Tuesday, December 2, 2014

Will the Real HRM Please Stand Up, or the Problem with Hard Unitarism

Think of what would make for a lousy job. Low wages, long hours, little autonomy, autocratic managers. Scholars call this a low-road or hard human resource management (HRM) approach. But is low-road HRM really HRM? In a practical sense, yes it is--it’s certainly one way for managing human resources, so in a definitional way, it's a form of HRM. But intellectually, I think it’s better to reject low-road HRM as HRM so that we can better appreciate the differing assumptions and implications of varied approaches to managing people. For practice-oriented readers, think of this as an opportunity to think about what HRM really means. For scholarly readers, this allows us to see the hard unitarism frame of reference as the oxymoron that I assert it is.

The British industrial sociologist Alan Fox is widely-credited with first identifying the unitarist and pluralist frames of reference in industrial relations, and then adding a third, radical frame. In my own work, I’ve added a fourth: an individualistic, egoist frame that focuses on individual self-interest. In the forthcoming Finding a Voice at Work? New Perspectives on Employment Relations (Oxford University Press), edited by two UK employment relations scholars, Stewart Johnstone and Peter Ackers, I was pleased to see Bruce Kaufman use my four frames of reference. But two chapters continue to use Fox’s three-dimensional framework.

I think this is problematic because both low-road and high-road HRM strategies are forced into the unitarist frame of reference. This is done by distinguishing between hard and soft unitarism. In the words of Johnstone and Ackers (p. 2),

Old fashioned ‘hard’ unitarists assume that...the best approach is for management to command and control the organization. Work rules and strong management are believed to be needed to ensure workers perform as required.

To me, this contradicts the central premise of unitarism that the employment relationship is largely characterized by a unity of shared interests among employers and employees. That is, if workers need to be aggressively controlled and commanded, then there isn't a set of shared of interests. Unilateralism is not unitarism. Admittedly, unitarism can have an element of unilateralism because human resource management is often determined with little employee input. But unitarist human resources practices are designed with the objective of benefitting employees and their organization through high-commitment policies that create win-win interest alignment. A low-road employer that unilaterally slashes wages or benefits simply because it can is exercising a very different kind of unilateralism—a kind that I don’t think warrants the label “unitarism.” Indeed, a command-and-control management strategy is probably better seen as emerging from a radical frame of reference in that this employment relationship is highly conflictual and rooted in hierarchical power differentials.

A second description of hard unitarism in Finding a Voice at Work? is seemingly more congruent with my requirement that unitarism involve shared interests:

There is a ‘hard unitarism’, which typically is grounded in economics and which is most fully developed in the ‘the new economics of personnel’. In this formulation it is the capacity of managers to offer financial incentives on both an immediate and a deferred basis that produces the congruence of interests between workers and employers” (Ed Heery, pp. 21-22).

But this, too, is problematic because financial incentives do not really produce a congruence of interests. Rather, incentives are designed to provide the worker with a self-interest to act in the interest of the employer. Indeed, the need for incentives in the first place comes from a belief that workers and organizations are each selfish and will act in their own self-interest. 

Admittedly, this is a subtle distinction, but ultimately this is a different way of thinking about the employment relationship than what underlies the high-road HRM model. So I think it is better replace Heery's version of hard unitarism with an individualistic frame of reference. I call this an egoist frame of reference in which the egoist employment relationship is rooted in the pursuit of individual self-interest by rational agents in economic markets. Employers and employees engage in voluntary, mutually-beneficial transactions to buy and sell units of productive labor based on the what the market will bear. If the organization’s HRM policies are not in the worker’s self-interest, she will quit.

The need for this frame of reference is reinforced by the confusion that can come from mistakenly equating unitarism to neoliberalism. Neoliberalism embraces laissez-faire economic policies and the operation of so-called free markets. So forms of human resource management that emphasize adherence to markets, such as imposing wage cuts when unemployment is high, are consistent with neoliberalism. But they are not rooted in unitarism. So maybe there should be hard egoism (emphasizing markets) and soft egoism (emphasizing incentives), but not not hard unitarism.

