HRMG305
HR Development and Performance
Management 2018-1
Stakeholder Theories for
Sustainable HRM
Lecture 3
Strathfield Campus - Monday 12 March 2018
Prepared by the National Lecturer in Charge: Dr Sugumar Mariappanadar
Presented by: Liz Ashard
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Learning objectives
Stakeholder theory and corporate sustainability
Stakeholder theory and HRM
Critical HRM
Simultaneous effects of HRM on organizations and stakeholders
Stakeholder harm index
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Similarities between sustainability and
stakeholder theory and management
Three main similarities:
(1)they “build on normative foundations”, and have
significant ethical implications;
(2)they “rely on participation”, and are supposed to be
implemented by societal consensus finding processes;
(3)they both “aim at the integration of economic, social
and environmental performances” (Steurer et al.
2005).
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Difference between sustainability and
stakeholder theory
Sustainability refers to principles and requirements that on organization
must satisfy for being considered sustainable, whereas stakeholder theory is
based on interactive and negotiation processes that result in an integration
of the stakeholders claims with the corporate interest (Guerci et al., 2014).
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Stakeholder definition
A stakeholder is “any individual or group who can affect or is affected by
actions, decisions, policies, practices or goals of an organization”
(Freeman 1984, p. 25).
Why is it important for businesses to manage stakeholders’ expectations?
The normative reasons emphasize the intrinsic value of stakeholders,
seeing them as “an end”.
The instrumental reasons, assume that corporate performances can be
improved by managing properly stakeholders, seeing them as “a mean”.
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Five-phase stakeholder management process
elaborated by Carroll and Buchholtz (2011)
Stakeholder management process is important because managers
can become effective stewards of their stakeholders’ resources by
gaining knowledge on stakeholders and using the knowledge to
predict and improve their behaviours in action.
Phase-1: stakeholder identification
Phase-2: the stakeholder stakes
Phase-3: cooperation/threat identification
Phase-4: responsibilities that the firm have towards its stakeholders
Phase-5: What strategies or actions should firms take to best address
stakeholders
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Stakeholder theory and HRM
The reason why stakeholder theory is important for HRM is
because HRM has to support the development of corporate
sustainability by adopting a multi-stakeholder approach. This
can be understand by exploring:
• the reasons why HRM should adopt a stakeholder perspective;
• who are the stakeholders of the HR system;
• what are the specific managerial actions and activities that the
HR department might take for effectively orienting the HR
system towards the stakeholders’ interests and needs.
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Why HRM should adopt a stakeholder
perspective?
A stakeholder-oriented HRM system is crucial for monitoring
intended and unintended impacts, and its effects on the
stakeholders’ satisfaction. This pushes organizations towards
finding new HR metrics, to be integrated with the more traditional
ones typically based on the financial outcomes (Guerci et al.,
2014).
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Who are the stakeholders of the HR
system?
Brockbank (2005) proposed that the stakeholders of the
company HRM system are of four groups: investors and
customers (considered external stakeholders) and employees
and managers (considered internal stakeholders).
Is that all?
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What are the specific actions of HR
department towards stakeholder interests
• Which stakeholders are to be considered in the design, implementation,
management and evaluation of the HRM system?;
• What the stakeholders’ stakes are and, in particular, which of the
stakeholders’ needs and interests are to be considered by the HRM
professionals?;
• Which actions and activities a HRM department can take for contributing
to the satisfaction of those stakeholders’ needs and interests?
• How a stakeholder-oriented HRM department can measure the effects of
the HRM system such in way that satisfies the stakeholders’ evaluation
needs?
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Critical HRM perspective
The critical HRM perspective (e.g. Legge, 1995; Ramsay et al., 2000) views employers as the
actors that benefit most in terms of organizational performance from high performance
work practices (HPWPs), and that HPWPs are not beneficial or could even be harmful for
employees in terms of their wellbeing.
The critical HRM perspective endorses the negative outcomes of HPWPs on stakeholders
based on the skeptical and pessimistic views (Peccei, 2004).
In the skeptical view it is argued that employee benefits and organizational performance
benefits are two distinct goals which are influenced by different sets or bundles of HRM
practices (Boxall & Purcell, 2016).
