Understanding the complexities of HRM development in the SME: Being caught between contradictory organisational,
regulatory and market forces in the aerospace sector
A thesis submitted to The University of Manchester for the degree of
Doctor of Philosophy
in the Faculty of Humanities
2019
PETER D. SCHOFIELD
Alliance Manchester Business School
People, Management and Organisation (PMO) Division
2
List of contents Page No.
List of tables 10
List of figures 11
List of abbreviations 12
Abstract 14
Declaration 16
Copyright statement 17
CHAPTER 1: Understanding the complexities of HRM development in the small and medium sized firm: An introduction
18
1.0 Introduction and background to the thesis 18
2.0 Why study SMEs? 22
3.0 Research questions 23
4.0 How the research was conducted 24
5.0 The structure of the thesis 25
6.0 Contributions and findings of the thesis 29
CHAPTER 2: Understanding human resource management within the small and medium sized firm: A review of the literature
34
1.0 Introduction 34
2.0 Positioning of the research 36
2.1 SHRM: Universalism and ‘best practice’ HRM 37
2.2 What is a small firm? 42
2.3 ‘Best practice’ HRM and the small firm: A critique 47
3.0 Understanding the internal organisational and ‘political’ environment 52 3.1 Depictions of HRM and employment relations in the small firm:
The binaries of consensus and coercion within SMEs 53
3.2 The familial dimension and the role of the owner/ manager: The role of internal social politics within management
56
3.3 The influence of founders on organisational culture: Culture and tradition within SMEs
60
3
3.4 The influence of the ‘HR champion’: Agency and individual protagonists within SMEs
62
3.5 HRM and the line manager: The structures and instability of management hierarchy within SMEs
63
3.6 Section summary 66
4.0 The development of key levers of HRM to the SME 66
4.1 Recruitment and selection in SMEs 69
4.2 Training and development in SMEs 71
4.3 Employee voice and participation mechanisms in SMEs 72
4.4 Performance appraisals in SMEs 75
4.5 Overview of the key levers of HRM in the context of the UK 77
4.6 The question of new management initiatives (NMI) 79
4.7 Informality as an advantage? 82
5.0 Summary conclusions 83
CHAPTER 3: The small and medium enterprise in context: Development, contingencies and regulation
86
1.0 Introduction 86
2.0 ‘Best fit’, contingency and configurational perspectives 89
2.1 A critique of the ‘best fit’ model of HRM 90 2.2 Life-cycle models: The moments and stages of SME development
as a factor 92
3.0 Aspects of structure and growth 96
3.1 Organisational design, structure and its relevance to growth 96
3.2 Organisational memory and path dependency 97
4.0 Illustrating the complexities of regulatory dynamics 99 4.1 Exploring the ‘regulatory space’: Understanding the political
tensions and nature of regulation and regulatory actors 100
4.2 Coercive networks and supply chains: The role of inter-corporate pressures on quality and HRM
107
4.3 Clusters and industrial districts: Isomorphic pressures for change within local spaces
110
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4.4 Professional employer organisations (PEOs) and business mentors: The role of consultancy networks in the developmental aspects of HRM
112
4.5 The impact of the erosion of collective worker voice: Are SMEs beyond the reach of conventional industrial relations pressures?
113
4.6 Section summary: Highlighting the role of the external environment
119
5.0 Accounting for and interacting with context 119
5.1 The attributes of an ‘open-systems’ framework? 119
5.2 Understanding interactions across the organisational boundary 122
6.0 Summary conclusions: Mapping the gaps and generating the research questions 124
CHAPTER 4: Methodology and research context: Researching the complexity of the internal and external organisational spaces
131
1.0 Introduction 131
2.0 Research questions 132
3.0 Philosophical suppositions: Researcher positionality and epistemological intimacies
135
4.0 Research design 140
4.1 Case study design: A comparative analysis 140
4.2 Case study selection: Organisational profiles 142
4.2.1 Case A 144
4.2.2 Case B 146
4.3 A qualitative enquiry 148
4.4 Data collection: Semi-structured interviews 150
4.5 Sampling method: Purposive sampling 154
4.6 Respondent profiles and characteristics 155 4.7 Institutional interviews and a mapping of the external
environment 156
5.0 Interpreting data and developing an argument 158
5.1 Qualitative data analysis: A critical discussion 158
5.2 Thematic analysis 161
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5.3 Theorising the data 164
6.0 Questions of access and ethics 166
6.1 Access 167
6.2 Ethical considerations 168
6.2.1 Informed consent 169
6.2.2 Anonymity 170
6.2.3 Affiliation bias 170
7.0 Background to the aerospace sector: Disorganisation, fragmentation and state-led intervention
171
8.0 Summary conclusions 176
CHAPTER 5: Organisational contingencies and people management in the small firm: Life-cycle stage, change and culture
179
1.0 Introduction 179
2.0 Growth, change and differing HR needs 181
2.1 The idiosyncrasies of growth and life-cycle stage 181 2.2 Enhanced bureaucratisation: Accounting for regulatory
provisions 190
2.2.1 Case A 191
2.2.2 Case B 194
2.3 The capacity issues of management 197
2.4 Section summary 200
3.0 Identity and perceptions 201
3.1 The influence of the owner/manager 202
3.1.1 Case A 202
3.1.2 Case B 206 3.2 Composition of the workforce: Employee profile and
characteristics 207
3.2.1 Case A 208
3.2.2 Case B 212
4.0 Organisational cultures and familial characteristics 215
4.1 Organisational culture 215
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4.2 Case A and a ‘culture of process’ derived from the sector of operation
216
4.3 Case B and intra-organisational cultures 217
4.4 Understanding the role of the family in the SME 219
4.4.1 Case A and the diminishing influence of family 219
4.4.2 Case B and familial tensions 220 4.5 A dual culture of professionalism and family: The issue of
maintaining a balance in Case A and B 223
5.0 Summary conclusions 226
CHAPTER 6: The peculiar nature of how the human resource function evolves in the small and medium sized firm
231
1.0 Introduction 231
2.0 The evolving nature of HRM 235
2.1 Case A 235 2.1.1 Difficulties encountered during the formalisation of
HRM and its bureaucratisation 235
2.1.2 The role of HR and how it is perceived 239
2.1.3 Formalised EIP mechanisms or an ‘empty shell’? 242
2.1.4 Case A summary 244
2.2 Case B 245 2.2.1 The formalisation of HR and its bureaucratisation as
a form of control 245
2.2.2 The role of HR and how it is perceived 251
2.2.3 Communication challenges, gossip and relations 253
2.2.4 Conflict and employment relations issues 255
2.2.5 The role of ‘HR champions’ and individual networks 256
2.2.6 Case B summary 258
3.0 Summary conclusions 259
CHAPTER 7: The mediation and formalisation of human resource management in the small and medium sized enterprise
