowski, K.  37
training and development in  244, 256t Cicero 26
Uravnilovka concept in  245 Clark, T.  380
Western Europeanization of  240, 250–1 Clarke, A. D.  530–1
written strategies  256t club convergence  370–1
centralization systems, in national business CMEs. See coordinated market economies
system approach  332–3 CMS. See critical management studies
CEOs. See chief executive officers cognitive processing bias  571
Cerdin, J-L.  440–1 Cohen, W. M.  530–1
Chambers, E. G.  198 collective bargaining. See also collective wage
Chan, C.  358–9 bargaining
Chang, M. -L.  587–8, 590–1 in Africa  319
Chaudhuri, S.  588 in Anglo-Saxon countries  169–70
Chen, H. Y.  349–50 in Austria  182
Chiang, F. F.  38 coverage of  495–7, 496f
Chicago School of economics  159–60 in Finland  216
chief executive officers (CEOs)  39 in Germany  186
Chile in Iceland  217–18
in customs union  287 international comparative approach
democracy in, restoration of  293 to 494
economic growth in  293 in Latin America  296–300
global commodity boom in  295 levels of  493t
industrial relations systems in  297t MNCs and  494
political systems in  293 in Netherlands  191
privatization of state companies in  293 in Nordic countries  223
China in Norway  219
convergence in  369 scope of  495
convergence in, during reform period  369 structures of  494
emerging markets in  119–20, 123–4 in Switzerland  189
guanxi concept  123–4 trends in  498f
as high-context culture  120 collective distribution principles  242
HRM practices, as import  354 collective wage bargaining, historical
management influences of, in Africa  315–18 institutionalism and  61
656   index

collectivism management directors  606–15, 609t

in Asia  350 strategic approaches influenced by  17
individualism-collectivism 29–30 strategic framework influenced by  17
in Philippines  351 competitive functioning, HRD and  521
collectivism-individualism. See also compressed working weeks  576–7
individualism-collectivism conceptual development, for HRM  7–9
performance appraisal and  35 conditional convergence  370–1
in selection mechanisms  34 configuration process, for MNEs  402–7
collectivist societies Confucian values  345
recruitment mechanisms in  34 congruence outcomes, in Harvard model  101
training and development in  37 Connolly, H.  497–8
Collings, D. G.  497–8 conservatism versus autonomy  30–1
Colombia, in customs union  287 conservative welfare regimes  210
colonialism constructive reflectivity  91
in Africa  311 contagion effects  148–9
in Asia  348–9 contextualism approach, to HRM  3–7,
Combs, J. G.  530–1 506–9
commitment outcomes, in Harvard model  in Asia  348
101, 109–10 in Cranet network  2
communication systems definition of  3
in Nordic countries  226–8, 229t, 231t development of  6
in not-for-profit sector  446–7, distal 6
447t, 453t integration across research  3
workplace learning and  556 macro 6–7
Communist Party  241–2, 257 meso 6–7
comparative capitalisms  506–8 micro 6–7
institutional theory  506–7 in Middle East region  330–1
comparative empirical studies, for public-sector in private-sector organizations  6–7
organizations 430 scope of  54
comparative human resource management  33 strategic frameworks in  5–6
context in  367–8 as tradition  3
comparison reference points  373 contingency theory  71
compensation 38–9 contracts. See fixed-term contracts; social
for CEOs  39 contract
cultural influences on  38–9 control systems, in national business system
definition of  38 approach 332–3
financial rewards  38 convergence
hierarchical systems  39 absolute 370–1
in Latin European countries  283–4 bounded 370–1
non-financial rewards  38 capitalism and  374–5
in Nordic countries  211–13, 223–6 during Chinese reform period  369
in public-sector organizations  422t classification of  372–3
competence outcomes club 370–1
in CEE countries  252 common uses of  370
in Harvard model  101 comparison reference points  373
in HRD  523t, 531 conceptualization of  371–3
competencies, of HRM directors conceptual reasoning and  375–6
 index   657

conditional 370–1 temporality in  371

constitutive elements of  370–5 time span and  373–4
country-level studies  379 transvergence 370–1
cross-sectional studies  380 two-country comparisons  379
crossvergence 370–1 units of analysis  373
in cultural theories  375 U.S. ideal 382
development constructs  372f in Western contexts  369
difference in  371 Cooke, F. L.  124–5, 350, 356–7, 397, 587,
between different economies  368–9 589–91, 596–9, 644–5
direction in  371 coordinated market economies (CMEs)
divergences 370–2 in Anglo-Saxon countries  161
double 370–1 capitalism in  507–8
economic development and  369 in Germanic cluster  177
empirical evidence of  376–83 individual-level rewards in  510
evolutionary 370–1 in Latin America  288, 289t
explanations and  374–5 quality of working life in  553–4
final 372 trade unions in  479–80
future research on  383–4 coordination systems, in national business
globalization and  368 system approach  332–3
hard 370–1 coping mechanisms, in responses to
historical roots of  368–70 terrorism 142
human capital and  369 Cordery, J.  358
hybridization of  370–1 core activities, outsourcing of  586–7
ideal-typical comparisons  382 Cornelissen, J.  136
in indigenous companies  377 corporate culture, HRM and  4
individual-level studies  377 corporate executive boards  640t
intergenerational class mobility corporate governance regimes
and 369–70 institutional approaches in  53, 55–6
in Japan  369 regulations in  53
local context for  378 varieties approach in  59
longitudinal studies  381 corporate social responsibility  85, 565
measurements of  371–3 corporatism, in Austria  182–4
mechanisms for  374–5 cost-effectiveness outcomes, in Harvard
in MNCs  377–8 model 101
multi-country comparisons  380 Côte d’Ivoire, economic growth rate in 
multidisciplinary background for  308–9
368–70 country-level studies, for
organizational-level studies  377–83 convergence 379
performance appraisal and  513 Cox, T. J.  568–9
regional studies  379 Cranet network  1–2
Scottish Enlightenment and  368–9 contextualism concept  2
sectoral studies  379 founding of  2
similarity and  372 multilevel influences in  2
single-country studies  379 outsourcing data  592–6
soft 370–1 scholarship with  2
stasis and  372 universalism concept  2
symbolic convergence theory  369–70 Cranet survey, HRD in  532–4
658   index

critical management studies (CMS) culture, HRM influenced by  9–14. See also
antiperformativity in  73–5 specific topics
best fit view  71 Anglo-Saxon 10–11
best practices approach in  71, 81–2 in Asia  349–52
constructive reflectivity  91 compensation 38–9
contextualization of  76–8, 86–7, 90–1 defining of  25–6
contingency theory  71 elements of  25–6
critical parties in  72–3 emic approach to  26
critical performativity  73, 75–6 etic approach to  26
critical reflectivity  91 flexible work arrangements and  40–1
critical reflexivity  74–6 frameworks for, summary of  27t
in Denmark  87–8 Gelfand’s framework  27t, 32–3
diversity management  77 GLOBE frameworks for  26, 27t, 31–2
engaged scholarship in  73–5 Hall’s framework  27t, 28–9
engagement of  75–6, 90–1 in high-performance work systems  33,
generic identities in  88 43–4
in high-performance work systems  71 Hofstede framework  27t
human relations theory  72 Kluckhohn and Strodtbeck’s framework 
institutional logics in  79–82 27t, 28
institutional theory and  76–80 in Latin European countries  268
lessons from  89–90 for management directors  612, 616t
mainstream parties in  72–3 management practices  33–44
management levels  88–9 measurements of  25–6
managerial rationality  88–9 in Middle East region  328t, 334–6
meditation as stress prevention  87–8 models of  26–33
methodological approach  77 roots of  26
moderation in  75 Schwartz’s framework  27t, 30–1
negative approach to  76 scope of  25
negative critique in  75–6 strategic framework approaches influenced
normative stance in  77 by  637, 638t
in organizational contexts  78–9 training and development influenced by  37
performative critiques of  91 Trompenaars’s framework  27t, 29–30
practical stance in  77 value dimensions  26
in professional service firms  76–7, 79–81 Cunningham, I.  454
purpose of  72 Cunningham, L. X.  382–3
rationality in  71–2 cynical distance, antiperformativity and  74
reconstructive reflexivity  73 Czech Republic  240, 243
theoretical approach  77 non-school-based vocational program
critical performativity  73, 75–6 in 552
critical performativity, in CMS  73 Czinkota, M. R.  147
critical reflectivity  91
critical reflexivity  74–6, 91 Darby, R.  354, 402–3, 406
Crook, T. R.  530–1 data sources, for trade unions  479
Crossland, C.  509 Dayaram, K.  378
cross-sectional studies, for convergence  380 De Bruijn, H.  102–3
crossvergence 370–1 De Cieri, H.  39, 590
Croucher, R.  381–2, 513–14 decision-making
 index   659