Furthermore, the pessimistic view highlights that organizational benefits could be achieved at
the cost of reduced employee benefits and hence these two are not only distinct but are also
conflicting outcomes (Legge, 1995).
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Simultaneous effects of HRM perspective
The simultaneous effects perspective of HRM (Mariappanadar,
2003; Ehnert, 2009; Kramar, 2013) adds value to the mutual
benefits and critical HRM perspectives by suggesting that high
performance work practices (HPWPs) are most likely to
cause harm to employees (in terms of personal, social and
health wellbeing) while maximizing organizational
performances but attempts can be made at the institutional
level to minimize this harm on employees.
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Stressed, overworked, too much to do.......Ping!!!!!
Work related health aspects of harm of high performance work
practices (HPWPs
Stress at work 2
https://www.youtube.com/watch?v=8Dez_4YpMIs (2:06)
Funny commercial / ad about the levels of stress at work
https://www.youtube.com/watch?v=6-nurmms_1k (1:00)
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The harm of work on stakeholders
The harm of work practices highlighted in the sustainable HRM
is based on the negative externality perspective, which
reflects the cost shifting to the stakeholders of the management
of the harm of HRM practices.
The negative externality of HRM practices (Mariappanadar,
2012a; Ehnert & Harry, 2012; Kramar, 2013) is the social cost of
welfare loss imposed by HPWPs on the stakeholders (e.g.,
employees, their family members and communities) for ‘reduced’
psychological, social and work related health wellbeing
outcomes.
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Contd..
The harm of HRM practices based on negative externality is
different from the skeptical and the pessimistic views of
HPWPs (Peccei, 2004 cited in Van de Voorde et al., 2012)
and the conflicting outcome perspective literature (e.g. Legge
1995; Ramsay et al., 2000) in two ways.
The first difference is based on the welfare loss caused by
the harm indicators of HRM practices such as ‘reduced’
psychological, social and work related health wellbeing
outcomes for the stakeholders.
The second difference is about cost shifting to the
stakeholders for managing the harm caused by HRM
practices, which is understood based on the social costs of
welfare loss for the stakeholders.
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Stakeholder harm index (Mariappanadar,
2014)
The stakeholder harm index of HPWPs is defined as a
catalogue to capture the harmful aspects of reduced
psychological, social and work related health wellbeing
outcomes for the stakeholders (employees, their families,
and the community) and the aggregate social costs of
welfare loss due to such harmful aspects caused by
either a specific form of HPWP or a bundle of HPWPs.
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Contd..
The harm of HPWPs is understood based on welfare loss
caused by the harmful aspects of HPWPs. That is, the
harmful effects of HPWPs restrict the stakeholders
(employees and their family) from maximizing the utility
function of paid work for improved individual
psychological, social and health wellbeing or good for a
society.
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Valuate the costs of harm
indicators
•Direct costs or market price of
harm indicators
•Indirect costs of harm indicators
Stage 3
Identification and
allocation of costs to
appropriate levels
•Employee level
•Family level
•Community level
Stage 2
Cost measure for harm
of HRM practices
•Psychological harm
•Social and work related health
harm
Stage 1
Figure 1 The costs framework for harm of HRM practices on stakeholders (Mariappanadar, 2013)
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Table 1 A Stakeholder Index of Harm of HRM practices
Costs
attributed to single
or multiple
stakeholders (C1)
The cost measure for psychological aspect
of harm (C2)
Type of harm
indicators (C2a)
Direct/indirect
costs (C2b)
Single
stakeholder
(employees) – R1
Problems
thinking clearly and
decision making at work
Costs of
longitudinal relative
deprivation ($15,000 or
more)
Single
stakeholder
(employees & their
partners) R2
Cost measures of harm of work intensification as a HRM practice
The cost measure for social aspect of harm (C3)
The cost measure for work related health aspect of harm
(C4)
Type of harm
indicators (C3a)
Direct/indirect
costs (C3b)
Increased conflict
between partners leading
to divorce
Direct average
costs of $ 30,000 for an
affected individual
Single
stakeholder (the
society or
government) – R3
Type of harm
indicators (C4a)
Insomnia
Coronary heart
disease (CHD)
Severe headaches,
shoulder and back aches
Multiple
stakeholders
(employees and to
society) – R4
Burnout
Multiple
Alcohol abuse
stakeholders (family having detrimental effect
and to employees) – on affected employees’
R5
work capabilities
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Change in career
path (85% less income at
the time retirement
compared to the former
career)
Transitional
unemployment and
reduced annual salary
Burnout and work
related depression
Decrease in
Costs of child
marital satisfaction due to
neglect due to alcohol
organisational stressor and abuse
role overload
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Direct/indirect costs (C4b)
Total direct average costs
for caring an affected individual
with insomnia $1039.