264
1.0 Introduction 264
7
2.0 Recruitment and selection: The uneven move away from informal processes
267
2.1 Recruitment and selection in Case A 267
2.2 Recruitment and selection in Case B 273
3.0 Training and development: How regulatory forces are seen to be impinging on this dimension of HR
279
3.1 Training and development in Case A 279
3.2 Training and development in Case B 283
4.0 Performance appraisals 287 4.1 Performance appraisals in Case A: The practice of formalisation
with tactical motivations 287
4.2 Case B on performance appraisals: The influence derived from ACAS?
291
5.0 Participation and voice mechanisms 294 5.1 Case A on participation and voice mechanisms: Organisational
growth and a continuity of expectations 294
5.2 Case B on participation and voice mechanisms: Heightened expectations derived from the memory of trade unionism?
298
6.0 Summary conclusions 301
CHAPTER 8: The regulatory spaces and context of small and medium sized firms: Dynamics and interactions
309
1.0 Introduction 309
2.0 Mapping the ‘regulatory space’: Unearthing the real dynamics of context and regulation
313
3.0 Public and private sector related bodies 316
3.1 The Civil Aviation Authority, regulation and a ‘culture of process’ 317 3.2 The influence of customers originating from ‘coercive networks’
on HRM 320
3.3 Regional aerospace alliances (RAA) 323
3.4 Summary and discussion 325
4.0 The role of the state in HRM development in the SME 326
4.1 Employment law and the difficulties attributed to HR outsourcing 326
4.2 Case B and ACAS as state voice? 329
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4.3 The HSE and associations between HR and health and safety 332
4.4 Summary and discussion 334
5.0 The role of non-state advisory bodies 335
5.1 The Chartered Institute of Personnel and Development (CIPD) 335
5.2 The influence of management consultants on Case A 338
5.3 Summary and discussion 339
6.0 Where are the trade unions? 340
7.0 Summary conclusions 343
CHAPTER 9: Discussion and conclusions: Bridging the gap between the human resource management, small and medium sized firms and regulation debates
349
1.0 Introduction 349
2.0 A complexity inherent to HRM development in the SME: Accounting for dynamic and nuanced characteristics
352
3.0 Questions of balance and choice: ‘Flexible formalisation’? 359
4.0 Accounting for regulatory provisions: How SMEs respond to yet interact with external pressures
364
4.1 SMEs as being influenced by a diverse set of institutional structures inhabiting the ‘regulatory space’
365
4.2 The complex interactions and relations with actors in regulatory spaces and across organisational boundaries
367
5.0 Conclusions and contributions 369
References 371
Appendices: 401
A. The historical and economic importance of the SME 402
B. Understanding the aerospace sector: Increasing levels of sector fragmentation and the position of SMEs
406
C. Interview schedule: Employee 426
D. Interview schedule: Line manager 430
E. Interview schedule: Owner/manager 436
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F. Participant information sheet 445
G. Respondent profiles and characteristics 449
H. Interview schedule: Institutional actors 450
I. Analysing the data: Coding template 454
J. Analysing the data: Summary of the key findings 456
K. The language of growth 457
L. BEIS (Business, Energy and Industrial Strategy): Aerospace, marine and defence sector
460
M. Policy implications 462
N. Limitations of the study and future research recommendations 464
Word count: 88,436
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List of tables
Table No. Title Page No.
1 ‘SME’ ProQuest citation search on the 06th June 2019 43
2 Conclusions drawn regarding an SME’s HRM agenda 50
3 Employment relations in SME’s 54
4 An overview of the key levers of HRM in the context of the UK
78
5 Examples of New Management Techniques in SME’s (employing 15-24 employees)
80
6 New Management Techniques in SME’s (employing 25-199 employees)
80
7 How regulation affects SMEs (Mallett et al., 2019) 123
8 A list of the institutional interviews undertaken 156
9 The actors and bodies occupying the ‘regulatory space’ 315
11
List of figures
Figure No. Title Page No.
1 Involvement of employees in introducing and implementing change
74
2 Greiner’s Growth Model (1972) 95
3 An ‘open-systems’ conceptual framework of factors influencing HRM in SMEs (Harney and Dundon, 2006)
121
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List of abbreviations
ACAS Advisory, Conciliation and Arbitration Service
ADS Aerospace, Defence, Security and Space
AGP Aerospace Growth Partnership
AIS Aerospace Industrial Strategy
AMO Ability-Motivation-Opportunities
ASCE Aerospace Supply Chain Excellence programmes
ATI Aerospace Technology Institute
BIS/BEIS Department for Business, Innovation & Skills/ Department for Business, Energy and Industrial Strategy
CAA Civil Aviation Authority
CEO Chief Executive Officer
CIPD Chartered Institute of Personnel and Development
CMM Component Maintenance Manual
EC European Commission
EIP Employee Involvement and Participation
FAA Federal Aviation Authority
FAC Farnborough Aerospace Consortium
FSB Federation of Small Businesses
GCSE General Certificate of Secondary Education
GLEB Greater London Enterprise Board
HITEA Highly-Innovative Enabling Technologies in Aerospace
HPWS High-Performance Work Systems
HRM Human Resource Management
HSC Health and Safety Commission
HSE Health and Safety Executive
IR Industrial Relations
LPC Low Pay Commission
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MAA Midlands Aerospace Alliance
MNC Multi-National Corporation
MRO Maintenance and Repair Organisation
NASA The National Aeronautics and Space Administration
NATEP National Aerospace Technology Exploitation Programme
NMI New Management Initiatives
NWAA North West Aerospace Alliance
OCED Organisation for Economic Co-operation and Development
OEM Original Equipment Manufacture
OLC Organisational Life-cycle
PEO Professional Employer Organisations
PLC Public Limited Company
RAA Regional Aerospace Alliance
RBV Resource Based View
SC21 Supply Chains for the 21st Century
SEMTA Science, Engineering and Manufacturing Technologies Alliance
SHRM Strategic Human Resource Management
SIGS Special Interest Groups
SMBA Small and Micro Business Assessment
SME Small and Medium Enterprise
WEAF West of England Aerospace Forum
WERS Workplace Employment Relations Survey
14
Abstract
Despite their ubiquitous nature, there is currently a paucity of theorising and research
on the drivers of human resource management (HRM) development within the context
of small and medium size enterprises (SMEs). Mainstream HRM models have tended to
be biased towards normative prescriptions regarding ‘best practice’, often drawing
insights more applicable to larger organisations with more formalised HRM systems. A
principal objective of this PhD thesis is to illustrate the complexities and subtleties of life
in small firms: to move beyond those accounts that criticise SME’s for their informal
agenda and a lack of uptake of best practice HRM to provide a more nuanced
understanding of the drivers of HRM development and change in the context of the SME.