for family businesses  462 task-oriented 564

in Latin European countries  276f of workforce, in Asia  360
De Cooman, R.  440 diversity management  41–3, 82–4
De Gieter, S.  440 in Africa  308, 311–13
Deissinger, T.  187 age profiles as factor in  570
De Kok, J. M. P.  466 annual hours contracts  576–7
Delery, J. E.  505 in Asia  359–60, 574
Demirbag, M.  121–2 best practices presumptions in  83
democracy, in Chile, restoration of  293 case studies in  84–5
DeMooij, M. K.  31–2 characteristics of  566t
Den Dulk, L.  40 cognitive processing bias  571
Deniz, M.  460–1, 464 compressed working weeks  576–7
Denmark 213–15 construction of  573–4
apprenticeship education system in  552 corporate social responsibility and  85, 565
critical management studies in  87–8 critical management studies and  77
employer flexicurity in  cross-cultural emphasis on  41
214, 215f, 228–32 definition of  41
Hovedaftalen agreement  213 demographic changes as factor in  82–3
labor markets in, regulation of  213–14 discrimination and  572
meditation as stress prevention in  87–8 economic globalization as influence on  575
MNCs in  220 emergent processes  568
Social Democratic movements in  213–14 in EMMNCs  125–6
Social Liberal movements in  213–14 equality through  85–6
trade unions in  213 for ethnicity  42–3
welfare regime in  214 under EU law  573
density, of trade unions  484f, 485f evolution of  563–8, 566t
dependency theory  316 external stakeholders and  569
developing countries, MNEs in  400 flexible work arrangements  576–7
development. See training and development flexi-time 576–7
Dewettinck, K.  330–1 formal processes  568
Dibben, P.  124–5 fourth stage of  569
Dickie, C.  571 for gender  42–3
DiMaggio, P. J.  78, 331, 463 general affective bias  571
directors, in HRM, competency of  17 group identification processes  572f
discrimination 572 in heterogeneous workforces  564
distal contextualism approach  6 home-based work  576–7
distal performance outcomes, for individual perspectives  83
outsourcing 588–9 industrial segregation  574–5
divergences 370–2 influences on  573–6
diversity interconnectedness of  84–5
cross-cultural, in Africa  307–8 intergroup bias  571
elaboration-based processes  564 internal stakeholders and  569
innovation and, links between  42 at international level  573–6
in Latin America  288 in Japan  42–3
learning through  563 lessons from  85–6
problem-solving through  563 mainstream research on  83
relations-oriented 564 in MNCs  575, 575t
660   index

diversity management  (Continued) Earley, P. C.  37

models for  568–70 Easterlin, R. A.  550
at national level  573–6 Easterlin’s paradox  550
in not-for-profit sector  451t economic organization models, in Latin
occupational segregation  574–5 America 288
openness to change and  568–9 Ecuador, in customs union  287
as open system  565, 569 education, HRD and  523t, 527f
organizational justice and  82–3 education systems. See also vocational
part-time work  576–7 training systems
policies for  566t apprenticeship 552
prejudice 572 in Asia  348–9
processes in  566t in Austria  184
in public-sector organizations  422t in Germany  187
recruitment action programs  576–7 for management directors  615
responses to  565 in national business system approach 
scope of  563 333–4
second stage of  568 national expenditures on  552t
social capital approach  573 in Netherlands  192
social categorization theory and  571–2 non-school-based vocational
social identity theory and  572–3 programs 552
sociopsychological perspectives  83 nonvocational 552
in South Korea  42–3 in Nordic countries  209
stakeholder approaches  571 in Philippines  348–9
stereotyping 572 in Switzerland  190
strategic management approaches  570–1 Edvardsson, I. R.  585
teleworking 576–7 egalitarianism
third stage of  568–9 gender 31–2
in U.K.  42–3 hierarchy versus  30–1
in U.S.  42–3, 564 Egri, C.  356–7
U.S.-centric research on  42–3 Ekman, S.  86–7
Dobbin, F. R.  78 elaboration-based processes, for
domestic terrorism, MNEs and  138, 141 diversity 564
Dong, H.-K. D  440 electoral systems. See also specific countries
Dore, R.  165–7 in Anglo-Saxon countries  10, 171
double convergence  370–1 Ellis, F.  308–9, 313
Dovidio, J. F.  571 Ely, R. D.  312–13
Dowling, P. J.  39, 399–400, 479 embedded economies, in national business
Drabe, D.  42 system approach  332
Dries, N.  531 embedded stakeholder approach  16
Drucker, P.  530–1 emergent processes  568
Druker, J.  379 emerging market multinational companies
dual labor markets, in Latin European (EMMNCs)  116, 121–2
countries 283 in Africa  121
Dugan, S.  510–11 cases studies for  118–19
Duguid, P.  547 country of origin approach  122–3
du Plessis, Y.  119 definition of  121
Dyer, W.  460 diversity management in  125–6
 index   661

dynamic institutional contexts for  employee relations

119–20 in Latin European countries,
export-oriented 117–18 communication strategies  278–80, 279f
external resource motivation of  125 in Nordic countries  226–8
FDI for  121–2 employees
human resource challenges for  122 in MNEs, terrorism and  137–40
institutional perspectives for  117–19 terrorism and, in MNEs  137–40
institutional theory perspectives  122–3 employee well-being
labor markets and  117–19 in Asia  348–9, 355
in Mozambique  124–5 through employment  545–6
in Nigeria  118–19 through skills development  545–6
post-colonial analytic approach  124–5 employer flexicurity, in Denmark  214, 215f,
power distance constructs  120–1 228–32
resource-based view of  125–6 employment
social capital approach  120–1 employee well-being through  545–6
social contract with  117 in public-sector organizations  418
sociocultural theory perspectives  122–3 regulations for  55
in South Africa  118–19 in Sweden, as insecure  221
emerging markets Workplace Employment Relations
in Africa  123–4 Study 448
in Brazil  119 Employment Equity Act of 1998  312–13
in China  119–20, 123–4 employment law
cross-cultural approach to  120 in Austria  182
definition of  115–16 in Germany  186
dynamic institutional context for  119–20 in Iceland  217–18
in high-context cultures  120 institutional approaches to  53
HRM in  8–9 in Netherlands  191
hybrid HRM models for  126–7 in Norway  219–20
in India  119 in South Africa  311–12
institutional theory approach  116–17 in Switzerland  189
in Middle East region  338 employment levels, in CEE countries  254f
MNCs in  118 endowments, in CEE countries  239–40
protectionism in  118 equality, through diversity management 
in Russia  119 85–6
scope of  115–16 Erten, C.  382
in South Africa  119 Esping-Andersen, G.  210, 266–7
thought systems in  115 Estonia 243
emic approach, to culture  26 as loose society  32
EMMNCs. See emerging market Estrin, S.  247
multinational companies Ethiopia, economic growth rate in  308–9
employee learning  547. See also workplace ethnic-based terrorism, MNEs and  145–6
learning ethnic diversity strategies  42–3
well-being and  549f ethnocentric strategies, for MNEs  401
employee management, in not-for-profit etic approach, to culture  26
sector 444–5 EU. See European Union
employee outcomes, in public-sector eudaemonic well-being  547–8
organizations  419–25, 429–30 European Social Survey  488–9
662   index

European Union (EU) by sector  15–16

CEE countries entry into  240 stakeholder theory perspective  463–4,
diversity management in  573 470–1, 473
family businesses in  459 strategic management paradigm for  461
Latin America and, relationship with  291 theoretical approach to  461–2
evolutionary convergence  370–1 family-controlled firms, in Switzerland  188–9
expatriates Fang, J. X.  358–9
employment for, in Middle East region  334 Farkas, F.  379
hidden, in Middle East region  337 Farndale, E.  4–6, 120, 381, 513, 633
experiential learning  547 FDI. See foreign direct investment
export-oriented EMMNCs  117–18 Fenton-O’Creevy, M.  513–14
exports Ferner, A.  178, 508–9
CEE countries and  247–8 Ferrera, M.  266–7
into Iceland  217 Festing, M.  35, 382–3
from Sub-Saharan Africa, to U.S.  320 Filella, J.  265, 270–2, 280, 282–4
external service providers, for CEE final convergence  372
countries  256–7, 257f financial rewards, as compensation  38
external stakeholders  524 in Asia  358–9
diversity management and  569 Fink, M.  467
Finland
familialism, in Latin European countries  267 austerity period in  216
family businesses collective bargaining mechanisms in  216
by country  465–6, 465t egalitarian labor markets in  216
decision-making for  462 egalitarian value systems in  216–17
definitions of  459–60 high-tech knowledge economy  215
empirical evidence for  464–72 innovations in  216
employee numbers in  465–6 labor unions in  216
employees as stakeholders  469–71 linguistic background  215
in Europe  459 manufacturing industry in  215–16
by firm type  465–9, 469t, 471t, 473t as social market economic model  215
founder beliefs and values  460 work-based education system in  552
hierarchical linear modeling  467t firm autonomy  508–9
innovation in  467–8, 468t economic organization and  508–9
institutional demographics for  465–6 under Industrial Relations Reform Act  509
institutional perspectives on  462–3 firm performance  399
legitimacy through isomorphism for  463 fixed-term contracts  265
level of participation in, for family Fleming, P.  86
members 459–60 flexible labor regimes, in Africa  310
long-term strategy for  460–1 flexible work arrangements (FWAs)  39–41,
normative rationality and  463 576–7
organization in  15–16 cultural influences on  40–1
productivity of  468, 469t individualism-collectivism and  39–40
public perception of  459 scope of  40
resource-based view of  16–18, 461–2 societal context for  41
as resource-focused  461 in U.S.  39–40
revenues from  468–9, 470t, 472f, 473t flexi-time 576–7
role of institutions for  471–2 Flores, G. L.  144
 index   663