Annual per capita direct
health care costs of $839 for
individuals with CHD.
The estimated annual
treatment costs for chronic
musculoskeletal pain in the US is
$ 100 billion.
Annual per capita health
and disability costs of $5,415 to
the society for caring affected
individuals.
Usefulness of stakeholder harm index
The stakeholder harm index can help managers identify
and capture the harm of certain work practices so as to
detect discrepancy in ethics of care for the stakeholders so
as to introduce HR policy and practice change interventions
to minimize the harm.
Subsequently, by using the index evaluate over a period of
time, the effectiveness of any intervention in minimizing the
harm of certain work practices that are imposed on the
stakeholders can be determined as well as achieve financial
performance for the company.
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Contd..
The stakeholder harm index will facilitate HR practitioners with
detailed knowledge of the industry in which firms are
operating to identify the harm of HPWPs and set standards for
management-based regulation, social self-regulation and
sustainable work systems at the institutional level. This will
arguably lead to more practicable standards for the negative
consequences on the stakeholders as well as be more effectively
monitored.
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A Paradox Perspective for
Sustainable HRM
HRMG305
HR Development and Performance
Management 2018-1
Week 4 Workshop
Strathfield Campus - Monday 19th March 2018 - 5pm
Presented by: Liz Ashard
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CONCEPTS for this week
❑Tension between sustainability and HRM
❑The Paradox Perspective
❑Key Organisational Paradoxes
❑Key Paradoxes for HRM
❑Strategies to Cope with Paradox
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AGENDA
Lecture - Paradox Perspective for Sustainable HRM
Recap on last week - Stakeholder Theories
Sharing the Blogs. Discussion and debate.
Drilling down into some of the areas mentioned in the lecture.
Assignment due next week.
Questions
Activities
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RECAP
Stakeholder Theory
The stakeholder theory is a theory of organizational management and business ethics
that addresses morals and values in managing an organization.
It was originally detailed by Ian Mitroff in his book "Stakeholders of the Organizational Mind",
published in 1983 in San Francisco.
Sourced: https://en.wikipedia.org/wiki/Stakeholder_theory
Stakeholder theory states that the purpose of a business is to create value for
stakeholders not just shareholders. Business needs to consider customers, suppliers,
employees, communities and shareholders.
Source: Stakeholder Theory. https://stakeholdermap.com/stakeholder-theory.html
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RECAP
Difference between sustainability and
stakeholder theory
•Sustainability refers to principles and requirements that
on organization must satisfy for being considered
sustainable,
•whereas stakeholder theory is based on interactive
and negotiation processes that result in an integration of
the stakeholders claims with the corporate interest
(Guerci et al., 2014).
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RECAP
Why HRM should adopt a stakeholder
perspective?
A stakeholder-oriented HRM system is crucial for monitoring
intended and unintended impacts, and its effects on the
stakeholders’ satisfaction. This pushes organizations towards
finding new HR metrics, to be integrated with the more traditional
ones typically based on the financial outcomes (Guerci et al.,
2014).
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Activity
Sharing the blogs – Discussion and debate
‘On how stakeholders can negatively impact on business
financial outcomes’ (200 -300 words)
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Paradox
What does it mean?
•A paradox is a statement that, despite apparently sound
reasoning from true premises, leads to an apparently
self-contradictory or logically unacceptable conclusion.
• A paradox involves contradictory yet interrelated
elements that exist simultaneously and persist over time
•Some logical paradoxes are known to be invalid
arguments but are still valuable in promoting critical
thinking.
Source: Wikipedia
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Sensemaking: Dealing with Organisational
Sustainability Paradoxes
Gaia Grant
How can groups generate innovative approaches for
dealing with organisational sustainability paradoxes?
A collective sensemaking perspective
“We cannot solve our problems with
the same thinking we used to create them.”