Through in-depth case studies undertaken in two small firms operating within the
aerospace sector, the thesis moves away from prevailing dichotomisations of formal vs.
informal or ‘small is beautiful’ (Schumacher, 1973) vs. ‘bleak house’ (Sisson, 1993) in an
attempt to provide an insight into the lived experiences of SMEs and to bring the voice
of the SME and its workers and managers into the story. Moreover, rather than one
universally applicable static model, the findings highlight various contingencies linked to
growth and firm life-cycle stage that shape HRM development, as well as idiosyncrasies
linked to the history and founder management culture. The broader regulatory context
of the aerospace sector further illustrates how diverse institutional structures inhabiting
the ‘regulatory space’ (Hancher and Moran, 1989) of organisations are shaping human
resource management practices and processes of formalisation. Taken together, there
appears to be a complex process of adaption occurring within the context of interacting
15
external and internal contingent forces, which are negotiated within internal micro-
politics and agency dynamics between owners and other actors. Such notions of
heterogeneity, fluidity and agency are largely underrepresented in mainstream human
resource literature and have broader implications for understanding HRM development
within the context of SMEs. The thesis represents a broader re-examination of HRM and
organisational growth in the SME, providing recognition of the need to bridge the gaps
between regulation and governance debates and HRM and organisational debates on
SMEs, thus bringing together a variety of perspectives that highlight the conceptual and
theoretical limitations of each approach.
Keywords: Small and Medium Enterprise (SME), Human Resource Management (HRM), Growth, Formalisation, Regulation, Regulatory Space, Aerospace.
16
Declaration
No portion of the work referred to in the thesis has been submitted in support of an
application for another degree or qualification of this or any other university or other
institute of learning.
17
Copyright statement
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CHAPTER 1 – Understanding the complexities of HRM development in the small and
medium sized firm: An introduction
1.0 Introduction and background to the thesis
A principal objective of this PhD thesis is a greater understanding and explanation of
HRM development in the small firm. The aim is to comprehend the subtleties and
complex dynamics of change and to explore the influence of the external regulatory
environment and contingent forces that act on the SME and drive change towards a
more formal position. This will be done with a consideration for organisational factors
and internal agency dynamics that are also theorised to influence the form of HRM
adopted, and that illustrate the complex interactions and mediations between what are
often two competing agendas.
Consequently, the research is seeking to establish how influential the factor of
firm size and ‘numbers’ employed is – the traditionally held viewpoint within much of
the extant literature on HRM formalisation within the SME – in relation to other factors
in determining HRM development. It also questions whether a teleological prescribed
approach – an approach that assumes an ultimate objective and which guides the course
of events, through which the implicit teleological guidelines force ‘historical facts’ into
the straitjacket of the author’s theoretical claims (van Baalen and Bogenrieder, 2009) –
can accurately capture SME growth and development experienced, and with it provide
a more comprehensive and nuanced understanding of HRM, growth and change in the
context of the SME.
19
Much of the existing literature has chosen to study the small firm in relative
isolation leading to conclusions devoid of context. Moreover, HRM in the broad SME
literature is typically considered from a deficit position (Wapshott et al., 2014): it
identifies what small firms are not doing or do not have in place when compared against
a formal set of HRM practices and policies that would typically align with normative best
practice models of HRM. The notion of ‘little big business syndrome’ (Welsh and White,
1981) and the implicit assumption of a specific HRM prescription being of universal
relevance to all seems to succinctly capture, in the main, the current status-quo.
This thesis seeks to redress the balance and move away from the prevailing
dichotomisations of formal vs. informal or the ‘small is beautiful’ (Schumacher, 1973) vs.
‘bleak house’ (Sisson, 1993) orientations of employment relations in the small firm, as
they are seen to encourage simplification of the debate. Hence, we need to challenge
stereotypical belief systems that persistently criticise SME’s for their informal agenda
and their relative lack of uptake of universalistic best practice HRM principles, and also
move away from the habitually recited explanation of the changing scale of the firm as
the overarching driver for HR formalisation and bureaucratisation in the SME. This
research is, therefore, seeking to portray the real and dynamic contexts of small firms
by affording them the same intellectual attention currently awarded the MNCs and
larger organisations. A complexity and subtlety exists, more so than key tranches of
existing literature would suggest, that must be accounted for prior to drawing
assumptions with regards to HRM development in small firms. This will be recognised by
undertaking an in-depth qualitative examination of two SME case studies in an attempt
20
to provide an insight into the lived experiences of SMEs and to bring the voice of the
SME and its workers and managers into the story. Such an approach has been advocated
by Stewart (2004) and Stewart and Martinez-Lucio (2011) regarding the nature of
academic engagement with labour and the requirement to reanimate a closer
engagement with labour-in-work and collective worker narratives.
This thesis contends that SMEs are not homogeneous in nature, and nor are they
static: they encounter numerous dilemmas and interactions across their organisational
boundaries with the external regulatory environment, raising questions such as to what
extent does the institutional positioning of SMEs coerce, facilitate or encourage HRM
development? This thesis seeks to demonstrate a complexity of causation in respect of
HRM development when the influences derived from the numerous actors and bodies
occupying the ‘regulatory space’ (Hancher and Moran, 1989) – a key analytical construct
of this thesis utilised to account for pluralistic and dynamic forms of interaction – are
accounted for. It is further contested that the SME’s close proximity to the environment,
coupled with archetypal insecurities, make SMEs more responsive and particularly
vulnerable to external changes, leading one to infer that HRM in SMEs can be expected
to be heavily shaped by contextual contingencies (Bacon et al., 1996; Harney and
Dundon, 2006).
An understanding of the role played by external contingent forces raises a further
important question of how are SMEs responding and interacting with these external
pressures? SMEs are expected to experience curious developments and processes of
21
adaption to such forces and the situational variables that act upon them, and the thesis
hopes to better understand what frames these choices in terms of organisational
context, including cultural, historical and structural influences. Particular attention is
directed towards the role of agency, memory and path dependency, using approaches
such as Whittington’s (1988) deep structures analogy to comprehend such dynamics.
Albeit that notions of heterogeneity or fluidity are largely absent from or
unaccounted for by the main body of extant literature, this PhD thesis will seek to
account for such nuances and intricacies by undertaking an in-depth qualitative
examination of two aerospace sector SMEs that places a particular focus on contextual
contingencies, including a consideration for the presence of regulatory external factors
alongside internal dimensions and their combined influence shaping the HRM agenda.
An ‘open-systems’ framework as suggested by Harney and Dundon (2006) is another
theoretical model of importance to this thesis, given its ability to act as a sensitising
framework to more accurately capture SME heterogeneity and the varying influences on
HRM development in SMEs.