Florkowski, G. W.  526 general affective bias  571

Flynn, B.  38 Gennard, J.  609–10
Flynn, M.  379–80 Gerhart, B.  43, 510
Fombrun, C. J.  504–5, 509 Germanic cluster. See also Austria;
Fordist era, regulation frameworks during  63 Netherlands; Switzerland
foreign direct investment (FDI) Anglo-Saxonization of  178
in CEE countries  247–8, 251–2 business partner model in  193
for EMMNCs  121–2 career development practices  198
in Switzerland  188 CMEs in  177
formal learning  547, 549 comparisons among countries  183t
formal training and development  505 cultural construct definitions for  180t
Foucreault, A.  39–40 cultural context of  179–81
Foulon, M.  198 definition of  177, 179–80
France demographic context for  181–93
managerial autonomy in  509 developmental practices in, for
varieties approach in  60 HRM 197–200
work-based education system in  552 economic context for  181–93
Franco, L. A.  103–4 empirical studies of  179–80
Frattini, F.  467–8 gender equality within  180
Freeman, R. E.  463–4, 522–4 GLOBE research on  177–9
Fried, Y.  3, 35–6, 41–2 high-potential schemes in, for career
Friedman, M.  573–4 development 198
FWAs. See flexible work arrangements institutional context for  181–93
LMEs in  177
Gallardo-Gallardo, E.  531 manager recruitment within  196–7, 197f
Gallie, D.  553–4 organizational cohesiveness in  180
Gallo, G.  460–1 performance appraisal systems
Gamble, J.  358 within 199–200
Gammelgaard, J.  119 societal cultural practices  180, 181f
Gandhi, Mahatma  25 strategic frameworks for HRM
Garavan, T. N.  522, 529 departments 639
Garrick, J.  531–2 strategic integration, for HRM  196–7
Garud, R.  467 strategic orientation of HRM in  194–6, 194f
GDP. See gross domestic product war for talent in  198
Gelfand, M. J.  26, 27t, 32–3 Germany
Gelfand’s framework, for HRM culture  27t, apprenticeship education system in  552
32–3 business structure  185
social norms in  32 collective bargaining in  186
in tight societies  32 economic context for  185
gender diversity strategies  42–3 education systems in  187
gender egalitarianism/equality  31–2 employment legislation in  186
within Germanic cluster  180 governance structure  185
in Iceland  218 historical institutionalism in  61
in Philippines  353 institutional context for  186–7
gender inequality, in Asia  352–4 job satisfaction in  42
gender representation, for female labor force in, decreases in  187
management directors  610–11 legal environment in  185–6
664   index

Germany (Continued) gross domestic product (GDP)

managerial autonomy in  509 for Argentina  294
manager recruitment in  197 in Paraguay  294–5
manufacturing sector in  186 in Uruguay  294–5
migrant population in  187–8 Grote, G.  553
outsourcing of HRM in  586 group identification processes  572f
performance appraisal in  511–12 Gu, Q. X.  356–7
population demographics in  187 guanxi concept  123–4
SMEs in  185 Guest, D.  504–5, 553
varieties approach in  59–60 Gulbrandsen, T.  467–8
vocational training systems in  187 Guo, C.  440
Ghana  311, 313 Guo, Y.  358–9
economic growth rate in  308–9 Gurkov, L.  250–1
Gilley, K. M.  588–9
Glaister, A. J.  590–1 Haar, J. M.  40
global commodity boom, in Chile  295 Habir, A. D.  347
Global Competitiveness Report  528–9 Hagel, J.  521
global HRD  540 Hall, E. T.  26, 27t, 28–9
globalization Hall, P.  161–2, 266, 298, 507, 509–10
in Africa, economic effects of  320–1 Hall’s framework, for culture  27t, 28–9
convergence and  368 Hambrick, D. C.  509
diversity management influenced by  575 Hamel, G.  526
in Latin America  290–1 Hammerschmid, G.  418, 425–7
Global Leadership and Organizational Han, K.  358–9
Behavior Effectiveness framework  26, Hanaoka, M.  379–80
27t, 31–2 Hancké, B.  169–70
for Germanic cluster  177–9 Handfield-Jones, H.  198
Global Talent Competitiveness Index  181–2 Handy, C.  72
Global Terrorism Index  139 Hankin, S. M.  198
GLOBE framework. See Global Leadership Hanson, S.  117–18
and Organizational Behavior Haq, R.  119
Effectiveness framework Harari, M. B.  429
Goergen, M.  381–2 hard convergence  370–1
Goh, J.  557 hard HRM  504–5
Gollan, P. J.  382, 425 hard practices, in HRD  126–7
González-Cruz, T. F.  531 Hardy, C.  74
Gooderham, P. N.  381, 508, 511–14 Harley, B.  74, 378
governance structure harmony. See mastery versus harmony
in Austria  182 harmony, as social value  349–50
in CEE countries  239–40 Harvard model, for performance 
in Germany  185 97–105, 100f
in Netherlands  190 closure needs in  103–4
in Switzerland  188 commitment outcomes  101, 109–10
government-financed services  417–18 competence outcomes  101
Greckhamer, T.  39 congruence outcomes  101
Greece, trade unions in  278 cost-effectiveness outcomes  101
Grey, C.  72 employee well-being and  99–100
 index   665

human resource flow in  100–1 in Spain  43–4

multidimensional constructs  99–100 strategic frameworks for  632
in Nordic countries  233 in U.S.  43–4
organizational outcomes  99–100, 109 high-potential schemes, for career
in private-sector workplaces  103 development 198
in public administration literature  101–3 Hillman, A.  463–4
in public-sector workplaces  103, 105f historical institutionalism  58t, 60–2
public values in  101–2 collective wage bargaining and  61
reward systems in  100–1 in Germany  61
situational factors in  98–9, 103–4 industrial relations systems and  61–2
stakeholder interests in  99–101 institutional change as focus of  60–1
welfare policies in  101–2 liberalization of markets  61
work systems in  100–1 regulation frameworks and  62
Harvey, M. G.  135 skills formation systems and  61
Hatry, H.  102–3 societal outcomes  60–1
Hauff, S.  42, 585 in Sweden  61
Hayes, J.  37 varieties approach compared to  60–1
Hayter, S.  318 Hoffman, A.  506
HCNs. See host country nationals Hofstede, G.  25–6, 27t, 29, 31–2, 39–40, 120–1,
He, L. R.  358–9 349, 510–11
He, S.  119 Höglund, C.  591
healthcare systems Holden, L.  379–80
in Nordic countries  209 Holden, N.  248–9
performance and, in public-sector Holman, D.  380
organizations 97 Holtgrewe, U.  380
health component, of public-sector Homberg, F.  429
organizations 419–20 home-based work  576–7
Hebl, M. R.  571 home-country practices, in Africa  317
hedonic well-being  548–50 Hong Kong, outsourcing of HRM  586, 591–2
incidental learning and  548 Hoover, K.  587
informal learning  548 Horak, S.  348, 382–3
Heh Jason, H.  375–6 Horwitz, F. M.  115–16, 119, 122, 258, 379–80
Hempel, P.  358–9 host country nationals (HCNs)  139–40,
Herst, D. E. L.  429 140n.1, 143, 145
hierarchical linear modeling, for family House, R. J.  39–40
businesses 467t Hovedaftalen agreement  213
hierarchical market models  296–300 HPWS. See high-performance work systems
hierarchy versus egalitarianism  30–1 HRD. See human resource development
high-context cultures  28–9, 120 HRM. See human resource management
high-involvement people  554–5 Huang, J.  358
high-performance work systems Huang, W.  379
(HPWS) 43–4 Huang, X.  38, 42
critical management studies in  71 Hui, C.  37, 349–50
cultural influences on  33, 43–4 human activity orientation  28
definition and scope of  43 human capital
historical development of  43–4 convergence and  369
public-sector organizations and  420–1 HRD and  526–8, 527f, 530–1, 530f
666   index

human nature orientations  28 talent management in  523t, 531

human relations theory  72 terms in  523t
Human Resource Competence Study  training and  523t, 534f, 536f
607–8, 609t human resource management (HRM).
human resource development (HRD)  16 See also contextualism approach;
activity with  535–7 institutional approaches; universalism
centrality of  526 approach; specific topics
competencies in  523t, 531 best practices in  4
competitive functioning and  521 calculative 504–5
conceptualization of  522–4 comparative agendas  10
by country  535f conceptual approach to  7–9
in Cranet Survey  532–4 definition of  53–4
definition of  522 in emerging markets  8–9
development in  523t, 534f functional context of  16–18
education in  523t, 527f future research on  7–8
effectiveness of, assessment of  537–40 hard 504–5
evaluation of  537–8, 538f, 539f institutional ideas embraced within  8
evidence on  532–4 international 33
global 540 in management science and  4
in Global Competitiveness Report  528–9 national culture as influence on  7–8
hard practices  126–7 organizational influences  14–16
human capital and  526–8, 527f, 530–1, 530f organizational performance  4
hybrid models for  126–7 recruitment mechanisms  34
identification of  522–5, 534–5 scholarship on  4, 8–9
incidence of  535 sectoral influences  14–16
individual 532 selection mechanisms  34
innovation and  529 as social practice  90–1
learning capacity and  521 theoretical approach to  7–14
learning in  523t in U.S., hegemony of  5
macro context for  521, 526–9 Hume, David  368–9
at micro level  532 Hungary 243
multilevel perspective on  525–6 as loose society  32
as multilevel phenomenon  522–4 Huo, J. Y. P.  375–6
national competitiveness  528f Huselid, M. A.  504–5, 607, 632, 635
national context for  535–7 hybrid models, for HRD  126–7
national good from  525
non-formal education and training  533t Iceland 217–18
organizational learning in  523t collective bargaining agreements in  217–18
at organizational level  529–32 employment legislation in  217–18
principles of  525–6 export industries  217
regional performance, by pillar  529t gender equality laws in  218
skills improvement through  531 labor legislation in  217
social good from  525 labor markets in  218
soft practices  126–7 labor unions in  217
in South Africa  535–7 social welfare regimes in  217
stakeholders in  522–5, 538–40 ideal-type management systems, in
in stakeholder theory  526 Africa 316–17
 index   667

