HRM, Technical Workers and the Multinational Corporation

Patrick McGovern

• Publisher: Routledge
• Year: 2012
• Print ISBN:
  9780415184878
• eBook ISBN:
  9781134667833
• Topic: Business
• Subtopic: Business General
• Index: Business

This book is the first major in-depth study of the impact of contemporary management practices on a rapidly expanding set of white-collar occupations, namely technical workers. It investigates whether HRM schemes such as employee appraisals and performance related pay have transformed technical work to such an extent that it can no longer be described as a 'service contract'. The book contains detailed examination of the nature of managerial control over employees who, by virtue of their committment, present their employers with problems that are often ignored by prescriptive models of HRM. The empirical evidence features case studies of matched pairs of hi-tech firms in the Irish Republic. The author examines recent debates about the nature of employment and the role of the multinational corporations within the so-called 'Celtic Tiger' Irish economy.

1

Management Practices, Technical Workers and the Service Relationship

Introduction

Will white-collar employment ever be the same again? Anybody reading the business pages during the recession-bound years of the early 1990s might conclude that it had changed beyond recognition. The emergence of corporate downsizing and delayering appeared to shatter white-collar assumptions about job security. The simultaneous introduction of various performance measures, such as individual appraisals and league tables, added pressure onto those who had begun to feel insecure. Managers were being made redundant on a large scale while those who survived found that their roles had enlarged because there was nobody else to take on the work of those who had departed. The solution appeared simple because there were no alternatives: cling on and hope for early retirement.

In this context there has been considerable speculation that the days of a career with a single employer are at an end. The best-selling author Charles Handy (1989) has long since promoted the view that managers are moving towards a portfolio career that consists of a small number of related jobs with different employers. The Harvard Business School academic, Rosabeth Moss Kanter (1989), has added further weight to this claim by arguing that the managerial career would in future be based on hopping between organizations rather than climbing up within any one specific organization. If this picture appears to be unduly exaggerated, it can be supported by evidence culled from an expanding body of social science research into, what Heckscher (1995) calls, the ‘white-collar blues’.

Heckscher’s (1995) study of eight major US companies concluded that the recent wave of corporate downsizing had amounted to a systematic assault on middle management. Corporations no longer offered lifetime security. Managers, for their part, abandoned a tradition of unquestioning loyalty since they now knew that this would not be reciprocated. Those who coped best in this environment were those who had given up any hope that the organization would settle down or return to normal. Other recent studies of white-collar employment in the US also concluded that the prospects for job security and upwardly mobile careers had been significantly reduced as a result of industrial restructuring (Osterman 1996). Similarly, surveys in the UK by the Institute of Management reported that 80 per cent of individual managers had experienced restructuring at least once in the previous five years (Wheatley 1992) and a similar percentage were worried about the lack of promotion opportunities (Lockwood et al. 1992). More significantly, a study of employers in the south of England by Brown and Scase (1994) reported that ‘the demise of the bureaucratic paradigm’ and the development of flatter ‘adaptive’ organizations had transformed the traditional career to the point where graduate recruits could no longer expect to climb into higher managerial positions. Finally, detailed case studies of the impact of downsizing on the managerial career in six major British-based employers reported that expectations of job security and of promotion had been reduced dramatically (McGovern et al. 1998).

The focus of this book, however, is on another set of changes. While they may have had a lower mass media profile they are no less significant for that. They may even be more widespread. These relate to a process which David Lockwood (1958) called the ‘bureaucratization of employment’ in his classic study of office clerks. This is defined as ‘the rationalization of work relations which is achieved mainly through the establishment of universalistic criteria governing conditions of employment, and through the specification of tasks within a clear-cut hierarchy of authority’ (Lockwood 1989:231). The bureaucratization I am interested in stems from the increasing use of formalized management policies such as project management systems, performance appraisals, performance-related pay systems and other measures. While all of these are intended to help management to manage in large impersonal organizations, they have other effects that are of sociological interest. They make formal what was previously informal by, for instance, introducing systems of monitoring and evaluation where none existed previously. They also bring a much greater degree of formal rationality, predictability and reliability into the world of work. In other words, they extend the classical bureaucratic principles of rationalization described by Weber (1948). The spirit of these developments has been captured in Ritzer’s (1993) influential repackaging of Weber’s theory as one of ‘McDonaldization’. This describes a process whereby the principles of the well-known fast-food restaurant come to dominate more and more areas of social life because of their ability to offer the producer increased efficiency, predictability, calculability and control. The world of employment is not exempt from these developments. Indeed it contains some of the most developed forms of this tendency. Ritzer’s examples include Frederick Taylor’s (1947) principles of scientific management, Henry Ford’s assembly line and the Japanese ‘Just-in-Time’ production supply system.