Albert Einstein
https://www.youtube.com/watch?v=e6LVzvEuAJI
(5:02)
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Paradox Perspective
It is argued that researchers can learn new aspects about an
organization by replacing a logic perspective, predominant
within western research, with a paradox perspective on the
analysis of the organization. A paradox perspective rests on the
assumption that mutually exclusive phenomena exist in the
organization. Ann Westenholz
Source:http://journals.sagepub.com/doi/abs/10.1177/0143831X99204002
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Activities
DISCUSSION
What is Stakeholder Theory? - R. Edward Freeman
https://www.youtube.com/watch?v=bIRUaLcvPe8 (2:57)
Shareholders vs. Stakeholders -- Friedman vs. Freeman
Debate - R. Edward Freeman
https://www.youtube.com/watch?v=_sNKIEzYM7M (1:17)
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Essential Question
It is possible to avoid the tension between sustainable
HRM contributing to profit maximization and stakeholder
well-being?
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Looking at the first assignment
Institutional and stakeholder context ....
Assessment task 1 - Week 5, Mon – 26th March, via Turnitin before 5pm
Individual essay – 30% - 1000 words
Question: Critically analyse the institutional and stakeholder
contexts for developing sustainable HRM as a new discipline to
achieve corporate sustainability.
Purpose: The purpose of this assessment is to help you develop an
understanding of the contexts for sustainable HRM.
Creating Value – Stakeholder strategy
https://www.coursera.org/learn/uva-darden-advanced-business-strategy/lecture/2p8A3/sources-of-institutionalpressure (9:26)
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Activity
Case study for discussion
Human Resource Management in Context
Use the case study handout to analyse the institutional
and stakeholder contexts for developing sustainable
HRM as a new discipline to achieve corporate
sustainability in this organisation.
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Next Week
Week 5
❑Sustanable HRM values and characteristics ❑Remember to read through the Lecture slides and
articles BEFORE the workshop
❑First Assignment is due for submission
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Institutional Context (1 of 2)
• Institutional Context: Includes other elements of society besides national culture such as:
• Education
• The government
• The legal system
• These can affect important business-related differences among societies.
• May encourage adoption of values inconsistent with national cultures.
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Institutional Context (2 of 2)
• It is important to understand the dominant institutional context of any society, and appreciate
its influence on individuals and organizations.
• Understanding the institutional context is critical to effective multinational management.
• At a basic level, a manager cannot completely understand any society without examining its
national culture and institutional context.
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Exhibit 3.1:
The National Context and Multinational Companies
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HRMG305
Sustainable HRM and
Stakeholders 2018-1
Sustainable HRM values
and strategies
Lecture 5
Strathfield Campus – Monday 26th March 2018
Prepared by the National Lecturer in Charge:
Dr Sugumar Mariappanadar
Presenter by: Liz Ashard
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Learning objectives
Understand how sustainable HRM strategies and practices go
beyond traditional approaches to HRM
Make practical suggestions how unsustainable HRM practices
can be identified and reduced and how sustainable HRM
practices can be designed and implemented
Critically discuss the contributions of sustainable HRM and key
theoretical assumptions
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Ethical issues with current approaches of
HRM
HRM is commonly defined as the productive use of
people in enabling organisations to achieve their strategic
goals and satisfy individual needs (Stone, 1998).
Critical HRM highlights the ethical deficiencies in
mainstream HRM. For example, is it ethical to call
‘human’ as a resource to be exploited?
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The focus of mainstream HRM
The focus of mainstream HRM is efficiency.
Organisations control HRM to achieve their strategic goals (Wright and
McMahan, 1992).
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The focus of critical HRM
The ideology of unitarism in the mainstream HRM is being used to
control any divergence of interest between organization and
employees in order to achieve organizational goals (Kamoche, 1994).
However, the critical HRM theorists believe in pluralist (multiple
purposes) and collectivist nature to the workplace.
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Stakeholder theory and HRM
The reason why stakeholder theory is important for HRM is
because HRM has to support the development of corporate
sustainability by adopting a multi-stakeholder approach. This can
be understand by exploring:
• the reasons why HRM should adopt a stakeholder perspective;
• who are the stakeholders of the HR system;
• what are the specific managerial actions and activities that the
HR department might take for effectively orienting the HR
system towards the stakeholders’ interests and needs.