identity switching  409 economic challenges in  355–6

Iles, P.  34 firm size in  347
incentive mechanisms, in Nordic countries  HRM practices in  347–8, 354
223–6, 227t industrial relations in  347
incidental learning  548–9 multinational enterprises in  398,
inclusion strategies, in Africa  311–13 403–4, 406
income levels, in CEE countries  240 industrialization
income sources, in not-for-profit in CEE countries  242–3
sector 437–8 in welfare state models  267–8
India 10–11 Industrial Relations Reform Act,
emerging markets in  119 Australia 509
MNEs in  397–8 industrial relations systems  61–2
outsourcing of HRM  591–2 in Africa  318–21
skill shortage issues in  354–5 in Argentina  298
as tight society  32 in Brazil  298
indigenization policies, in Middle East in Chile  297t
region 337–8 in Indonesia  347
indigenous companies, convergence in  377 in public-sector organizations  431–2
individual-based working culture, in industrial segregation  574–5
Sweden 221–2 inequality. See equality; wealth inequality
individual HRD  532 influence ratios  272f, 272
individualism, in Philippines  351 informal learning  548–9
individualism-collectivism 29–31 informal training and development  505
flexible work arrangements and  39–40 information-sharing, in Nordic
individual-level rewards countries 230t
ability and  505 Ingeoglu, I.  548
calculative HRM and  503 innovation
in CMEs  510 diversity and, links between  42
context for  509–14 in family businesses  467–8, 468t
convergence and  513 in Finland  216
cultural dimensions of  510–11 human resource development and  529
development of  504–6 management directors and  605–6
divergence and  513 institutional approaches
in formal institutions  511–14 for agencies within organizations  55
in Germany  511–12 assumptions in  56–64
in informal institutions  511–14 characteristics of  56–64
institutional theory and  513 in corporate governance contexts  53, 55–6
in LMEs  510 empirical results in  56–64
macro models of  504 to employment law  53
MNCs and  512–13 employment regulations  55
motivation and  505 to family businesses  462–3
opportunity and  505 historical institutionalism  58t, 60–2
performance appraisals and  503 in Middle East region  331–2
in U.K.  511–12 in national contexts  55–6
in U.S.  503, 512 organizational heterogeneity and  54–5
individual-level studies, for convergence  377 organizational principles in  53–4
Indonesia 10 regulation frameworks  58t, 62–4
668   index

institutional approaches  (Continued) Jackson, S. E.  4–5, 53–4, 380, 611–12

regulations as part of, in corporate Jackson, T.  116–19, 123–4, 314–17
governance contexts  53 Jain, H. C.  377–9
scope of  53–4 Jankelová, N.  248–9
in U.K.  55 Janssens, M.  74
varieties approach  57–60, 58t Japan
institutional logics, in CMS  79–82 Africa HRM strategies influenced by  315
in Asia  350 convergence in  369
bureaucratic logic  80–1 diversity management in  42–3
contradiction of  80t Hall’s framework for culture in  28–9
institutional theory and  82 job satisfaction in  42
professional logic  79–81 nonvocational education system in  552
institutional theory privately-owned companies in  345
for Anglo-Saxon countries  160–1 skill shortage issues in  354–5
capitalism in, different forms of  116 Jaussaud, J.  378
comparative capitalisms and  506–7 Jayasinghe, M.  43
in critical management studies  76–80 Jegers, M.  440
criticisms of  116–17 Jenkins, A.  612
emerging markets and  116–17 Jenkins, G.  379
EMMNCs and  116–17, 122–3 Jennings, P. D.  78
institutional logics and  82 Jensen, U. T.  101–2
MNCs and  116 job satisfaction
performance appraisal and  513 in Germany  42
intellectual autonomy  30–1 in Japan  42
intergenerational class mobility  369–70 in U.S.  42
intergroup bias  571 Johns, G.  3
internal environment, for management Johnson, K.  358–9
directors  613–14, 619–20 Joniaková, Z.  248–9
internal stakeholders, in diversity Jordan 337
management 569 Jørgensen, T. B.  101–2
international business scholarship, on justice. See organizational justice
terrorism 135–6
international terrorism, MNEs and  138, Kabst, R.  357, 590–1
141, 147 Kahn, A. K.  429
interpersonal skills  556–8 Kalleberg, A. L.  420–1, 505
Ip, P. K.  316 Kalula, E.  320–1
Iraq 336–7 Kamoche, K., P24  124, 307
Ireland Kao, H.  349–50
electoral systems in  168–9, 171 Kaplinsky, R.  117–18
nonvocational education system in  552 Karnøe, P.  467
ISIS, terrorism and  148 Karoliny, Z.  379
Islamic traditions, in Middle East Kassinis, G. I.  40–1
region 334–5 Kaufman, B. E.  373–4
isomorphic influences, on MNEs  403 Kavran, D.  245
isomorphism. See legitimacy through Kazlauskaitė, R.  248
isomorphism Keim, G.  463–4
Israel, as loose society  32 Keizer, A. B.  379
 index   669

Keller, J. R.  531 in Latin America  288

Kelly, J.  609–10 in Switzerland, decreases in  190
Kenya 312 labor laws
economic growth rate in  308–9 in CEE countries  251
Kerr, C.  374 in Iceland  217
Ketchens, D. J.  530–1 labor markets. See also dual labor markets
Khan, S. A.  382–3 in Africa  309–11, 319–20
Khan, Z.  119 in Argentina  294
Khiliji, S. E.  527–8 in Denmark, regulation of  213–14
Kiggundu, M.  124 deregulation of  170
Kilaniotis, C.  40–1 in Finland  216
Klein, H. J.  530–1 in Iceland  218
Kluckhohn, F. R.  25–6, 27t, 28 in Latin European countries  265, 267–70
Kluckhohn and Strodtbeck’s framework, for in Norway  219–20
culture 27t, 28 policy-setting for, in Africa  319–20
Knies, E.  98, 104, 416–17 social market economic model  215
Knight, G. A.  147 in Sweden  221
knowledge management, by management in Uruguay  294
directors 612–13 labor movements, in Anglo-Saxon
knowledge systems, in Africa  316 countries 169–70
Kochan, T.  508, 605–6 labor unions. See also collective bargaining
Kock, H.  591 in Africa  318
Kogut, B.  530–1 in Finland  216
Kolb, D. A.  547 in Iceland  217
Korea in Latin America  296–300
diversity management in  42–3 in Lebanon  335–6
nonvocational education system in  552 in Nordic countries  209, 228t
performance management in  36 in Norway  219
privately-owned companies in  345 in South Africa  320
as tight society  32 Labour Relations Act, South Africa
Korzilius, H.  103–4 (1995) 320
Kosnik, T.  587 Laforet, S.  467
el-Kot, G.  37 Laine, P.  608–9
Kotlar, J.  467–8 Landeta, J.  43–4
Koubek, J.  241–2 Lane, D.  240
Kraus, S.  467 Laos 10
Kroeber, A. L.  25–6 Larsen, H. H.  382
Kühlmann, T. M.  43 Latin America, industrial relations in. See also
Kulkarni, M.  358–60 specific countries
Kumar, R.  119 academic research on, lack of  290
Kuwait, in Gulf Cooperation Council  capitalism in, varieties of  289t
333–4 CMEs and  288, 289t
collective bargaining in  296–300
labor agreements, in Netherlands  191–2 complementarities in  289t
labor forces contextual background for  290–3
in Asia, median age for  360f convergence contexts for  300–2
in Germany, decreases in  187 divergence contexts for  300–2
670   index

Latin America, industrial relations Roman law legacy in  274

in (Continued) self-employment levels in  265, 269
diversity in  288 social services spending in  269t
economic indicators for  291t strategic approaches to  274–7
economic organization models  288 trade unions in  277–82, 277f, 278f
economy subsystems in  289t, 290–1 training and development  282–3, 282f
EU relationship with  291 wage setting agreements in  280–2, 280f, 281f
geographic area and  290 welfare state model  266–8
globalization in  290–1 Latuhkha, M.  248–9
hierarchical market models in  296–300 Latvia 243
institutional complementarities in  299t law. See employment law
labor regulations in  296–300 Law, K. S.  37, 349–50
labor unions in  296–300 Lawrence, F. B.  529–30
landscaping of  287–8 Lawrence, P. R.  556
LMEs and  288, 289t Lazarova, M.  590–1
low-skilled labor force in  288 leadership research  356–7
MNCs in  288, 291, 300–2 learning. See also employee learning;
political instability in  301–2 workplace learning
trade unions in  292 action 547
Treaty of Asuncíon  287 adult 551
Treaty of Ouro Preto  287 through diversity  563
U.S. relationship with  291 experiential 547
Latin European countries, HRM in. See also formal  547, 549
France; Portugal; Spain in HRD  523t
academic specialties for HRM managers  incidental 548–9
273–4, 273f informal 548–9
compensation practices  283–4 national investment in, international
cultural norms in  268 comparisons for  552
decision-making in  276f organizational 523t, 547
definition of  266 problem-focused 557–8
degree of mission in  275f social modeling and  547
departments in, share of  271–7, 272t UNESCO Institute for Lifelong Learning  551
as dual labor market  283 well-being and  546–50
employee communication, union role learning capacity, HRD and  521
in  278–80, 279f Lebanon, labor unions in  335–6
familialism in  267 Le Breton-Miller, I.  460–1
fixed-term contracts in  265 Ledolter, J.  382
geographic scope of  266 Lee, H. J.  142–3
influence ratios  272f, 272 left-wing governments
labor markets in  265, 267–70 in Argentina  295
labor relations in  276 in Brazil  295
locus of control in  275f Legge, K.  72, 74
migration patterns in  267–8 legitimacy through isomorphism  463
models 270–1 Leisink, P. L. M.  98
people management in  271–2 Lepak, D. P.  505, 587
performance appraisal practices  283–4 Lertxundi, A.  43–4
recruitment mechanisms in  283–4 Lesotho 318–19
 index   671