While the spread of Weber’s iron cage of rationality is of interest in itself I am more concerned with the impact that this kind of process has on employment relations within white-collar work. More specifically, I wish to assess whether contemporary management practices have transformed white-collar work to the point where it resembles that of blue-collar waged labour in a number of major respects. There is of course already a significant body of research that examines how bureaucratization has led to the degradation of work (Braverman 1974). But as Lockwood (1989) has argued, bureaucratization does not necessarily lead to unskilled, repetitive work with low pay and no job security. What it describes is a process by which work relations in general and employment conditions in particular are increasingly rationalized. In comparison with the vast amount of literature on the deskilling of white-collar work produced by those working within the Marxist labour process tradition (e.g., Crompton and Jones 1984; Armstrong et al. 1986), studies of the bureaucratization of white-collar work have been comparatively rare (Lockwood 1989: 231). This may be the result of an assumption that white-collar employment has already been bureaucratized and is therefore of little interest. The danger with this assumption is that bureaucratization is accepted as a fait accompli.

This study breaks new ground in addressing this issue in the context of human resource management practices. Furthermore, the answer to this question has important implications for existing conceptions of social class. Social class is of course one of the major areas of research in sociology. Much of the recent British debate has sought to understand the impact of social change on the middle classes (Savage et al. 1992; Butler and Savage 1995). Here also the debate has suffered from a lack of empirical evidence on changing employment practices. Despite the significance attached to new management practices in this debate, little attempt has been made to undertake detailed employer-based studies of these changes. This is surprising since an individual’s employment status is one of the key indicators of social class location.

While this debate informs the research presented in this book I should like to emphasize that this is primarily a study in industrial sociology rather than in social class. The reason I draw so heavily on the sociological literature about the middle class is that it offers a powerful theoretical account of the employment relationship for professional and managerial workers. Furthermore, some of the questions I address are derived from issues raised within this literature. It would be wrong to imply from this that I do not intend to shed some light on the debate over the changing middle classes. However, the focus on managerial practices in professional white-collar work, and the overall focus, are such that this is a study in the sociology of work and occupations rather than of social stratification.

This may seem somewhat old-fashioned in an era when research in the sociology of employment has been crowded out by management-oriented studies that bear the title of human resource management (HRM). However, some of the more interesting work in this area has been conducted by scholars who write from a sociological perspective such as John Storey (1992), Peter Armstrong (1995) and Stephen Wood (Wood and Albanese 1995). Nevertheless, much of the substance—the theoretical models and the research programmes—is dominated by a management perspective. This seeks to establish models of ‘best practice’ and in extreme cases represents an ideological project that seeks to provide the ultimate control of employee performance through the management of meaning (Keenoy and Anthony 1992: 248). In this context, I believe there is an even greater need for a sociological perspective that examines how contemporary management practices shape the social construction of the employment relationship. This is all the more necessary because management-oriented approaches either do not examine these issues or else provide only a partial understanding.

In the next part of this chapter I shall review some of the existing theories and evidence on the changing nature of white-collar employment. My aim, in this review, is to show that these debates have suffered from a lack of detailed organizational level data, especially in regard to ‘new’ management practices. Particular emphasis will be placed on Alan Fox’s (1974) influential micro-sociological model of the employment relationship which seeks to characterize it as one of varying degrees of trust. Fox’s (1974) work is an appropriate starting point because it provides a coherent theoretical account of the white-collar employment relationship. The value of Fox’s account has also been recognized by other sociologists who have incorporated it into recent studies of specific groups of white-collar workers such as engineers. More specifically, it is of interest because of arguments which claim that the traditional element of trust has been eroded from the employment relationship for professional and managerial workers. After describing this particular argument I shall focus on some contemporary management practices, especially those that lie within the area of HRM, since these are, supposedly, the source of this change.