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The ethical questions for HRM
Is it right or wrong to manipulate employees using the focus of
mainstream HRM?
Under what circumstances, if any, is it allowable for employees to
be “used” as a means to an end
To what extent, if at all, should the organisation act in the interest
of employees.
These ethical questions relate to individual’s rights
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Propositions to evaluate the ethical issues
of HRM
Individual employees must be treated with “respect”.
An organisation or an employee should not undermine the
autonomy of an individual (Greenwood, 2002).
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What is “respect”?
Respect includes the rights of an employee such as the right to freedom, the
right to well-being and the right to equality. The right to freedom includes not
only negative freedom, such as the right to not be physically restrained, but
also positive freedom such as the right to not be coerced or hindered by the
effect of external forces (Rowan, 2000).
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What is “manipulation”?
Manipulation is a broad category that includes any successful attempt to elicit a desired
response from another person without the means of physical force (coercion) or rational
argument (persuasion).
A person who is manipulated makes a choice based on incorrect or unsound reasoning, as a
result of a deliberate attempt by another to mislead or deceive them (Greenwood, 2002).
The right to well-being can be understood as the right of individuals to pursue their own interests
and goals and organisation must also recognize individual’s interests (Rowan, 2000).
Equality implies that everyone has rights to freedom and wellbeing equally.
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Corporate social responsibilities (CSR)
CSR is defined as actions that appear to further some social
good, beyond the interests of the organisation and that is
required law (McWilliams & Siegel, 2001).
Others define CSR is of voluntary nature and it is not an altruistic
activity but it can be strategic for an organisation.
CSR as an alternative form of addressing employee needs and
thus forestalling efforts to organise labour (Preuss et al., 2009).
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Ethics of care
When organizations’ HRM practices are strategically driven by
the internal referenced efficiency they can disregard ethics of
care.
The ethics of care (Mariappanadar, 2012) in the HRM context
refers to the ethical choices organizations face when seeking to
maximize profit as well as reduce the harmful aspects of HRM
practices on the stakeholders, such as employees, their families
and communities, so as to maintain harmonious relations
between the employer involved and the stakeholders.
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Contd..
The issue with ethics of care does not stop with the harm
imposed by work intensification on the third parties
(stakeholders) but it also raises a subsequent question, ‘who
pays to overcome the harm imposed by such practices on
the third parties’. The cost part of the associated harmful effects
of practices by organizations due to lack of care for the third
parties is explained by externality.
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Negative externality
The negative externality is something that costs the
organization nothing for their actions or business
practices, but those actions or business practices impose
psychological and social aspects of harm on third parties
(stakeholders) such as employees, their families and
communities (Mariappanadar, 2011).
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Contd..
Organizations to enhance their holistic corporate
sustainability initiatives by proactively identifying the
negative externality and minimize the harm of HRM
practices on employees, their families and communities.
Holistic corporate sustainability suggests that each
person or organization has a universal responsibility
towards all other beings (Van Marewijk, 2003).
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Values of sustainable HRM
Sustainable HRM must treat employees with respect,
care for employees and other stakeholders by identifying
and reducing the harm of work imposed on them, and
respect freedom of employees.
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Figure 4.1. An integrated model of sustainable HRM system
Sustainable business strategy,
organizational design &
process
Sustainable organizational values
•
•
•
•
Social consciousness
Developmental humanism
Ethics of care
Humanistic organizational
values
Sustainable HR
strategies
Characteristics of sustainable HRM practices
Employee knowledge,
skills and abilities with Sustainability
champion
social consciousness
Altruistic
employee
motivation
Low employee
High
health and social consideration for
harm
HR regeneration
Organizational
performance
Facilitate green
HRM
Minimize harm
of work on
stakeholders &
facilitate HR
regeneration
Synthesis effects of sustainable HRM practices
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Sustainable
corporate
assistance program
Corporate
sustainability
Economic,
environmental and
social goals of
corporations
Table 4.1. Definition for sustainable organizational values
Sustainable
organizational value
Social consciousness
Ethics of care
Utilitarian
instrumentalism
Developmental
humanism
Humanistic
organizational values
Altruistic employee
motivation
Prosocial value
orientation
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Definition
The highest level of organizational consciousness that focuses on
systems, policies and practices to include the characteristics of care,
compassion and altruism in HR practices (Chiva, 2014).