Levi, A.  41–2 Ma, H.  470–1

Levinthal, D. A.  530–1 Macri, Maurício  292–3
Lewin, K.  568–9 macro conceptual model, for MNEs 
Li, P.  356–7 403–4, 403f
Li, S.  358–9 macro-contextualism approach  6–7
liberalization of markets  61 Madhok, A.  121–2
liberal market economies (LMEs) Maertz, C.  144
in Anglo-Saxon countries  159–64 Mamman, A.  124
in Canada  163–4 management directors
capitalism in  507–8 absenteeism for  622
collective bargaining in  163–4 competencies of  606–15, 609t
comparative capitalisms in  162, 164–5 by country affiliation  616t
competition in  163 cultural background as factor for 
in Germanic cluster  177 612, 616t
ideal type  162 definition of  606–7
labor markets in  163 devolution of responsibilities  614–15
in Latin America  288, 289t differences among  625t
in Netherlands  181–2 education level of  615
performance appraisal in  510 empirical results of  615
short-term 164 experience and expertise of  609–10
statist 167–8 external environment for  612–13, 615–18
in Switzerland  181–2 function and purpose of  605, 620–1
trade unions in  163–4, 479–80 gender as factor for  610–11
in U.K.  200 Human Resource Competence Study 
in U.S.  200 607–8, 609t
liberal welfare regimes  210 by industry  617–18
Libya  318–19, 337 innovation and  605–6
Liesch, P. W.  147 internal environment for  613–14,
Ligthart, P.  513 619–20
Lin, N.  357 knowledge management of  612–13
Lithuania 243 legal environment for  617
Liu, X.  378 organizational affiliation  616t
Liu, Z. Q.  358 organizational outcomes  621–2
Liuhto, K.  246 personal attributes  610
LMEs. See liberal market economies profiles of  605–6, 607f, 608–15, 619f, 623t
logics. See bureaucratic logic; institutional size of firm and  613
logics; professional logic specialization of  606–7
longitudinal studies, for convergence  381 strategic integration through  614–15
loose societies  32 trade unions for  612
Lòpez-Gracia, J.  468–9 turnover rates for  622
low-context culture  28–9 women as  621
Lowe, K. B.  39 management practices. See also performance
Luce, R.  463–4 management
Luk, V.  379 culture as influence on  33–44
Lumpkin, T.  460 in high-performance work systems  33
Luo, Y.  121 international 33
Luthans, F.  530–1 management science, HRM in  4
672   index

managerial autonomy Michaels, E. G.  198

in Australia  509 micro-contextualism approach  6–7
in France  509 micro process model, for MNEs  405f
in Germany  509 Middle East region, HRM in. See also specific
in private-sector organizations  426t countries
in public-sector organizations  425–7, 426t academic scholarship on, limitations
in U.K.  509 for  327, 330
in U.S.  509 Arab Spring and  337–8
manager recruitment, in Germanic contextual approach to  330–1
cluster 197 cultural characteristics  328t
Mangaliso, M. P.  124 cultural context for  334–6
man-nature relationship  28 cultural similarities within  330
manufacturing industry demographic characteristics  328t
in China  345 economic characteristics  328t
in Finland  215–16 as emerging market setting  338
in Germany  186 expatriate employment in  334
in Netherlands  191 future applications for  336–9
in Vietnam  345 geography of  327
Marí-Klose, P.  268 Gulf Cooperation Council  333–4
Markóczy, L.  358–9 hidden expatriates in  337
Marques, R.  121–2 indigenization policies in  337–8
Martin, L.  460 institutional perspective on  331–2
mass layoffs, in CEE countries  247 Islamic traditions and  334–5
Massis, A. de  467–8 MNCs in  337–8
mastery versus harmony  30–1 national business system approach  331–4
Masuda, A. D.  40–1 political instability as factor for  336–7
Mauritius 310 poverty in  330
Mayrhofer, W.  37, 373, 381–2, 621 recruitment mechanisms in  34
Mbigi, L.  316–17 terrorism in  138
McCarthy, A. M.  522 tribal societal structures and  335
McCarthy, D.  429 unemployment levels in  333
McCormack, D.  117–18 value development and  335–6
McGraw, P.  378, 402–3, 407–9 wasta-based recruitment mechanisms
McGuire, D.  525 in  34, 335
meditation, as stress prevention  87–8 wealth 330
Meier, K.  425–6 wealth inequality in  330
Meier, K. J.  106 migrant populations
Mellahi, K.  3, 292–3 in Germany  187–8
Melton, E. K.  106 in Sweden, as labor force  221
Mercosur countries. See also specific countries migration
economic indicators for  291t in Africa, patterns of  310
meso-contextualism approach  6–7 within CEE countries  245
methodological approaches in Latin European countries, patterns
Cranet network  1–2 of 267–8
origins of  1–3 in Netherlands  192
Meyer, J. W.  78, 331 to Switzerland  190
Meyer, R. E.  425–7 Milikić, B. B.  373, 382–3
 index   673

Miller, D.  460–1 host country institutions and  118

Milliman, J.  36, 39 identity switching in  409
Mills, D. Q.  556 in Indonesia  398, 403–4, 406
misuse sectors  441 isomorphic influences on  403
MNCs. See multinational companies macro conceptual model for  403–4, 403f
MNEs. See multinational enterprises micro process model  405f
Moliterno, T. P.  530–1 operation of  401
Moore, M.  101–2 organization in  14–15
Moreno, L.  268 research context for  400–1
Morley, M. J.  115–16, 252, 522 by sector  14–15
Morris, M.  117–18 in Spain  43–4
Mostafa, A. M. S.  106 specific practices in  13–14
Mozambique, EMMNCs in  124–5 structures of  401
Mroczkowski, T.  379–80 subsidiaries of  402–7
Muenjohn, N.  350 systems perspective for  399
Mujica, José  292–3
Müller-Camen, M.  379–80, 382 Nagarathnam, B.  529–30
multinational companies (MNCs) Nakamura, N.  124
in Africa  307–9, 314, 317 Namibia 318–19
in Asia  345, 355, 359–60 Nancy, K. N.  375–6
in CEE countries  247–8, 257–8 national business system approach, in Middle
collective bargaining and  494 East region  331–4
in convergence  377–8 centralization systems in  332–3
in Denmark  220 control systems in  332–3
diversity management in  575, 575t coordination systems in  332–3
in emerging markets  118 in developmental state  332
in Latin America  288, 291, 300–2 education systems  333–4
in Middle East region  337–8 embedded economies in  332
in Norway  220 political economy and  332
performance appraisal and  512–13 Sheikho-capitalism 332
in South Africa  122 state’s role in  332
strategic frameworks within  636 vocational training systems  333–4
multinational enterprises (MNEs). See also national culture. See also culture; specific
emerging market multinational countries
companies; terrorism HRM influenced by  7–8
in Asia  397–8, 402–7 national good, from HRD  525
autonomy of  402 Némethová, I.  248–9
in BRICS countries  397–8 Netherlands
case organizations, characteristics of  405t business structure in  190
configuration process for  402–7 collective bargaining in  191
conflicts within  409 economic context for  190
cross-border strategies  402 education systems in  192
in developing countries  400 employment legislation in  191
ethnocentric strategies for  401 governance structure in  190
external knowledgeable sources  406 institutional context for  192
firm performance for  399 labor agreements in  191–2
future research for  407–9 LMEs in  181–2
674   index

Netherlands (Continued) healthcare systems in  209

manufacturing industry in  191 HRM practices in  222–3
migration context for  192 incentive mechanisms in  223–6, 227t
poldermodel system  191–2 information-sharing 230t
population demographics in  192 labor union membership in  209, 228t
as service economy  190–1 liberal economies in  209
trade unions in  192 mean organizational size in  224t
vocational training systems in  192 professional pay rates  225t, 227t
work-based education system in  552 social model in  210–13
network-based recruitment mechanisms  34 socioeconomic comparison with
Neumann, O.  103 U.K./U.S. 212t
neutral-affective orientation  29–30 strategic frameworks for HRM
Newenham-Kahindi, A.  124, 378 departments  639, 641–2, 646
new public management reforms (NPM war for talent in  232
reforms) 415–16 welfare systems in  209–10
New Zealand work councils in  228t
banking systems in  165–7 Nordic social model  210–13
domestic markets in  163–4 calculative contexts in  211
electoral systems in  168–9, 171 collaborative contexts in  211
labor market deregulation in  170 definition of  210
Nguyen, T. T. T.  587–8, 590–1 income distribution in  211
Nigeria labor market participation in  211
economic growth rate in  308–9 trade unions and  211–13
in EMMNCs  118–19 welfare regimes in  210–11
Nikandrou, I.  38, 381 normative rationality, for family
Nilsson, B.  591 businesses 463
Nishii, L. H.  104, 313 North Africa, HRM in  308
Nkomo, S.  119, 124, 312 Norway 218–20
Noe, R. A.  530–2 agricultural history in  218–19
Nohria, N.  13–14 collective bargaining in  219
noncore activities, outsourcing of  586–7, 597t employment legislation in  219–20
non-financial rewards, as compensation  38 labor markets in  219–20
non-formal education and training  533t labor unions in  219
nonvocational education systems  552 low trade barriers  218–19
Nordhaug, O.  509 MNCs in  220
Nordic countries. See also specific countries oil-based economy of  219
analysis of  228–33 soft industries in  220
collective bargaining in  223 as tight society  32
communication systems in  226–8, unemployment mechanisms in  219
229t, 231t work-based education system in  552
compensation mechanisms in  211–13, Working Environment Act  219–20
223–6 not-for-profit sector, HRM practices in
context assessment of  228–33 action programs, for minorities  442–3,
coordinated economies in  209 443t, 444t
education systems in  209 benefit mechanisms  445–6, 446t
employee relations in  226–8 communication strategies in  446–7,
in Harvard model  233 447t, 453t
 index   675