This might seem like an esoteric academic debate, but I think it gets to the heart of how we want to define HRM. We can certainly define it as any strategy for managing people. But I think it’s better to distinguish among the key principles that underlie these strategies. In this way, hard unitarism is a problematic oxymoron and low-road HRM is self-interested unilaterism, not true HRM that seeks alignment of shared interests (which has its own problems, but that's a story for another day).

Wednesday, November 5, 2014

Deeper Lessons from Recent Employee Wellness Program Controversies

It’s no secret that employee wellness is an important issue today. As just one example, Honeywell’s wellness program penalizes employees if they don’t complete a biometric screening. According to newspaper reports, the penalties can include a $500 medical plan surcharge, the loss of up to $1,500 in contributions to health savings accounts, and up to $2,000 in tobacco-related surcharges. This has landed Honeywell in hot water because two employees complained to the U.S. Equal Employment Opportunity Commission (EEOC), and the EEOC subsequently filed a lawsuit against Honeywell saying that these noncompliance penalties violate federal law. I’ll let others comment on the legal merits of this case, but I think there are at least three lessons here that go beyond Honeywell and the specifics of this dispute.

First, the emphasis on penalties rather than rewards in some employee wellness programs underscores the need for those who design corporate policies of any type to have a sound understanding of what drives human behavior. If one believes that employees are exceedingly rational (as is common in neoclassical economics), then it shouldn’t matter whether something is implemented as a penalty or a reward. For example, a $500 reward for complying is viewed by a dispassionate ultra-rational person as the same as a $500 penalty for non-compliance.

But research in psychology and behavioral economics demonstrates that real decision making isn’t dispassionately rational; rather, it’s shaped by a number of cognitive biases and limitations. Of particular relevance here is the phenomenon of loss aversion—that is, individuals are significantly more bothered by a loss than a gain. So it probably matters--maybe a lot--whether wellness plans (and many other policies) emphasize penalties or emphasize rewards. Admittedly this is complex. On the one hand, this might imply that companies should design policies around penalties because employees will work harder to avoid them than to achieve rewards. But what seems to have happened here and elsewhere (e.g., Penn State) is that the threat of a penalty seems more coercive than the possibility of a reward, so employees have a stronger negative reaction from the outset when the program uses a penalty-based approach. Maybe these are exceptional examples, but the fundamental point remains—corporate policy-makers need to have a deep understanding of human behavior in order to design effective policies.

Second, the Honeywell lawsuit can be a tale that illustrates the importance of employee voice. The opposition to the Honeywell wellness plan, at least by some workers, harkens back to a year ago when Penn State similarly launched a wellness plan that included a monetary penalty for employees who failed to complete a health questionnaire (a very invasive questionnaire, by the way, that included asking women if they intended to become pregnant, but that’s a story for another day). Unlike many U.S. corporations, U.S. universities have strong traditions of employee voice by key employees (in the form of faculty governance). There was an uproar on the Penn State campus in reaction to this plan, there was a special meeting of the faculty senate in which administrators were told of passionate employee objections, and the penalty part of the wellness program was withdrawn. Maybe it’s just coincidence, but I find it telling that Honeywell is facing a lawsuit because when workers lack a voice, they need to turn to other avenues for redress. Wouldn’t it be better for all involved to resolve many issues through employee voice rather than through the courts?

Third, on some level, it’s natural to have sympathy for Honeywell and other employers. Health care costs are obviously a major challenge, and something needs to be done. But I think the deeper lesson is that this is another symptom of a fundamentally broken system. The U.S. is fairly unique in having a health care system that is so closely tied to voluntary, employer-provided insurance. At its worst, this system can dampen overall employment, contribute to job lock (employees not leaving jobs because of the difficulty in switching health carriers), and burden American employers with anti-competitive costs. And this system isn’t necessarily good for health care delivery, either, because the private health insurance system can increase costs by dividing up risk pools and increasing administrative costs.

We need to remember, however, that corporate American was instrumental in shaping this system in the first place (see Jennifer Klein’s book, For All These Rights: Business, Labor, and the Shaping of America’s Public-Private Welfare State). From the 1940s on, business lobbied against national or universal health insurance so that employees would need to rely on employer-provided benefits, and therefore be loyal solely to their employers, not to the government or even worse, to a labor union! So we probably shouldn’t feel too sorry for Honeywell and other corporations as they grapple with health care challenges in the system that they largely created. More importantly, rather than rearranging the deck chairs on the Titanic by fussing with incentives (and even worse, penalties) through employee wellness programs, fundamental reform that decouples health care coverage from employment should be the real issue of the day.