In the HRM context refers to the ethical choices organizations face
when seeking to maximize profit as well as reduce the harmful
aspects of HRM practices on the stakeholders, such as employees,
their families and communities, so as to maintain harmonious
relations between the employer involved and the stakeholders
(Mariappanadar, 2012a).
Emphasizes the quantitative and calculative business strategic aspects
of managing HR, just as rationally as any other factor of production
(Mariappanadar, 2003).
It is about without disregarding the important of strategic HR
management, perceives employees as an asset and stresses the
significance of their development, learning and commitment to yield
better economic performance as well as satisfied staff
(Mariappanadar, 2003).
Emphasizes the possibilities of integrating humanistic values with
general moral principles such as employee well-being and employee
personal growth with strategic management goals such as maximum
productivity and long-range economic rationality (Alvesson, 1982).
Witnessing another person in need may elicit empathic concern (e.g.,
sympathy, compassion) and that produces an altruistic motivation to
reduce the distress of the person in need (Dovidio et al., 1990).
Prosocials compared to employees who are individualists and
competitors provide greater positive weight and equality to others'
outcomes, exhibited greater reciprocity with others depending on the
degree of cooperation, and strongly inclined to exhibit the same level
of cooperation as they expected from others (Van Lange, 1999).
Table 1: Characteristics of control, commitment and sustainable HR practices
(Mariappanadar, 2016)
Attributes of HR
practices
Characteristics of
Control HR
practices
Characteristics of
Commitment HR
practices
Characteristics of
Sustainable HR
practices
HR attributes instrumental in improving organizational performance
Employee
competencies
(Knowledge, skills
and abilities - KSA)
Align employee
competencies with
those of an
organization (a clan
system) in selection,
training
Employee
competencies are
aligned with
organizational and
employee interests for
mutual benefits in
selection,
performance
appraisal, training and
retaining
Employee
competencies align
with mutual interest of
employees,
organization and
stakeholders in
selection, performance
appraisal, training ,
and retaining
Employee motivation
Extrinsic motivation
Intrinsic & extrinsic
motivation
Individual and
altruistic motivation
Employee
participation –
employee
empowerment
Employee
empowerment is low
due to high work
standardization
Organizational
citizenship
Sustainability
champion
HR attributes of harm of work while improving organizational performance
Health harm of work
High health harm on
employees
High health harm on
employees
Low health harm on
employees and supply
chain HR
Social/family harm of
work
High social harm on
employees & family
High social harm on
employees & family
Low social harm on
employees, their
families and supply
chain HR
Future supply of
skilled HR
Low consideration for
HR regeneration
Low consideration for
HR regeneration
High consideration for
HR regeneration
globally
HR attribute for the reduction of harm of work
Employee support
through employee
assistance program
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Employee assistance
program for
individual employee
to cope with the
consequence of workrelated stress
Employee assistance
program for stress
management
interventions for
employees to cope
with work-related
stress and improve
organizational
outcomes.
Sustainable corporate
assistance program Achieving workplace
wellness along with
worker wellness.
Figure 1: A Framework of employee work and career conditions for designing sustainable HRM (Mariappanadar, 2016)
2
High obscured harm of
work and high benefits
for employees and
2
increased benefits for
organization
1
Low harm of work and
low benefits for employees
and increased benefits for
organization
Normal
work
1
Employee
early-career
stage
1
4
High harm of work and
high benefits for
employees and increased
benefits for organization
3
4
6
Moderate harm of work
and low benefits for
employees and increased
benefits for organization
5
3
Employee
mid- career
stage
Employee career life-cycle
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High harm of work and
high benefits for
employees and increased
benefits for organization
7
Low harm of work and
low benefits for
employees and increased
benefits for organization
5
Employee
late- career
stage
High
simultaneous
benefits
Simultaneous
positive
impact of
HPWPs
Work
intensification
Extreme
work
Low
simultaneous
benefits
Sustainable HRM Theories
HRMG305
Sustainable HRM and Stakeholders
2018-1
Week 6 LECTURE
Strathfield - Monday 9th April 2018
Presenter Name: Sugumar Mariappanadar
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Learning objectives
Compare sustainable and unsustainable aspects of HRM
functions and high performance work practices (HPWPs).