diversity management programs  451t Organisation for Economic Co-operation and

employee management in  444–5 Development 527
employee training  445t organization, in HRM  14–16
evolution of  447–54 in family business contexts  15–16
formalized structure and strategy of  449t MNEs and  14–15
global data on  441 in non-for-profit sectors  15
government reforms for  438 ownership and  14
heterogeneity of  437–8 in private sectors  14
income sources  437–8 in public-sector contexts  15
misuse sectors in  441 organizational heterogeneity  54–5
multiple stakeholders  437–8 organizational justice  82–3
new public management strategies organizational learning  523t, 547
for 438 organizational-level studies, for convergence 
paid employees in  439 377–83
pay mechanisms  445–6, 446t, 452t organizational training and development.
payroll costs  445t See training and development
performance appraisal systems  445t, Ostroff, C.  505
450–2, 452t Otoo, E.  529–30
private-sector practices compared Otoo, F.  529–30
to 439–44 O’Toole, L.  425–6
public-sector practices compared Ou, A. Y.  356–7
to 439–44 outsourcing, of HRM  17
recruitment strategies  440, 441t, 442, 450t of core activities  586–7
selection methods for  442, 442t, 451t Cranet data on  592–6
staff retention strategies  440 through decentralization  584
talent management in  440–1 definition of  583
training days in  452t distal performance outcomes  588–9
in U.K.  437 empirical findings for  584
in U.S.  440 function and purpose of  584–6
voluntary-sector ethos  437–8 future research on  599
volunteers in  439 in Germany  586
welfare benefits  453t in Hong Kong  586, 591–2
welfare-related practices  448 in India  591–2
in Workplace Employment Relations levels of  595t, 597t
Study 448 long-term benefits of  599
NPM reforms. See New Public Management mixed effects for  583
reforms of noncore activities  586–7, 597t
outcomes of  586–9
occupational segregation  574–5 performance outcomes of  587–9
offshore business process outsourcing  345 prevalence of  591–6
oil-based economies, Norway  219 in public-sector organizations  17
Okoroafo, S. C.  117–18 qualitative comparative analysis of  587–8
Oliver, C.  462–3, 513–14 resource-based views  585–6
Ollier-Malaterre, A.  39–40 in Russia  591–2
Oman, in Gulf Cooperation Council  333–4 through service providers  591
openness to change  568–9 in strategic frameworks  635
Oppong, N. Y.  124 theoretical background for  585–6
676   index

outsourcing, of HRM  (Continued) Peng, M.  358–9

transaction cost economics  585 pension systems, in Switzerland  188–9
trends in  594t Pepermans, R.  440
in U.K.  589–90 perceived organizational support (POS) 
in U.S.  591–2 142–3, 146, 149
work intensification as result of  590 Peretz, H.  35–7, 41–2
ownership structures Peretz, M.  378
in Asia  353 performance, in public-sector organizations 
in CEE countries  251–5, 254f 107t. See also Harvard model
Özbilgin, M. F.  42–3, 313 of bureaucracy  108
Özçelik, A. O.  380 definition of  97
employee perception data surveys  108
Paauwe, J.  4–6, 99, 115. healthcare quality and  97
Pakistan laws as influence on  108
terrorism in  141 process model for  104–5
as tight society  32 public values as influence on  108
Vartan Bhanji effect  10 safety and  97
Palaric, E.  418 in talent management  106
Palestine 336–7 value chains and  97–8
Panayotopoulou, L.  38 for workforce  108
Papalexandris, N.  38, 381 performance appraisal  34–6
Paraguay ability and  505
GDP growth in  294–5 collectivism-individualism 35
liberal market policies in  302–3 context for  509–14
Treaty of Asuncíon  287 convergence and  513
parent country nationals (PCNs) cultural dimensions of  510–11
responses to terrorism  143 definition of  34–5
terrorism and  139–40, 140n.1 development of  504–6
Parker, S.  548 divergence and  513
Parola, H. R.  429 extension of  34–5
Parry, Emma  1–2, 374, 437 in formal institutions  511–14
particularism. See universalism-particularism in Germanic cluster  199–200
part-time work  576–7 in Germany  511–12
Parumasur, S. B.  312–13 individual-level rewards and  503
Patel, C.  348, 375–6, 587–8, 590 informal institutions  511–14
paternalism, in Asia  350 institutional theory and  513
Paunescu, M.  177, 181–2 in Latin European countries  283–4
pay and wage rates in LMEs  510
in Nordic countries  225t, 227t macro models of  504
Uravnilovka concept  245 methods of  35
payroll costs, in not-for-profit sector  445t MNCs and  512–13
pay schemes motivation and  505
in not-for-profit sector  445–6, 446t, 452t in not-for-profit sector  445t, 450–2, 452t
in public-sector organizations  430–2 opportunity and  505
PCNs. See parent country nationals in public-sector organizations  417, 422t,
Peiper, M.  247 428–9
Pelto, Pertti J.  32 salary decisions  36
 index   677

in South Korea  36 Poutsma, E.  513

in U.K.  511–12 poverty, in Middle East region  330
in U.S.  503, 512 Powell, W. W.  78, 331, 463
performance management  34–6 power distance
in Asia  359 for EMMNCs  120–1
in Korea  36 in performance management  35
personal relationships in  35 in Philippines  350–1
power distance in  35 in training and development  37
performance management systems (PMS)  36 Prahalad, C.  526
Perón, Juan  292 prejudice 572. See also bias; discrimination
personnel management Price, D.  459–60
in CEE countries  241–5 primary stakeholders  524
in public-sector organizations  416 privately-owned companies
Peru, in customs union  287 in Asia  345
Petruzzelli, A.  467–8 in Japan  345
Pfeffer, J.  557, 632 in South Korea  345
Philippines in Vietnam  354
bahala na concept in  351–2 private-sector organizations
collectivism in  351 in CEE countries  259t
education system in  348–9 contextualism approach in  6–7
gender equality in  353 Harvard model for performance  103
individualism in  351 managerial autonomy in  426t
masculine culture in  351 not-for-profit sector compared to  439–44
offshore business process outsourcing  345 organization in  14
power distance in  350–1 by regional sector  14
terrorism in  138 role in public-sector organizations  417
uncertainty avoidance in  351–2 varieties approach in  59–60
Piñera, Sebastian  293 privatization of state companies, in Chile  293
Pinochet, Augusto  293 problem-focused learning  557–8
Pizzurno, E.  467–8 problem-solving, through diversity  563
Plessis, F. de  119 process-oriented HRM studies  398–9
Ployhart, R. E.  530–1 productivity. See workplace productivity
PMS. See performance management systems professional logic  79–81
Pocztowski, A.  241–2 professional service firms (PSFs)  76–7, 79–81
Poland  243, 246–7 protectionism, in emerging markets  118
Polanyi, M.  530–1 PSFs. See professional service firms
poldermodel system  191–2 psychosocial theories of well-being  547
Pontusson, H. J.  116–17 public-sector organizations. See also
Pools, M.  379 performance
Poór, J.  14–15, 379 bureaucracy in, perceptions about  429–30
Porter, M.  526 career management and development
Portugal 124–5 strategies 422t, 423–4
POS. See perceived organizational support in CEE countries  259t
post-colonial analytic approach, for comparative empirical studies for  430
EMMNCs 124–5 compensation and benefit schemes  422t
Posthuma, R. A.  144 contextual approach to  416–18
Poulfelt, F.  79–81 definition of  415–16
678   index

public-sector organizations  (Continued) al-Qaeda 148

distinctiveness of  415–16 Qatar, in Gulf Cooperation Council  333–4
diversity management in  422t qualitative comparative analysis, of
empirical findings for  105–8 outsourcing 587–8
employee outcomes  419–25, 429–30 quality of working life
employment in  418 in CMEs  553–4
government-financed services  417–18 in Nordic countries  554
Harvard model for performance  103, 105f Tavistock Institute of Human Relations
health component of  419–20 and 553–4
high-performance work systems well-being and  553–4
and 420–1 Quintanilla, J.  178
HRM practices  418–25 Quratulain, S.  429
industrial relations, resilience of  431–2
as labor-intensive  416 Rable, T.  43–4
logistic regression and  421–3, 421n.1 Rajanahally, J.  358
managerial autonomy in  425–7, 426t Rajendran, K.  347
New Public Management reforms  415–16 Ralston, D.  356–7
not-for-profit sector practices compared to Ramsey, J. R.  144
o 439–44 Rao, A.  359–60
organization in  15 Rao-Nicholson, R.  119
outsourcing of HRM in  17 Rasheed, A. A.  588–9
pay schemes  430–2 rationality
performance appraisal in  417, 422t, 428–9 in critical management studies  71–2
personnel policies in  416 managerial 88–9
private-sector role in  417 Reade, C.  142–3
public service motivations  428–30 reconstructive reflexivity, in CMS  73
public service performance in  419–25 recruitment action programs  576–7
by regional sector  15 recruitment mechanisms  34
research implications for  417 in Asia  357–8
stakeholders in  419 in collectivist societies  34
strategic alignment in  420 in Latin European countries  283–4
theoretical approach to  417 for management, in Germanic cluster 
varieties approach in  59–60 197
vocational training and development in Middle East region  34
in 420 network-based 34
well-being in, distinctions for  419–20 in not-for-profit sector  440, 441t, 442, 450t
work arrangements in  424 relationship-oriented approach  34
public service motivations  428–30 strategic frameworks and, data for  642t
public service performance  419–25 for talent  641–2
public values wasta-based  34, 335
in Harvard model for performance  101–2 Rees, C.  418
performance in public-sector organizations reflexivity skills  557–8
and 108 regional clusters, for HRM theories  9–14
Pudelko, M.  380 geography as factor  9–10
Pugh, D.  380 regional studies, for convergence  379
Purcell, J.  427–8 regulation frameworks, in institutional
Purpura, C.  440–1 approaches 58t, 62–4
 index   679