In summary, the thesis represents a broader re-examination of HRM and
organisational growth in the SME, illustrating the need to bridge the gaps between
regulation and governance debates and HRM and organisational debates on SMEs by
bringing together a variety of perspectives that highlight conceptual and theoretical
limitations of each approach.
22
2.0 Why study SMEs?
It has been suggested that a lack of existing SME-focused research is a consequence of
academic motivations: and higher education institution policy may be directed towards
blue chip organisations and public bodies for reasons of heightened exposure, with
particular emphasis placed on journal publishing rates and corporatisation (Heneman et
al., 2000). Gibb (2000) has meanwhile argued that academia is too far removed from the
world of the SME to fully comprehend their cultures, values and beliefs, and ultimately
how they perceive and understand the world, coupled with a reductionist approach to
data extraction and positivistic examinations offering excessive empiricism that fail to
provide causal logic.
However, an understanding of the operation of people management practices in
the context of small firms is important for a number of reasons. Storey (1994) argues
that the numerical, social and economic importance of SMEs cannot be overstated,
while Arthur and Hendry (1992: 246) caution “the emergent role of SMEs on the world
economic stage stands in stark contrast to our limited understanding of HRM activity
within them.” Similar conclusions were drawn by Curran (1986), who went on to describe
employees of SMEs as the “invisible workforce”. These statements can be evidenced by
Business Population Estimates released by BEIS (2018) for the UK, which provide an up-
to-date account of SMEs economic importance, particularly in terms of their role as a
major employer (60% of total UK workforce) and their combined overall contribution to
the private sector turnover (52% of total annual turnover).
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One particular change that has encouraged the growth and revival of the SME is
the de-industrialisation of industry and the growth of service sector activities over the
latter half of the 20th century (CIPD, 2012). More specific causal factors include an
increase in sub-contracting, the rise of the digital economy, fragmentation by larger
firms, flexible specialisation driven by consumer preferences and public sector
reorganisation by way of privatisation (Storey, 2004).
3.0 Research questions
The research questions of this thesis are presented in this sub-section and reflect some
of the concerns raised above relating to the perceived complexities inherent to HRM
development within an SME context and the need to locate discussions within a
framework or interface that more fully accounts for internal dynamics, external
regulatory functions, and interactions between the two. Their justification will be
explained more fully in Chapter 4 – Methodology and research context: Researching the
complexity of the internal and external organisational spaces
1. How complex are aspects of growth and the development of HRM in the
SME?
2. How are SMEs contending with the contradictory pressures of
formalisation and what organisational contextual determinants frame
these choices?
24
3. How influential are the actors and bodies occupying the external
‘regulatory space’ in which the SMEs are embedded upon the
development of HRM in the firm? How do firms respond to and interact
with external pressures?
4.0 How the research was conducted
This qualitative research enquiry – deemed the most appropriate, taking into account
the aims of the research – principally the attainment of a deeper understanding of HRM,
processes of change and associated complexities in the context of the SME; it
encompasses two case studies conducted on aerospace sector SMEs located in the
North-West of the UK. The intensive nature of the case study exercise was intended to
offer systematic micro-level analysis of SMEs’ growth and the impact of regulation and
actors on HRM development, in pursuit of counterfactuals against existing literature.
Semi-structured interview techniques were selected to allow for a degree of refinement
and encompassing equal amounts of flexibility and structure, while also serving to direct
the research towards a more interpretive framework. The coding method chosen was
thematic analysis because this provided flexibility and allowed for the review and
refinement of themes and codes to best capture the intricacies of the data set (Braun
and Clarke, 2006).
In addition to the two case studies, a series of institutional interviews were
conducted as the research sought to map the external environment or ‘regulatory space’
25
(Hancher and Moran, 1989) in which the case study sites are situated. This was seen as
an important aspect of the research because it considers the SMEs from a different
perspective, from the outside-in, in an attempt to understand the regulator’s
perceptions and understanding of SMEs.
5.0 The structure of the thesis
Immediately following this introductory chapter there will be two literature reviews.
These capture different dimensions of the SME and HRM debates. The first literature
review, Chapter 2 – Understanding HRM within the small and medium sized firm: A
review of the literature – will attempt to synthesise and critically analyse existing
literature on HRM and the SME. Initial focus will be directed towards existing literature
and authors’ pre-disposition towards normative, universalist or ‘best practice’ HRM and
a critique of the applicability of such broader mainstream HRM theory to the small firm
context. Subsequently, the internal organisational political environment of the SME will
be examined in order to understand some of the potential drivers of people
management practice in small businesses, including the role of the family and the
influence of the owner/manager. The final section of this chapter examines key levers
(or practices) of HRM: existing research relating to recruitment and selection, training
and development, participation and voice mechanisms and performance appraisals.
The second literature review, Chapter 3 – The small and medium enterprise in
context: Development, contingencies and regulation – considers perspectives on how
26
contextual factors such as the broader ‘regulatory space’ (Hancher and Moran, 1989), or
idiosyncrasies linked to other external, organisational or strategic contingencies faced
by organisations may influence people management practices. The chapter begins with
a critique of ‘best fit’, contingency and configurational perspectives of SHRM (Schuler
and Jackson, 1987; Delery and Doty, 1996; Boxall and Purcell, 2000), to understand if
such an approach may better determine more precisely the objectives of the research
as it attempts to illustrate the importance of contingency factors and the influence of
internal and external dynamics; lifecycle models (such as Greiner, 1972) are
consequently considered. Organisational design and structure literature and its
relevance to growing organisations, particularly in relation to structural dynamics and
span of control and how these changes can influence the HR narrative of the firm, are
then considered. Path dependency and organisational memory are then considered in
order to determine whether such contingent factors influence HRM development. The
final section of this chapter will provide examples of complexities in regulatory
dynamics. It will consider whether SMEs are contending with a concealed form of
regulation, with regulation conceived in this thesis to be a much broader concept
(MacKenzie and Martinez-Lucio, 2005) in criticism of dominant understandings of
regulation for failing to locate the discussion within a broader social and economic
context.
Chapter 4 – Methodology and research context: Researching the complexity of
the internal and external organisational spaces – will provide a rationale behind key
methodological decisions made with respect to a study that seeks to attain a better
27
understanding of HRM in the context of SMEs. Consideration will be given to the
researcher’s philosophic positionality, the research method adopted, including a
rationale for adopting a qualitative research strategy, and the utilisation of a case study
design. This will be followed by a critical discussion of data interpretation and validation
for utilising thematic analysis. Questions relating to access and ethics will be considered
thereafter. Latterly, key characteristics relating to the UK aerospace sector – the site of
the research – will be outlined. Themes of sector fragmentation are identified and SMEs’
role within the sector considered.