Trust and the Employment Relationship

Fox’s Theory of Trust and Work Roles

The model which Fox (1974) set out in Beyond Contract for the analysis of different patterns of work organization, was presented as a ‘necessary foundation’ to the subsequent examination of the non-contractual elements of the employment contract in capitalist societies. A central tenet of this model is the idea that variations in employment relations are related to variations in the discretionary content of work roles. Though Fox (1974: 16–21) acknowledged that work roles can be specific or diffuse in either the task-range sense, or the discretionary-content sense, his exposition is explicitly restricted to the latter. The task-range is, he claims, a lateral conception while the discretionary-content is more appropriately conceived of as a vertical conception. Fox adopts Jaques’ (1967) distinction between ‘prescribed’ and ‘discretionary’ work as a means of analysing variations in the discretionary-content of work roles. While all roles contain both elements, the discretionary-content of jobs generally ‘tends to enlarge further in scope and importance’ as one moves upwards in the occupational hierarchy (Fox 1974: 24).

Three broad categories of work roles are described. Each of these syndromes of low, medium and high-discretion is strongly associated with low, medium and high levels of trust. In Fox’s terms, trust is concerned ‘with relationships which are structured and institutionalized in the form of roles and rules’ (Fox 1974: 68–69), rather than with personal relations between individuals as in the conventional usage of the word. Each of these categories is also associated with a particular set of work relations. High-discretion high-trust work patterns are characterized by a high degree of moral involvement (Etzioni 1961) in the organization and also by a reciprocal willingness on the part of employers and employees to undertake favours for each other. Such relations, which are entitled ‘social exchange’, characterize the employment of managers, engineers, scientists and other professionals. Low-discretion low-trust work patterns, by contrast, are characterized by ‘economic exchange’. Those who occupy low-trust positions are, in effect, being treated by management as if they cannot be trusted to act in the employer’s interest of their own accord. Their exchanges with management are characterized by an instrumental rationality because of the widespread perception that management has no need to trust its employees because of the detailed division of labour. This contributes to a low-trust dynamic in which both managers and workers act in a cautious calculative manner.

It is important to emphasize that Fox’s conception of trust is not concerned with personal relations between individuals, ‘but with relationships which are structured and institutionalized in the form of roles and rules’ (1974: 68–69). This gives Fox’s use of the term a rather idiosyncratic quality: in normal usage trust refers to a belief or expectation about the dependability or honesty of another person. Studies that have attempted to measure the amount of trust which workers have in management have recognized this limitation and have focused on the other components mentioned by Fox such as the levels of discretion and supervision in work (e.g., Whelan 1982: 31–38).

Even so, the level of discretion in work may not be interpreted by workers as a direct reflection of trust in them by management. This argument has been advanced by Roche who, in a critical evaluation of Fox’s theory, argues that trust perceptions may be more usefully regarded as a feature of social integration rather than system integration. Perceptions of trust, he believes, may be of particular consequence at an interpersonal level, e.g., between individual negotiators, and especially in situations of organizational and procedural disruption (Roche 1991: 109). They are of little value in explaining relations between institutions at the macro level.

Nevertheless, Fox’s analytical categories provide a number of hypotheses for empirical research even if his claims about the links between job content and worker perceptions are flawed (Roche 1991). Of particular interest here is the claim that employment relations in the higher echelons are characterized by open-ended exchanges with a high degree of employee commitment. This claim, which describes those employed in the category of high-trust high-discretion work roles, was itself based on a wide-ranging synthesis of the existing research on organizational professionals (1974: 30–37). But does this conceptualization of professional and white-collar work still stand?