definition of  62 Ritz, A.  103

during Fordist era  63 Rode, J. C.  38
historical institutionalism and  62 Rodwell, J. J.  106
instability of  62 Rogovsky, N.  38–9, 511
stratification of workers and  63 Romania 240
unsustainable growth models and  63 Roman law, in Latin European countries  274
variegated capitalism and  62 Romano, C.  469
wealth inequality and  63 Ronen, S.  593
working conditions and  62–3 Rosenblatt, Z.  37
Reichel, A.  37, 590–1, 621 Rosenzweig, P. M.  13–14
relations-oriented diversity  564 Rössl, D.  467
Remue, J.  330–1 Rousseau, D. M.  3
resource-based views  398–9 Rouwette, E. A.  103–4
of family businesses  16–18, 461–2 Rowan, B.  78, 331
of outsourcing  585–6 Rowley, C.  348, 382–3
resource-focused, family businesses as  461 Royle, T.  378
response rates, in strategic frameworks  639t Rupidara, N. S.  347–8, 354, 402–3, 405–7
responses to terrorism, MNEs and  140–4 Russia 243–4
contagion effects  148–9 emerging markets in  119
coordinated domestic contexts  146–7 MNEs in  397–8
coordinated global contexts  147–8 outsourcing of HRM in  591–2
coping mechanisms  142 vocational training systems in  246
domestic 145–7 Russo, M.  40
future research on  150 Ryan, A.  34
global 147–9
for host country nationals  143, 145 Sadler-Smith, E.  37
individual 141–3 Salamon, M.  480–1
organizational 143–4 Salt Lake Agreement  220–1
for parent country nationals  143, 145 Sánchez-Andujar, S.  468–9
perceived organizational support and  Sanders, K.  120
142–3, 146, 149 Sankards, S. A.  358
practical implications for  150–1 Sapir, A.  210
psychological 142 Saudi Arabia  336
social exchange theory and  142 in Gulf Cooperation Council  333–4
social identity theory and  142–3 Sauers, D.  29–30
stress perspectives and  141–2 Savvas, M.  37
stress theory and  141–2 Schneider, B. R.  288
theoretical approaches to  144–9, 145f Schneider, M. R.  177, 181–2
for third country nationals  143, 145 Scholes, L.  460–1
revenues, from family businesses  468–9, Schön, D.  547
470t, 472f, 473t Schone, P.  467–8
reward systems. See also individual-level Schröder, H.  379–80
rewards Schuler, R. S.  4–5, 38–9, 53–4, 380, 511, 526–8
in Harvard model  100–1 Schultz, C.  636
Richter, N. F.  42 Schuster, T.  142, 148–9
right-wing populism, in Australia  170 Schwartz, J.  521
Ringdal, K.  509 Schwartz, S. H.  26, 27t, 30–1
680   index

Schwartz’s framework, for culture  27t, 30–1 in Asia  354–5

Scott, W. R.  119 in China  354–5
Scottish Enlightenment  368–9 in India  354–5
Scullion, H.  358 in Japan  354–5
sectoral studies, for convergence  379 Smale, A.  644–5
sectors, in HRM  14–16 SMEs. See single-market economies
in family business contexts  15–16 Smith, Adam  159–60
MNEs and  14–15 Smith, P. B.  510–11
in non-for-profit sectors  15 Smyrnios, K. X.  469
in private sectors  14 Snell, S.  587
in public-sector contexts  15 social capital approach
segregation to diversity management  573
industrial 574–5 for EMMNCs  120–1
occupational 574–5 social categorization theory  571–2
Selden, S.  419 social contract, with EMMNCs  117
selection mechanisms  34 Social Democratic movements, in
in Asia  357–8 Denmark 213–14
collectivism-individualism approach  34 social democratic regimes, Sweden as  220–1
in not-for-profit sector  442, 442t, 451t social-democratic welfare regimes  210
self-employment, in Latin European social dialogue, in African countries  318–19
countries  265, 269 social exchange theory  136, 142
Sengtupa, S.  358–9 social good, from HRD  525
service economies, Netherlands  190–1 social identity theory  142–3, 572–3
Shapiro, D. L.  3 socialist systems, in CEE countries 
shareholder economies  184 239–40, 245
Sharkey, T.  117–18 Social Liberal movements, in
Sharma, K.  440–1 Denmark 213–14
Sharma, P.  460, 470–1 social market economic model, Finland
Shaw, J. D.  505 as 215
Sheehan, C.  586, 590 social modeling, learning and  547
Sheikho-capitalism 332 social partnership model  182–4
Shen, J.  317 social protection mechanisms. See also
Shenkar, O.  593 welfare policies; specific countries
Sherer, P. D.  3 in Anglo-Saxon countries  169
Shockley, M.  124 social relation with people orientation  28
Short, J. C.  460 social services, in Latin European
Siebers, L. Q.  124, 316 countries 269t
similarity, convergence and  372 societal cultural practices, in Germanic
single-country studies, for convergence  379 cluster  180, 181f
single-market economies (SMEs), in societal well-being  107, 109
Germany 185 sociocultural theory perspectives, for
skills development EMMNCs 122–3
employee well-being through  545–6 soft convergence  370–1
psychosocial 546–7 soft industries, in Norway  220
skills formation systems  61 Soldan, Z.  571
skills improvement  531 Song, Z. G.  356–7
skills shortage Soskice, D.  161–2, 288, 298, 507, 509–10
 index   681

Sotirakou, T.  379 Stenvall, J.  608–9

South Africa Stewart, S.  356–7
Black Economic Empowerment programs Steyaert, C.  74
in 311–12 Stoica, M.  459–60
economic growth rate in  308–9 strategic frameworks, for HRM departments
emerging markets in  119 best practices in  632
EMMNCs in  118–19 business strategy participation, overlaps
Employment Equity Act of 1998  312–13 with 643t
employment equity legislation in  311–12 capacity of firms  644–5
human resource development in  535–7 in China  644–5
as labor-receiving country  310 contemporary challenges for  635–6
labor unions in  320 in contextualism approach  5–6
Labour Relations Act  320 corporate executive board access and  640t
MNCs in  122 cultural values as influence on  637, 638t
MNEs in  397–8 development of  633–5
social dialogue in  318–19 economic factors as influence on  637–8
trade unions in  318–21 empirical evidence for  638–45
Wage Inequality and Labour Market external effects of  636
Stability declaration  318 across firm operations  636
South Korea. See Korea formal recognition stage  634
Spain in Germanic cluster  639
in high-performance work systems  43–4 for high-performance work systems  632
multinational enterprises in  43–4 historical perspective on  633f
nonvocational education system in  552 HRM director competence as influence
Sparrow, P. R.  380 on 17
specific-diffuse orientation  29–30 within MNCs  636
Spector, B.  556 in Nordic countries  639, 641–2, 646
staff retention strategies  440 organizational performance  632
staff-to-employee ratios  640, 641t outsourcing options  635
stakeholders. See also embedded stakeholder overview of  645–7
approach for performance  634
diversity management and  571 recruitment data  642t
external 524 response rates  639t
in family businesses  463–4, 470–1, 473 sole responsibility for activities and  644f
in Harvard model for performance  99–101 staff-to-employee ratios  640, 641t
in HRD  522–5 stage of strategic role  634
in human resource development  522–5, for talent recruitment  641–2
538–40 for task adjustment  635
in not-for-profit sector  437–8 theoretical approach to  632
primary 524 trends in  646–7
in public-sector organizations  419 value of  631–3
stakeholder theory, HRD in  526 variation of, contextual influences of  636–8
stasis, convergence and  372 for women  640–1, 641t
state-owned enterprises, in China  345, 354 written 643t
Stavrou, E. T.  38, 40–1 strategic management paradigm  461
Steen, J.  147 stress theory  136
Steenkamp, A. J.  379 for responses to terrorism  141–2
682   index

Strodtbeck, F. L.  26, 27t, 28 Syria 337

Strunk, G.  382 systems perspective  399
Sturdy, A.  86 Szierbowski-Seibel, K.  590–1
Su, Z.  29–30
Suarez, M.  460–1, 464 Tabvuma, V.  429
subjective well-being  523t, 546 talent management  106
Sub-Saharan Africa, HRM in  308 in HRD  523t, 531
exports to U.S.  320 in not-for-profit sector  440–1
literacy skills in  551 Tanewski, G.  469
subsidiaries, of MNEs  402–7 Tanzania, economic growth rate in  308–9
Sudan 336 Tarba, S.  119
Suder, G. S.  147 Tarique, I.  440–1, 527–8
Sumelius, J.  644–5 task adjustment, strategic frameworks
Suñe, A.  40 for 635
Susomrith, P.  586 task-oriented diversity  564
Swaziland 318–19 Tatar, M.  144
Sweden 220–2 Tatli, A.  42–3
consensus-driven institutions in  220 Tavistock Institute of Human Relations 
historical institutionalism in  61 553–4
individual-based working culture  221–2 TCNs. See third country nationals
insecure employment in  221 Teagarden, M. B.  3
labor markets  221 Teitsdóttir, U. D.  585
migrant labor force in  221 teleworking 576–7
in Salt Lake Agreement  220–1 temporality, in convergence  371
as social democratic regime  220–1 Teo, T. T.  106
trade unions in  220–1 Terpstra, R.  356–7
Ulrich model in  221–2 terrorism, MNEs and. See also responses to
work-based education system in  552 terrorism
Switzerland in Afghanistan  141
banking systems in  188–9 in Africa  138
business structure in  188 in Asia  138
collective bargaining in  189 business risk level influenced by  139
education systems in  190 characteristics of  137–9
employment legislation in  189 definition of  137
family-controlled firms in  188–9 dimensions of  138
foreign direct investment in  188 domestic  138, 141
governance structure in  188 employees and  137–40
institutional context for  189–90 ethnic-based 145–6
labor force in, decreases in  190 Global Terrorism Index  139
LMEs in  181–2 host country nationals  139–40, 140n.1
migration to  190 international  138, 141, 147
pension systems in  188–9 international business scholarship
political structure in  188 on 135–6
political system in  189 ISIS and  148
population demographics for  190 in Middle East  138
vocational training systems in  190 at organizational level  136
symbolic convergence theory  369–70 in Pakistan  141
 index   683