Chapter 5 – Organisational contingencies and people management in the small
firm: Life-cycle stage, change and culture – analyses some of the internal drivers of
practices and people management approaches and considers interrelated themes of
growth, life-cycle stage and change; strategy and managerial choice; organisational
design and structure; and the influence of organisational culture and identity.
Chapter 6 – The peculiar nature of how the human resources function evolves in
the small and medium sized firm – considers nuances in how the HR function evolves to
a more formalised and bureaucratic state in the SME, and in doing so demonstrates the
complex and dynamic nature of the HR function. It aims to illustrate the complex and
contradictory developments in HR by identifying potential factors in change.
Chapter 7 – The mediation and formalisation of human resource management in
the small and medium sized enterprise – seeks to analyse and compare four different HR
practices within the case study organisations to better understand how the SMEs are
28
balancing and coping with the contradictory pressures of formalisation. The specific HR
levers to be analysed include: 1. recruitment and selection, 2. training and development,
3. performance appraisals and 4. employee involvement and participation. This chapter
will engage with an enquiry that seeks to understand how such questions and choices –
in relation to their HR narrative – manifest and resolve themselves within these types of
firms. The thesis-introduced concept of ‘flexible formalisation’ will be presented in this
chapter in an explanatory capacity to illustrate the dual nature of HRM in the SME, and
in many instances demonstrating the organisation’s decision (and ability) to straddle the
line between formality and informality.
Chapter 8 – The regulatory spaces and context of small and medium sized firms:
Dynamics and interactions – is the last empirical chapter and will seek to examine
external boundaries of the SME and relations across them. More specifically, it will
attempt to account for the contextual idiosyncrasies of the vast array of market
conditions with which small firms must contend, structural forces that cement their
unique position within a multifaceted web of actors and regulatory spaces (not
forgetting the various internal dynamics considered in previous chapters), which all
combine to influence and shape HRM in a unique way. This chapter directs focus to the
external environment with a view to understanding whether its contours and
‘landscape’ as a ‘regulatory space’ explain the more flexible developments uncovered in
the preceding chapters. The chapter represents an attempt to provide a more nuanced
and complete narrative, substantiated by a series of expert interviews with relevant
actors and bodies to elucidate greater meaning and understanding.
29
Chapter 9 – Discussion and conclusions: Bridging the gap between the human
resource management, small and medium sized firms and regulation debates – is the
final chapter; and its purpose is to consider the key findings of the thesis arranged in a
manner that fits with the research questions. The chapter outlines the key contributions
to the literature. References and appendices follow. To avoid duplication, key findings
and contributions are detailed in section 6.0 of this chapter.
6.0 Contributions and findings of the thesis
There are four principal findings of this thesis. Firstly, the internal development of HRM
and growth does not appear to follow the literal process descriptions offered by life-
cycle models or a teleological prescribed approach to development and change. There
seems to be a complexity of interactions. The thesis thus offers a critical appraisal of
teleological models, while such arguments risk suggesting that social reality is more
orderly and uniform, as theories denote sequential stages, than it actually is. For
example, the Greiner model (1972) has been used to illustrate how such models are
limited beyond their use as a sensitising framework, and it serves as an example of how
broad tranches of the existing literature are less concerned with more complex
dynamics, the complexity of environmental factors and the highly idiosyncratic nature
of the growth process.
Secondly, the thesis outlines the relevance of what can be termed ‘flexible
formalisation’ and the deliberate and conscious adoption of, and ongoing engagement
30
with, informal mechanisms, in light of the advantages of informal mechanisms within
the context of the SME. Thus, it provides an appreciation of elements of HRM and the
curious processes of how they develop. This is in contrast to much of the extant
literature that criticises an SME’s HRM approach for not adhering to the prescribed form
of ‘best practice’ HRM principles. However, deliberate and conscious debates are taking
place in relation to bureaucratisation and the degree of formalisation within the firm as
the SME attempts to straddle the formal-informal divide. Moreover, as firms grow and
develop they appear to be conscious of these decisions and problems of antagonisms
and balance – this reveals a certain amount of agency in the cases. The adoption of
informal mechanisms can be a consequence of informed, deliberate and thought-out
intentions in light of formalised structures. It is unclear whether ‘flexible formalisation’
reflects a long-term equilibrium in terms of arrangement or a transitory phase where in
the process of moving from an informal to a formal system a hybrid of both can be
observed – however from the cases here, ‘flexible formalisation’ was quite stable in the
contexts explored.
Thirdly, SMEs are influenced by a diverse set of institutional structures inhabiting
the ‘regulatory space’, thus, leading to calls for external agencies to be included in any
discussion of SMEs in terms of HRM and organisation. The consequent relevance of the
‘regulatory space’ (Hancher and Moran, 1989) analogy as an analytical framework for
understanding the uneven and complex impact of the external environment upon the
workplace does not just concern legislation but an array of actors, and it is this
‘overpopulation’ of regulatory actors and complexity that needs to be understood. There
31
is a consequent need for recognition of the requirement for a more nuanced perspective
which sees HRM development, change and learning as a negotiated process, iterative in
nature and requiring a degree of pragmatism. There is evidence that SMEs are having to
evolve their HRM strategies, regardless of commercialisation or marketisation, with
emergent regulatory pressures leading to the development of HRM within these types
of firms and through a process of complex interaction – the fourth key finding.
Fourthly, a series of complex interactions and relations with actors in the external
regulatory space span across the organisational boundary. Yes, regulatory pressures are
key to any discussion, but they are also richer and more diverse. Influences are not as
direct as they first appear, a result of a complex layering effect that can be construed in
different ways – the SME is more dynamic in its interactions with actors and bodies and
not always a clear ‘recipient’ of external pressures – porous boundaries are very much a
‘live’ characteristic; what we see is the reality of complex regulatory actors having a
range of effects (sometimes even contradictory) on the firm in terms of its development
of HRM structures and strategies. Lifeforms overlap, no deterministic situation exists,
and how we draw the internal and external lines in terms of functions and roles is never
clear. What is more, different internal individuals act as mediators and filtration
mechanisms of the external. The thesis provides a curious insight into how internal
bureaucracy develops and responds to regulatory pressures. It begs the question of what
is a firm? Where is the boundary of the firm? Boundaries become invoked by internal
processes and become external to the firm, created and or modified by the process of
formalisation. Regulatory influence upon the HRM narrative and practices allows us to
32
perceive management as a shared function with more complex bureaucratic
relationships.
