Thursday, April 15, 2021

The Importance of Cognitive Frames for Understanding HR Practices, Part 1 (Organizational Leaders)

Last Fall, workers at two popular craft breweries in the Twin Cities (Fair State and Surly) announced their intent to unionize. The CEO of Fair State responded by saying “I am proud of the self-determination our team has shown by taking on the responsibility of organizing to make Fair State better,” and Fair State became the first U.S. microbrewery to unionize. However, Surly announced plans to close its taproom two days later. Even if this had already been planned due to pandemic-related financial losses, Surly certainly didn’t embrace the unionization effort, and it remains nonunion.

If market conditions determine human resources (HR) strategies and practices, such a stark difference is hard to explain. In a recent paper, Dionne Pohler, Wei Huang, and I assert that we also need to factor in the role of leaders’ frames of reference. A frame of reference is a cognitive lens through which we perceive the world. When someone says “labor union,” quick meanings probably come to mind; possibly, large, bureaucratic organizations protecting lazy workers, relics of a bygone era, or needed champions of social justice. This is because your brain has created a mental map based on prior experiences, assumptions, and beliefs. This then influences what you think is possible and desirable, perhaps subconsciously.

We focus on frames of reference on the nature of employment relationship, and consider four broad alternatives:

  1. The neoliberal-egoist frame in which organizations and workers are seen as dispassionate agents pursuing their own self-interest in economic markets that approximate ideal competitive conditions, often with a view that work is lousy but serves economic interests.
  2. The unitarist frame in which organizations and workers are seen as essential partners who can both thrive when appropriate policies and practices align and unite their mutual interests, which are often seen as psychological as well as economic.
  3. The pluralist frame in which organizations and workers are seen as having complex relationships in which they are each an important partner, but also that this partnership is set against a backdrop of bargaining power advantages for the organization which is important because not all of their interests coincide and can be aligned, potentially leading to harmful inequities.
  4. The critical frame in which capitalist organizations and workers are seen primarily as adversaries with opposing goals interacting in a world in which the dominant group uses its deep-seated economic and social power to maintain its advantages, systematically depriving the other of essential rights and standards.

We assert that most organizational leaders’ implicit views on the nature of the employment relationship can be usefully categorized as largely falling either in the neoliberal-egoist or unitarist frames. There can also be organizational leaders whose inherent beliefs are more consistent with the pluralist way of thinking.

Central to our work is that we assert that these views, even if subconscious, will influence what types of HR strategies and practices organizational leaders will prefer and implement. That is, neoliberal-egoist leaders will prefer transactional HR approaches, unitarist leaders will prefer commitment HR approaches, and pluralist leaders will prefer accommodative HR approaches:

Note that this dynamic can occur at various levels within an organization. The top leadership of an organization can have a certain frame that sets an overall HR direction, and then if lower-level managers have the same frame, their implementation practices will reinforce this direction. However, there are many ways in which lower-level managers can shape the implementation of HR policies consistent with their own frame. For example, a neoliberal-egoist manager could act in an authoritarian fashion while denying development opportunities to workers in a unitarist organization. So we admit that these relationships are complicated, but nevertheless we believe that research needs to place more attention on the importance of organizational leaders’ beliefs about the nature of the employment in considering how HR strategies and practices are determined and implemented. 

But what about the critical frame? The critical frame of reference sees the employment relationship as a deeply unequal one rooted in socio-political-economic dominance by an elite group, such as capital. A leader who holds this view could exploit this by acting only in the organization’s interest without regard for employee well-being. By dismissing employee welfare as something workers are themselves responsible for, such a leader would be acting in a neoliberal-egoist fashion, and would provide market-driven, take-it-or-leave terms and conditions of employment. Instead, consider a business owner who sees the employment relationship through a critical frame of reference but is bothered by the inequalities that disadvantage employees rather than seeking to exploit them.

Through a critical lens, redressing these inequalities requires structural changes in resources and decision-making rights. We label leaders who have this perspective as “critical reformist” because of the implied need to reform traditional capitalist organizational forms by creating non-hierarchical organizations or alternative employment models that are characterized by a relatively equal distribution of resources and shared authority over decision-making between managers and employees. We label this a cooperative approach where “cooperative” indicates worker-owned cooperatives (e.g., Mondragon) and other multi-stakeholder organizational governance forms (e.g., Stocksy). And thus, we can add another row to table above:

To return to the opening example, Fair State is, in fact, a cooperative, and hence the CEO sees unionization as “one more step to building the business that we have envisioned from the beginning—one where workers and consumers each have a say and stake in a business, working together to build something beautiful and thriving.” The Surly leaders might not be surly, but with more of a unitarist mindset they did not embrace unionization. More generally, previous HR systems research has focused on archetypes—bundles or clusters of HR practices within organizations that are structurally determined, internally consistent, relatively stable over time, and documented across contexts. Our research seeks to highlight the important role leaders’ frames of references can play in influencing an organization’s HR approach, in addition to environmental, structural factors.

But what about workers? They are also humans (!), and as such have their own cognitive frames, including on the nature of the employment relationship. So they have their own expectations about HR practices. This is an essential element of our paper, and is addressed in a follow-up post. Or you can watch our animated video overview.

Source: John W. Budd, Dionne Pohler, and Wei Huang (forthcoming) "Making Sense of (Mis)Matched Frames of Reference: A Dynamic Cognitive Theory of (In)stability in HR Practices," Industrial Relations. [free access to the pre-publication version here].

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