parent country nationals  139–40, 140n.1 in European Social Survey  488–9

in Philippines  138 functions of  480–7
al-Qaeda and  148 in Greece  278
social exchange theory and  136 influence of  490f, 491t
stress theory and  136 in Latin America  292
targets of  137 in Latin European countries  277–82,
in Thailand  138 277f, 278f
theory building for  136 in LMEs  479–80
third country nationals  139–40 for management directors  612
Thailand membership in  483–5
offshore business process outsourcing  345 national institutions and  481
terrorism in  138 in Netherlands  192
Thelen, K.  170, 507 objectives of  480–7
theories organization of  482
cultural clusters  9–14 recognition of  488f, 489t
for HRM  7–14 societal factors for  482–3
regional clusters  9–14 in South Africa  318–21
third country nationals (TCNs)  145 strength of  483, 488
responses to terrorism  143 structures of  481–7
terrorism and  139–40 studies of  487–92
Thite, M.  121–2 in Sweden  220–1
Thomas, D.  312–13 trends for  485–7, 486f
Thomas, R. R.  564 types of  483t
Thommes, K.  585 in UAE, restriction of  335–6
Thompson, P.  116–17 Universal Declaration of Human Rights
thought systems, in emerging markets  115 and 492
Thurik, A. R.  466 varieties approach to capitalism  479–80
Tian, M.  358–9 training and development  36–8
tight societies  32 in CEE countries  244, 256t
time perspective  29–30 in China  37
time sense orientation  28 cognitive styles  37
Tjosvold, D.  349–50 in collectivist societies  37
Todd, S. Y.  530–1 cultural variations in  37
trade barriers, in Norway  218–19 design of  36
trade unions formal 505
in Africa  321t informal 505
in Argentina  292 in Latin European countries  282–3, 282f
in Austria  164 methods of  37
in Brazil  292 needs determination through  37
in CEE countries  252, 258f, 259t in not-for-profit sector  445t
in CMEs  479–80 in power distance contexts  37
collective bargaining and  492–7 transaction cost economics  585
common features for  481–2 transitional economies, in Africa  307
data sources for  479 transvergence 370–1
definitions of  480–7 Treaty of Asuncíon  287
in Denmark  213 Treaty of Ouro Preto  287
density of  484f, 485f Tregaskis, O.  377–8, 380–1
684   index

trends Nordic countries and, socioeconomic

in collective bargaining  498f comparison with  212t
in outsourcing of HRM  594t not-for-profit sector in  437
in strategic frameworks for HRM outsourcing of HRM in  589–90
departments 646–7 performance appraisal in  511–12
for trade unions  485–7, 486f as shareholder economy  184
tribal societal structures, in Middle East sustainable consumer banking in  165–7
region 335 technology sectors in  168
Trompenaars, F.  26, 27t, 29–30, 510–11 varieties approach in  59–60
Trompenaars’s framework, for culture  27t, United States (U.S.)
29–30 African Growth and Opportunity
Tucker, Josiah  368–9 Act 319–20
Tung, T.  121 business partner model in  193
Tuominen, H.  608–9 diversity management in  42–3, 564
turnover rates, for management electoral systems in  10, 171
directors 622 flexible work arrangements in  39–40
Tylor, Edward Burnett  26 hegemony of, in HRM  5
in high-performance work systems  43–4
UAE. See United Arab Emirates industrial policy in  167–8
ubuntu concept  123, 314–17 job satisfaction in  42
Uganda, economic growth rate in  308–9 Latin America relationship with  291
Uhlaner, L. M.  466 LMEs in  200
U.K. See United Kingdom managerial autonomy in  509
Ukraine, as loose society  32 military/industrial sectors in  168
Ulrich, David  178, 193, 221–2, 521, 607–8, nonvocational education system in  552
611–12, 615–17, 621 Nordic countries and, socioeconomic
Ulrich model  221–2 comparison with  212t
uncertainty avoidance  351–2 not-for-profit sector in  440
unemployment levels, in Middle East outsourcing of HRM in  591–2
region 333 performance appraisal in  503, 512
unemployment mechanisms, in Norway  219 as shareholder economy  184
unemployment rates, in Africa  309 social protection mechanisms in  169
UNESCO Institute for Lifelong technology sectors in  168
Learning 551 universalism approach to HRM in  10, 506
unions. See labor unions; trade unions Universal Declaration of Human Rights  492
United Arab Emirates (UAE)  336 universalism approach, to HRM
in Gulf Cooperation Council  333–4 in Cranet network  2
trade unions in, restriction of  335–6 definition of  3
United Kingdom (U.K.) development of  6
banking systems in  165–7 expansion of  4–5
business partner model in  193 in U.S.  10, 506
diversity management in  42–3 universalism-particularism 29–30
electoral systems in  10, 171 unsustainable growth models  63
institutional approaches in  55 Uravnilovka concept, in CEE countries  245
LMEs in  200 Uruguay
managerial autonomy in  509 GDP growth in  294–5
military/industrial sectors in  168 labor markets in  294
nonvocational education system in  552 U.S. See United States
 index   685

Vaiman, V.  248–9 in China  37

value chains, performance and  97–8 in national business system
value development, in Middle East approach 333–4
region 335–6 in Netherlands  192
values. See also public values in public-sector organizations  420
culture and  26 in Russia  246
in Finland  216–17 in Switzerland  190
in GLOBE framework  31–2 voluntary-sector ethos  437–8
value chains  97–8 volunteers 439
Vance, C. M.  376 Von Glinow, M. A.  3
Vandenabeele, W. V.  98, 101–2, 104–6
Van der Vegt, G. S.  42 Wage Inequality and Labour Market Stability
van der Vliert, E.  42 declaration, South Africa  318
van der Walt, H.  636 wage rates. See pay and wage rates
Van Harten, J.  98 wage setting, in Latin European countries 
Van Loon, N.  428 280–2, 280f, 281f
Vanuatu 10–11 Wall, T.  467–8
Vargas, Getúlio  292 Wallo, A.  591
variegated capitalism  62 Walton, R.  553, 556
varieties approach  57–60, 58t Wang, J.  529–30
capitalism in  57 Wang, M.  397
in corporate governance regimes  59 war for talent
in France  60 within Germanic cluster  198
in Germany  59–60 in Nordic countries  232
historical institutionalism compared Warr, P.  548
to 60–1 wasta-based recruitment mechanisms 
institutional structuring in  57 34, 335
organizational type as factor in  59 wealth, in Middle East region  330
in private-sector workplaces  59–60 wealth creation  545–6
in public-sector workplaces  59–60 wealth inequality
in U.K.  59–60 in Middle East region  330
variations within national economies  regulation frameworks and  63
57–9 Webb, Beatrice  480–1
Varma, A.  36, 348, 375–6 Weiland, K.  585
Vartan Bhanji effect  10 Weinstein, M.  508
Vázquez, Tabaré  292–3 Welch, D. E.  399–400
Veblen, T.  368–9 welfare policies
Veen, A.  397 in Harvard model for performance  101–2
Veersma, U.  513 in not-for-profit sector  448, 453t
Veld, M.  98 welfare regimes
Vidovic, M.  633 in CEE countries  250–1
Vietnam conservative 210
manufacturing industry in  345 in Denmark  214
private ownership in, transition to  354 in Iceland  217
Vincent, S.  116–17 in Latin European countries  266–8
vocational training systems liberal 210
in Asia  358 in Nordic countries  209–10
in Austria  184 social-democratic 210
686   index

welfare state models communication skills and  556

academic scholarship on  266–7 high-involvement people  554–5
dualistic work model  267 HRM models and  554–5
industrialization and  267–8 individual factors in  555
in Latin European countries  266–8 interpersonal skills and  556
origins of  267 workplace productivity
types of  266–7 organizational benefits of  557
well-being 17. See also employee well-being workplace learning and  554–7
definition of  546 work systems. See also high-performance
economic measures and  550–3 work systems
employee learning and  549f in Harvard model for performance 
eudaemonic 547–8 100–1
in Harvard model  99–100 Wright, M.  460–2, 467–8
hedonic 548–50 Wright, P. M.  104
learning and  546–50 written strategies, in HRM
psychological 547 in Africa  310t
psychosocial theories of  547 in CEE countries  256t
in public-sector organizations  419–20 in strategic frameworks  643t
quality of working life and  553–4
societal  107, 109 Xi, Y. M.  356–7
subjective 523t, 546 Xiao, Z.  3
Wernerfelt, B.  461
Whetten, D. A.  330–1 Yeganeh, H.  29–30
White, G.  379 Yemen 336
Whitley, R.  507 Yeung, A.  608
Wilkinson, A.  121–2, 381 Yongsun, P.  376
Woehr, D. J.  530–1 Yoon, Y.  358–9
Wolf, A.  612 Yoshioka, C. F.  440
women. See also gender diversity strategies; Youssef, C. M.  530–1
gender egalitarianism/equality Yu, K. C.  356–7
in Asia labor markets  352–3 Yugoslavia 243
as management directors  610–11, 621
role in strategic frameworks, for HRM Zahra, S. A.  330
departments  640–1, 641t Zambia 311
Wong, C. S.  37 Zander, U.  530–1
Wong, Y. T.  37 Zelenova, O.  250–1
Wong-MingJi, D. J.  587 Zenios, S. A.  557
Wood, G.  118–19, 121–2, 381, 397 Zeppou, M.  379
work arrangements  424 Zhang, H.  121
work councils, in Nordic countries  228t Zhang, J.  470–1
Working Environment Act, Norway  219–20 Zhang, Y. L.  356–7
work intensification, through Zhao, L. Q.  358–9
outsourcing 590 Zheng, C.  119
Workplace Employment Relations Study  448 Zhu, H.  358
workplace learning  546–7 Zimbabwe 318–19
active learning thesis and  554–5 Zulu, P. S.  312–13