Trust and ‘Service-Class’ Employment

While Fox’s discussion of the employment contract and employment relations continues to be of significance (e.g., Streeck 1992: 41–75), his original micro-sociological theory of trust and organizational integration received limited attention in the decade following its publication (apart from Wood and Elliot 1977). This situation has changed in more recent times as Fox’s conception of high-discretion high-trust roles has been utilized in the analysis of work organization (Heisig and Littek 1995), explanations of the organizational integration of white-collar employees (Hyman 1989: 34) of managerial employees (Armstrong 1989) and, in particular, in studies of technical workers (e.g., Whalley 1986a; Armstrong 1987; Causer and Jones 1990; Webb 1992). However, it is perhaps through Goldthorpe’s (1982) influential essay on the formation of the service class and the subsequent debate over its changing nature that Fox’s arguments have become most widely known (see also Lash and Urry 1987).

The service class, as described by Goldthorpe (1982), consists of higher white-collar employees (though not the self-employed or employers). Their employment is characterized by relations of trust or ‘social exchange’ of the kind described by Fox. According to Goldthorpe those in positions of authority, or positions where specialist knowledge is required, are given ‘some legitimate area of autonomy and discretion’. Their work is therefore marked by a distinctive degree of autonomy especially in relation to the way that their performance is monitored. In these cases ‘it must then pro tanto be a matter of trust that they will act—i.e., will make decisions, choices, judgements, etc.—in ways that are consistent with organizational goals and values’ (1982: 168). It follows that the performance of these employees will be driven by their moral commitment in the organization, rather than by external sanctions and rewards (see also Goldthorpe et al. 1968: 39–40).

Relations of trust are, however, only one element of Goldthorpe’s account of service-class employment. Another defining feature, according to Goldthorpe is the way that the market character of this service relationship is modified in a qualitatively different way to that of the wage-worker. Exchanges between employer and professional or managerial employees are more diffuse, have a more long-term orientation and a higher moral content. Payment is made as a form of ‘compensation’ and ‘consideration’ for discharging trust faithfully. This is typically in the form of a salary with some fringe benefits. Here Goldthorpe emphasizes the role ‘played by rewards that are of an essentially prospective kind: that is, embodied in understandings on salary increments, on security both in employment and after retirement and, above all, on career opportunities’ (1982: 169). These characteristics act to distinguish members of the service class from wage-earners who typically have a labour contract that is based on the exchange of discrete quantities of effort for discrete quantities of reward on a short-term basis. In sum, the defining element of professional and managerial employment is one of ‘service’ while that of the wage-worker is based on the logic of contractual exchanges (see also Goldthorpe 1980: 39–42; Erikson and Goldthorpe 1993: 41–42). This argument has become a fundamental feature of Goldthorpe’s influential programme of research on social mobility (Goldthorpe 1980; Erikson and Goldthorpe 1993).

In his initial formulation of the service class, Goldthorpe drew explicitly on Lockwood’s (1958) use of the Weberian concepts of an employees’ market and work situations since these were, in his view, the two major components of class position. ‘Market situation’ is defined by Lockwood (1958: 15) as ‘the source and size of income, degree of job security, and opportunity for upward occupational mobility’. ‘Work situation’ refers to ‘the set of social relationships in which the individual is involved at work by virtue of his position in the division of labour’. Goldthorpe argued that it was possible to combine these concepts because those in the same occupation typically shared similar market and work situations (1980: 39). This meant that the amount of autonomy in an employee’s work role was a direct indicator of his or her location in the class structure. In the case of the service class Goldthorpe argues that ‘the conditions—in effect of, bureaucratic employment—are ones which clearly reflect, whether by design or evolution, the need for creating and sustaining an organizational commitment’ (1982: ...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright
• Contents
• List of figures and tables
• Acknowledgements
• 1. Management practices, technical workers and the service relationship
• 2. Multinational corporations, human resource management and technical labour
• 3. Recruitment, occupations and qualifications
• 4. Markets, projects and routines
• 5. Managerial authority and bureaucratic control
• 6. Pay, status and performance
• 7. Careers, labour markets and job hierarchies
• 8. Conclusions
• Appendix
• Bibliography
• Index