The contributions of this thesis reside in an attempt to advance the literature
beyond reliance on the contrasting undertones of employment relations in SMEs:
specifically, ‘small is beautiful’ (Schumacher, 1973) and ‘bleak house’ (Sisson, 1993); to
have challenged stereotypical belief systems that persistently criticise SMEs for their
informal agenda and to move away from the habitually recited explanation of ‘numbers’
employed or scale of the firm as the overarching motive for HR formalisation in the SME
is important; to also move beyond abstracted empiricism and to portray the real and
dynamic contexts of small firms is also essential. In addition to the attainment of a
greater understanding and explanation of HRM development in the small firm, to
comprehend the more complex dynamics of change and explore the influence of
external actors and contextual forces that act on the SME needs an approach that
focuses on the diverse set of institutional structures inhabiting the ‘regulatory space’.
The need to draw attention to the interactions between SMEs and the external
environment and the subsequent processes of adaption must be at the heart of the
discussion on SMEs and HRM – and not a quaint final point in any analysis. Providing
more nuanced appreciation to the debate on HRM and regulation is becoming important
(see Martinez-Lucio and Stuart, 2011), as is the recognition of the need to account for
plural systems of authority. An awareness of continual flux and renegotiation should also
be at the heart of those approaches that acknowledge the ‘external environment’ as in
the ‘open-systems’ framework propagated by Harney and Dundon (2006). This ‘open-
33
systems’ approach, which sensitises the researcher to particularistic factors and the
various dimensions of influence needs to be more sensitive to the dynamic and
contradictory features and relations inherent to HRM development in smaller firm
contexts. In addition, we need to engage with a clearer understanding of the fact that
the notion of de-regulation is of little use in explaining the pressures facing SMEs, which
have been closer to re-regulation – regulation still exists but in a more nuanced manner.
Finally, the thesis represents a broader re-examination of HRM and
organisational growth in the SME – the need to bridge the gaps between regulation and
governance debates and HRM and organisational debates on SMEs, thus bringing
together a variety of perspectives that highlight the conceptual and theoretical
limitations of each approach.
34
CHAPTER 2 – Understanding human resource management (HRM) within the small
and medium sized firm: A review of the literature
1.0 Introduction
The objective of this chapter is to synthesise and critically analyse literature on HRM and
the SME. This is undertaken to locate the thesis within the context of existing literature:
to identify gaps and provide a foundation that informs the research and the research
questions. A motivation for the selected methodology is further developed. However, a
relative lack of existing theory and debate relating to HRM in an SME context make the
foundations of any sort of integrative theoretical framework difficult to conceive
(Barrett and Rainnie, 2002; Fuller and Moran, 2001; Wilkinson, 1999; Harney and
Dundon, 2006). Consequently, Scase (1996: 580) comments “evidence is so fragmentary
and theories so empirically specific that there are severe limitations to the development
of cumulative theory”. Therefore, in line with Harney and Dundon’s (2006: 13) research
objectives and critique of the extant literature, wherein existing research attempts have
been criticised for having “focused on the determinants and aspects of HRM in SMEs in
isolation at the expense of a more holistic perspective which addresses the whole domain
of HRM in context”, this PhD thesis will seek to consider contextual dynamics from a
more inclusive perspective that accounts for contingencies of internal and external
origin, and their influence on HRM development in SMEs.
The first sub-section of this chapter is intended to aid the positioning of the
research and accordingly will undertake a critical review of literature relating to
35
universalist or ‘best practice’ HRM. In the context of this discussion, a key issue raised is
the concern with the applicability of such models to the small firm context; this is aligned
with the idea that broad tranches of the extant literature have typically drawn criticism
to SMEs for their lack of uptake of normative ‘best practice’ HRM – the ‘deficit position’
(Ram et al., 2001a; Marlow, 2006; Wapshott et al., 2014). Additionally, this section
considers the history and growing importance of SMEs within the UK economy.
The second sub-section goes on to review the current literature on HRM in the
small firm context in order to understand drivers of people management practice in
small businesses. A specific focus is placed on the polarised perspective of employment
relations in the SME: those of ‘small is beautiful’ (Schumacher, 1973) and ‘bleak house’
(Sisson, 1993), followed by the family-run small business literature and the decisive and
influential role of the owner/manager’s ideology on HRM uptake. This will sit alongside
a section that will focus on the influence of the ‘HR champion’ (Ulrich, 1996; 1998) and
a consideration of the relationship between HRM practices and line-managers, who in
the absence of functional specialists are often delegated HR responsibilities.
The final section of this review will examine key levers (or practices) of HRM: i.e.
existing research relating to recruitment and selection methods, training and
development initiatives, participation and voice mechanisms and performance appraisal
systems will each be analysed individually. Throughout the thesis these levers will be
examined in detail in terms of looking at context and structure in relation to the specific
HRM activities. A common theme across the different practices, and one of the defining
characteristics of HRM in SMEs, is that they are typically characterised by informality
36
rather than being part of a more formalised and bureaucratised approach. Subsequently,
that body of research will be contrasted with new management initiatives (NMIs) (see
Bacon et al., 1996; Wilkinson, 1999), which include the take-up and awareness of
formalised professional forms of labour management in small firms. The idea that
informality in HRM can be perceived as an advantage, including attributes such as
flexibility and pragmatism and the ability to confront future change by reacting quickly
to changing environmental conditions, will also be discussed at this stage.
Summary conclusions will then be presented before the next chapter (and
review) considers ‘SMEs in context’. They will reflect on whether the contingency,
configurational or ‘best fit’1 paradigm can most accurately capture the forecasted
complexities and external regulatory functions related to the HRM development that
accompanies growth in SMEs.
2.0 Positioning of the research
This section will begin by critically reviewing literature on universalism or ‘best practice’
HRM, as broad tranches of the literature have typically drawn criticism to SMEs for their
1 The objectives of the thesis are not aligned solely with the examination of strategic human resource management (SHRM) debates including ‘best fit’, ‘best practice’ and the resource-based view of the firm and their application to the small firm context. Rather, this thesis is concerned with establishing a more nuanced understanding of the curious, complex and multifaceted nature of HRM development, aspects of growth and evolution in SMEs and the influences imparted by contingent forces both internal and external to the firm. Consequently, this thesis uses SHRM debates as a mechanism through which to operationalise SME and HRM debates, and to explore and critique existing literature relating to HRM and the small firm; it will outline a series of debates, pointing out their weaknesses in relation to SMEs and their environment, but also how there are openings in terms of the way some dimensions of HRM debates are more sensitive to context and agency.
37
lack of uptake of normative ‘best practice’ HRM – the ‘deficit position’ (Ram et al., 2001a;
Marlow, 2006; Wapshott et al., 2014). Thus, an understanding of the key principles of
SHRM literature is deemed relevant to this thesis. This will be followed by a
consideration of what a small firm or SME is, before a brief discussion of the history and
growing importance of SMEs within the context of the UK economy that highlights the
increasing societal and economic importance of understanding people management
practices in small businesses and the consequent theoretical and practical importance
of the thesis. The issues of aligning ‘best practice’ HRM to SME debates will then be
considered; in the context of this discussion a key issue raised is the concern as to the
applicability of such models to the small firm context.