Monday, October 13, 2014

Another Empowering Story from the UK Miners Strike on its 30th Anniversary

This year marks the 30th anniversary of the UK miners strike. The singular watershed event in U.S. labor relations in last the 50 years is arguably the illegal Professional Air Traffic Controllers Organization (PATCO) strike in 1981. President Ronald Reagan’s firing of the 11,000 striking air traffic controllers is often cited as the event that made it acceptable for private sector companies to aggressively fight unions in organizing drives, at the bargaining table, and by using replacement workers for strikers. In Great Britain, the analogous watershed event is the National Union of Mineworkers (NUM) 12-month strike against the government-run National Coal Board (NCB) in 1984-85, often now referred to simply as the Great Strike.

The strike was extremely divisive. Hard line bargaining stances spilled over into numerous violent clashes between miners and police, with an estimated 10,000 arrests, 1,700 injuries, and a couple of deaths. Politically, the strike highlighted north (poor) – south (rich) divisions within Britain, created fissures within the labor movement and the Labour party, and questioned the fabric of British society. Prime Minister Margaret Thatcher’s opposition was so intense that she labeled the miners “the enemy within.” It was later revealed that MI5, Britain’s domestic CIA, led a widespread surveillance effort which included infiltration of NUM, bugging restaurants frequented by NUM leaders, and tapping the phone of every NUM branch. [For a collection of powerful images, see this Daily Mail retrospective]

Any yet, empowering stories emerge (and not just fictional ones, as in the movie-now-musical Billy Elliot). In stories that parallel the women’s brigade in the General Motors sit-down strike in 1935-36, women became actively involved in the NUM strike in running soup kitchens, speaking to groups around Great Britain to develop support for the strike, and picketing. A daughter, mother, and ex-wife of South Yorkshire miners captured this significant change in a later interview:

The NUM, as far as I can see, put all its eggs in the picketing basket, as they traditionally have, and made no particular provision for dealing with destitution amongst the families. So the women began to see that as well as campaigning there was a need to support the families. That meant going far beyond the traditional housewife role of the mining women. There has been large-scale catering, feeding five and six hundred people in a day; having to raise the money for that, learning to argue for it, to earn it in all sorts of ways, by speaking at meetings and rallies, by collecting on the streets. What they did was to set up an alternative welfare system, and an effective one at that. And these women who had never done anything outside the home before, learning to speak on public platforms to enormous audiences. The change in those women is tremendous. [Source: Vicky Seddon (ed.), The Cutting Edge: Women and the Pit Strike (London: Lawrence and Wishart, 1986), p. 229.]

And now there is a movie, Pride, based on another empowering true story from this strike. A group of gay and lesbian activists in London from a group “Lesbians and Gays Support the Miners” (LGSM) to raise money to support the strikers. One can easily imagine the culture clashes that result when LGSM members travel to a tiny Welsh village (Onllwyn) to personally hand over the donated money, as well as during subsequent reciprocal visits, such as for the “Pits and Perverts” benefit at a London rock club.

I highly recommend this movie to anyone who has the chance to see it. It is a very powerful and uplifting story. Individual struggles among activists and miners as well as the evolution of various relationships are captured with a deft blend of realism and humor. Within the domain of work, the film is a visual reminder that the labor movement can be a champion of social change, but it can be difficult to overcome traditional attitudes. Human resources professionals should also see this movie as a reminder that “diversity” should be very powerfully about human dignity, not superficially about broadening employee demographics to better serve a diverse customer base or enhancing creativity through a mixing of diverse perspectives. But you don't just have to be professionally interested in the domain of work to find this a very good movie. It has it all: human rights and dignity, identity, labor, caring, stunning Welsh scenery, an entertaining soundtrack, and many laughs.

To get you in the mood (or recall it, if you've seen the movie), here is the closing song: Billy Bragg, There is Power in a Union. Which reminds me of Jimmy Barnes, Working Class Man. Though one is British and the other Australian. But I digress. Just go see Pride.