Develop understanding of negative externality of HRM functions
and HPWPs on the stakeholders.
Appreciate work harm of some of HRM functions and HPWPs
(e.g. flexible work arrangements, work intensification etc.,) on the
stakeholders.
Examine the social costs of HRM functions and HPWPs imposed
on the stakeholders.
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High performance work practices (HPWPs)
In the HRM literature it is common to find that most HRM practices in
particular some of the high performance work practices (HPWPs) are driven
by organizations’ internally referenced efficiency focused approaches
(Mariappanadar, 2003). HPWPs aim to assure greater flexibility and
motivation of employees, to increase the participation of employees in
decision-making, and to take advantage of their problem-solving and
communication skills (Colombo et al., 2007). These HPWPs are shaped by
strategic and economic aspirations of organizations to achieve competitive
advantage through employees (Pfeffer, 1998).
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Critical HRM
The critical HRM perspective (e.g. Legge, 1995; Ramsay et al., 2000)
suggests that the economic aspirations of organizations using HPWPs may
also have negative impacts on well-being issues relating to stakeholders.
Hence, in this chapter the negative impacts of HRM practices in particular
HPWPs on the stakeholders.
Using a stakeholder aspect as a component of sustainable HRM would
foster a moral relationship between organizations and employees instead of
a purely instrumental approach to HRM (Greenwood and De Cieri 2007).
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Simultaneous effects
The simultaneous effects of HRM indicated in the framework of
sustainable HRM theories highlights that strategic HRM practices,
such as HPWPs, work intensification, overwork etc., used to enhance
organizational performances also have positive or sustainable and
negative or unsustainable impacts on employee well-being.
There are three different perspectives of simultaneous effects of
HRM; they are the mutual benefits perspective, the critical HRM
perspective and the synthesis effect perspective.
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Theory of Negative Externality of HRM
Highlights an organization’s failure to assimilate the cost of
negative impacts of HRM practices instead transferred to the
stakeholders to manage the negative impacts (Mariappanadar,
2012b).
The theory of negative externality is relevant for sustainable HRM
because the theory helps to the social costs imposed on the
stakeholders to manage negative impacts of certain HPWPs.
Organizations can subsequently use this understanding of
negative externality of HRM practices to reduce or minimize such
negative impacts to improve well-being while increasing
organizational performances.
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Attributes of negative externality
The attributes of negative externality of HRM practices are the
characteristics of harm of practices that negatively impact on
employees, their families and the community.
The negative impact of the attributes of negative externality of
HRM practices are understood by the harm indicators.
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The attributes of harm
▪Level of harm – The level of harm of HRM practices is about
employees’ evaluation of high or low risk of harm of work
practices that leads to negative personal, social and work related
health outcomes for employees and their family.
▪Keefe et al. (2002) found in their study of meat workers in New
Zealand, who lost their jobs due to downsizing, that there was an
increased risk of serious self-harm which led to hospitalization or
death (suicide) when compared to the employed cohort.
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Contd..
•Manifestation of harm – The manifestation attribute of harm of
work practices refers to when the harm manifest itself by
negatively affecting personal, social and work related health
outcomes for employees and their family.
•For example, Price et al. (2002) proposed in their study that a
single discrete life event such as job loss due to downsizing
triggers short-term (instantaneous effect on family members) and
long-term (time lagged depression due financial strain)
adversities.
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Contd..
•Impact of harm – This attribute refers to the temporary or permanent
impact of harm of work practices have on personal, social and work
related health outcomes for employees and their family.
•For example, Kets de Vries and Balazs (1997) found that victims tend
to neglect their appearance; they also tend to suffer from insomnia
and loss of appetite along with preoccupation with negative thoughts.
Victims of downsizing may be able to overcome this temporary harm
once they regain employment.
•Price et al. (2002) revealed that the chain of adversity appears to
have a long lasting negative impact on victims’ mental health,
suggesting that even reversible life events such as job loss can have
lasting effects upon those who experience them.
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Negative externality
The attributes of negative externality of HRM practices is used to
understand the different negative impacts on the stakeholders.
For example, Mariappanadar (2012b) reviewed the negative
externality of work intensification, as a strategic HRM practice, on
the stakeholders (employees, their families, and the community)
using the attributes of negative externality of HRM practices.