2.1 SHRM: Universalism and ‘best practice’ HRM
For some, HRM is a practice that is universal and has more efficient forms of application
irrespective of the scale, nature and context of the firm. Whereas some view human
resources as concerning the activities of human resource departments, others have
viewed HRM as concerning itself with absolutely everything to do with the management
of people in general. Particularly emerging from the US tradition, the term human
resource management has for many been associated with a particular ‘best practice’ or
‘high commitment’ approach to HRM. Although there is some difference between
authors as to what such an approach entails in terms of policies and practices, some core
themes of such perspectives can be highlighted. The focus has generally been on the
38
extent to which ‘best practice’ or ‘high commitment’ HRM may lead to improvements in
worker or organisational performance, with the idea being that a “particular bundle of
HR practices has the potential to contribute improved employee attitudes and
behaviours, lower levels of absenteeism and labour turnover, and higher levels of
productivity, quality and customer service” (Marchington and Wilkinson, 2005: 71).
In its strongest form, one key component of the best practice approach is that a
set or bundle of HR practices provides an optimal configuration that is universally
applicable across organisational contexts and contingencies (Delery and Doty, 1996).
Variants of this perspective range from those that recommend an entire suite of policies
as required to provide the performance, those that view incremental increases in the
number of policies as beneficial, and those that suggest that specific subset bundles may
be applicable to different contexts. Criterion-specific studies, including Pfeffer (1998),
outline a number of ‘best practices’ and suggest that the closer organisations get to this
list the better their performance is likely to be. The danger of adopting a universalist
approach of this kind is that such approaches ignore potentially significant differences
between organisations, sectors and countries (for a discussion see Marchington and
Wilkinson, 2005: 82). By contrast, there are criterion-free studies, which can be broken
down in to two categories: ‘fit as gestalt’ and ‘fit as bundles’. The former assumes that
such synergies and benefits can only be achieved with the adoption of all specified
practices, and that if one is missing then the whole effect will be lost. The latter sees
bundling as ‘additive’, and the more practices that are in place the better (Marchington
and Wilkinson, 2005). Issues of bundling include how many practices are needed to
39
make a difference or from what areas of HRM they are to be drawn. To what extent
should there be a degree of consistency or alignment between practices that make up
the bundles, and are certain practices fundamental to make synergies work? Guest et al.
(2000: 15) sought to differentiate between organisations on the basis of how many and
which HR practices they use. They concluded that “despite trying a variety of approaches
and combinations, we could not find any coherent pattern of bundles of practices”.
Whereas early research focussed on effects on organisational performance, more
recently, scholars have sought to incorporate employee perspectives and consider
broader impacts on wellbeing (van de Voorde et al., 2012; Peccei et al., 2013; Guest,
2017).
The criticisms aimed at the ‘best practice’ universalist paradigm typically relate
to there being a lack of consensus in the empirical literature as to the extent to which
best practices contribute to organisational performance, in addition to their positive or
negative impact on employee outcomes and wellbeing, uncertainty regarding the “black
box” or causal mechanisms through which HR impacts on performance (Paauwe, 2004)
and methodological critiques regarding positivistic attempts to establish causal laws in
management processes (Legge, 2005).
Universalism represents one component of Delery and Doty’s (1996) prominent
three-way typology of strategic HRM (SHRM) perspectives. The other two are the
‘contingency’ perspective and the ‘configurational’ perspective. The contingency
perspective “maintains that the relationship between HRM practices and organisational
performance is contingent on and moderated by various contextual factors external and
40
internal to firms.” (Kaufman, 2010: 289). The configurational perspective “maintains
that the relationship between HRM practices and performance is moderated by
interactions among the individual HRM practice variables. The idea is that some HRM
practices have a complementary relationship with other practices (they fit together), thus
creating performance-enhancing synergies” (Kaufman, 2010: 289).
The reason that universalism has been focused upon in this chapter with a view
to critiquing its relevance to understanding HRM in SMEs relates to the criticism levelled
against SMEs for their lack of uptake of normative best practice HRM in much of the
literature – the ‘deficit position’ (Ram et al., 2001a; Marlow, 2006; Wapshott et al.,
2014). There is evidence which also shows that any neglect of SMEs in respect of their
HRM practices is even more acute in studies on SHRM, because where there has been
attention to HR issues in SMEs, “empirical concern has been with the content rather than
the process of small firms’ HRM systems” (Mayson and Barrett, 2006: 447). Further
critiques of the best practice approach will be considered in section 2.3 of this chapter,
with a particular emphasis on its applicability to comprehending HRM in the context of
the SME.
The core propositions of SHRM are that HRM practices perform better when they
are aligned with the organisation’s business strategy, external environment and internal
resources and capabilities, and, secondly, are mutually aligned into a complementary
and synergistic package (Kaufman, 2010). These two characteristics of HRM strategy are
called ‘vertical fit’ and ‘horizontal fit’. The notion of ‘fit’ is the next link in the theory
chain which leads to the distinction between ‘best practice’ and ‘best fit’ (Boxall and
41
Purcell, 2008). As already considered, ‘best practice’ and universalism are largely
equivalent. A key hypothesis of the ‘best fit’ model, on the other hand, is that the best
performing set of HRM practices varies from one situation to another due to important
external and internal contingencies (Jackson and Schuler, 1995). The ‘best fit’ model
therefore incorporates both the contingent and configurational perspectives. According
to Kaufman (2010) contingency perspectives range from weak contingency to strong
contingency along a continuum. Weak contingency identifies largely with the best
practice universalistic paradigm which then introduces contingent factors that modify it.
Strong contingency, by comparison, posits that ‘it all depends’ and decisions made
concerning HRM should be ‘contingent’ upon contextual factors internal and external to
the firm. This approach begins to open up discussion on the role of context and agency.
Advancements in the SHRM literature were met by the realisation that questions
of ‘how’ and ‘why’ HRM affects firm performance must be answered – a problem
referred to as the ‘black box’ or ‘transmission mechanism’ (Purcell et al., 2003). Attempts
to answer such a question led to the creation of the ‘resource-based view’ (RBV) of the
firm (see Barney, 1991), which contends that firms can capture competitive advantage
by developing and exploiting valuable, rare, inimitable and non-substitutable resources,
looking within their internal contexts and environment. While the RBV draws attentions
to the causal pathway from HRM to firm performance, AMO theory adds to it (Boxall and
Purcell, 2008). The AMO model argues that ‘best practice’ HRM leads to higher firm
performance because it augments and enables the abilities, motivation and
opportunities (AMO) of the firm’s human capital (Purcell et al., 2003).