In this review, he found that work intensification at surface level
seems to be an efficient practice for the company. However, if the
costs of negative externality of work intensification imposed by
organizations on the stakeholders are also taken into
consideration while calculating the efficiency for an organization
then it is more likely to reflect inefficiency.
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The Theory of Harm of Work
It is important to understand negative impacts or harm indicators that
the attributes of the negative externality have on the stakeholders (e.g.
employees, their family members and the community) so as to
evaluate the social costs imposed on the stakeholders to manage the
harm of work (Mariappanadar, 2012b).
Hence, the harm indicators of negative externality are used to identify
the presence or manifestation of harm of work and can be used to
raise awareness of managers and researchers the negative
consequence (harm) of HPWPs on the stakeholders (e.g. employees,
their family and the community).
Also, the harm indicators can trigger socially responsible organizations
to develop sustainable HRM practices to minimize such harm of work
imposed on the stakeholders.
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The theory of harm of work
The profound negative impact on employees and their
family members for reduced or loss of psychological,
social and work related health well-being outcomes that
are caused by the work practices used by organizations
to extract maximum skills, abilities and motivation of
employees to achieve highly effective and efficient
performance (Mariappanadar, 2014a).
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Conceptual Model of Harm Indicators of
NE of Organisational Practices
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The Theory of Harm of Work and
Sustainable HRM
It is important for this purpose an early identification of harm of
HPWPs is essential so that organizations can be proactive and
introduce sustainable HRM strategies to minimize the harm of
work before the harm starts curbing employees to make positive
contributions to their families, community based voluntary
activities and be a productive resource for other prospective
employers.
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The Costs Framework for Harm of HRM
practices
The costs framework (Figure-1) for harm of HRM practices (Mariappanadar, 2013)
proposes three components to valuate the cost of harm of HRM, and they are the
cost measures for the harm of work, identification and allocation of the cost of harm
of work, and valuation of cost of harm of work.
The component of cost measures for the harm of work highlights the measure for
the costs of harm of work using the welfare ‘loss’ to the stakeholders (e.g.
employees, their family and the community) due to the harm of work.
Welfare loss in the HRM context is about an employee being restricted by the
harmful aspects of HRM practices for maximizing the utility function of paid work for
improving an individual’s psychological, social and health well-being outcomes. The
reason for using welfare loss in HRM because the definition of harm of work
(Mariappanadar, 2012b) is about the harm it causes on employees and their family
members, which impairs their effective utility function of paid and unpaid work.
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Figure 1 The costs framework for harm of HRM practices
Valuate the costs of
harm
• Direct costs or
market price
• Indirect costs
Stage 3
Identification and
allocation of costs to
appropriate levels
• Employee level
• Family level
• Community level
Stage 2
Cost measure for harm
of HRM practices
• Psychological
harm
• Social and work
related health harm
Stage 1
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The Stakeholder Harm Index (SHI)
The stakeholder harm index of HRM practice is defined as an
index to capture the aggregate welfare loss or social costs of
reduced personal, health, emotional and social wellbeing
outcomes for stakeholders (employees, their families, and the
community) caused by the harm of either a specific form of HRM
practice or a bundle of HRM practices.
The SHI is proposed based on a heuristic argument of microeconomic theory to indicate the ‘welfare loss’ to employees, their
families and communities caused by the harm indicators that are
triggered by the harm of HRM practices.
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Role of sustainable HRM on minimizing NE
of organisational practices
In the literature, workplace flexibility (Hill et al 2008) is discussed
as an organisational practice to counter the social issues or NE of
work intensification.
Work flexibility can be identified as a sustainable strategy
because it takes into consideration employee wellbeing as well
as an organisation’s internal referenced efficiency.
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The theory of synthesis effects of HRM
practices
The theory of synthesis effects of sustainable HRM practices is
about improving organizational performances through HRM
practices as well as attempt to ‘reduce’ the harm of those HRM
practices on employee well-being because these two polarities
are not mutually exclusive but they are mutually reinforcing.
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Empirical evidence of synthesis effects
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SUSTAINABLE HRM and HPWS
Conclusion
• Support simultaneous effect (increased organisational performance and increased employee
harm)
• Synthesis effect (increased organisational performance and reduced employee harm
• No mutual benefits for organisation and employees off HPWS and bundle of HPWSs
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