42
Having briefly defined key terms relating to the SHRM literature, and before
continuing with a critique of best practice in the context of the small firm, it is pertinent
to consider what an SME is and the importance of such businesses to the UK economy.
Also, a key purpose of the following chapter will be a consideration of the benefits to be
accrued from the ‘best fit’, contingency and configurational perspectives, and how a
particular use of any of them provides us with an ability to offer a more nuanced
approach to understanding HRM development within small firm contexts. For that
purpose, we now need to turn to the context at hand – the SME.
2.2 What is a small firm?
An understanding of the operation of people management practices in the context of
small firms is important for a number of reasons. Storey (1994), for example, argues that
the numerical, social and economic importance of SMEs cannot be overstated, while
Arthur and Hendry (1992: 246) caution “the emergent role of SMEs on the world
economic stage stands in stark contrast to our limited understanding of HRM activity
within them.” Similar conclusions were drawn by Curran (1986), who went on to describe
employees of SMEs as the “invisible workforce”. A simple citation search on ProQuest
revealed the extent to which HRM has been ignored in the context of the SME (Table 1).
Interestingly, that is not the case regarding the literature in other business management
fields. As depicted in Table 1, the topics of finance, strategy and marketing amongst
43
others receive significantly more attention and higher publication rates in peer-reviewed
journals.
Table 1: ‘SME’ ProQuest citation search on 06th June 2019
Key words Number of results (in descending order)
SME Technology 31,372
SME Strategy 24,896
SME Operations 20,278
SME Innovation 19,106
SME Marketing 15,752
SME Finance 12,533
SME Entrepreneur 10,175
SME Flexibility 8,049
SME HRM 1,274
One problem facing the study of people management within the context of the
SME surrounds definitions of what constitutes a small business. Storey (1994: 8) states
“there is no single, uniformly acceptable, definition of a small firm.” For example, the
Bolton Commission Report (1971) describes SMEs as those employing fewer than 200
workers. By contrast the American Small Business Association believed an SME
employed fewer than 1500 workers (Dundon and Wilkinson, 2009). Presently, a more
44
generally accepted consensus and understanding is that an SME is an organisation that
employs between 0 and 249 employees (EC, 2005; FSB, 2015; BIS, 2015).
HR and employment relations-derived datasets pertaining to SMEs are difficult
to come by. The Workplace Employment Relations Survey (WERS) is one of the few of
recent times that has incorporated SME-sourced data, since its 1998 survey, wherein an
SME was defined as an organisation between 10 and 249 employees. However, in line
with the perceived definitional issues being discussed, in the two subsequent surveys
since that date (the 2004 and 2011 surveys) the WERS changed what it perceives to be
an SME: it extended the definition to include those workplaces employing between five
and ten employees, making comparisons difficult.
Whilst the term ‘SME’ is the dominant descriptor within existing literature and
with policy-making outfits, the term is frequently used interchangeably with ‘small
business’ (Wapshott, 2018). As already considered, and whilst a more generally accepted
consensus has emerged which sees the SME characterised as employing between 0-249
members of staff, the very nature of this research, which is concerned with the
attainment of a greater understanding of HRM development towards a more formalised
position, would imply that the focus of this thesis is smaller firms within the ‘SME’
bracket and not medium sized enterprises.
The number of employees is at present a primary basis from which firm size is
defined, arguably due to its convenient and arbitrary nature (Barrett and Buttigieg,
1999). However, it promotes an aura of homogeneity, and it is to be contended in this
45
thesis that while firm size may be a contributory factor, it alone is not sufficient to
explain patterns of employment relations. For example, Dundon and Rollinson (2004)
suggest the use of ‘numbers’ employed as a means to define firm size can be beneficial,
as they will likely influence the degree of interaction between management and
employees, which can be of significant importance in the absence of trade unions, as is
likely to be the scenario in smaller firms. By contrast, Instagram, a photo-sharing and
social networking service, employed only thirteen members of staff when it was
acquired by Facebook Inc. for approximately one billion dollars in April 2012 (Rushe,
2012). With thirteen members of staff, Instagram had only just exceeded the threshold
for what the European Commission (EC) would define as a ‘micro-firm’: that which
employs less than ten members of staff (EC, 2005). In consequence, taking account of
staff numbers in isolation, particularly in light of advancements in information and
communication technologies, can be deceptive.
Heneman et al. (2000) claim academic motivations and higher education
institutional policy may be directed towards blue chip organisations and public bodies
for reasons of heightened exposure, with particular emphasis placed on journal
publishing rates and corporatisation, and as we saw earlier, this failure to look at
different contexts ends up with highly generalised HRM debates. Gibb (2000) articulately
maps the key issues surrounding the value of academic research to policymakers and
stakeholders with respect to SME development. Therein, Gibb argued that despite a
growing attention towards SMEs, it can only be paralleled by a growth of ignorance
brought about primarily by how academia interfaces with SMEs and more generally how
46
academics approach research in the social sciences, with academia too far removed from
the SME to fully comprehend its cultures, values and beliefs and, ultimately, how such
businesses perceive and understand the world. This is coupled with a reductionist
approach to data extraction, a lack of theory, the use of data from previous studies and
positivistic examinations offering excessive empiricism but failing to provide a causal
explanation. Thus, the method selected for this PhD thesis: an in-depth qualitative study,
was selected to attain a deep contextual understanding and provide a fascinating insight
into the lived experiences of the SME and attempt to bring the voice of the SME and its
workers and managers into the story.
Shifting the topic of discussion slightly now before attention is directed towards
a critique of ‘best practice’ HRM and the small firm in the subsequent section, Appendix
A outlines the historical and economic importance of the SME, focusing particularly on
the latter half of the 20th century, which has seen the deindustrialisation of industry and
the subsequent growth of service sector activities (CIPD, 2012) – changes which are
understood to have contributed towards the growth and revival of the SME. Therein,
particular attention is directed towards Piore and Sabel’s (1984) ‘second industrial
divide’, which was perhaps one of the main vehicles for the promotion and acceptance
of SMEs by the wider economic community on account of flexible specialisation,
industrial spaces and networks between smaller firms. In the context of the UK, the
government-commissioned 1971 Bolton Committee Report into the potential role that
can be played by the smaller firm is also considered. Appendix A provides recognition
and examples of how focus and interest in the SME tends to mutate and is seen as having
47
different dimensions over time in line with changing social and economic conditions. In
doing so, it draws on Castells (1996) and his ‘network society’ and the work of Kotkin
(1992) relating to ‘Tribes’ and ethnically orientated, geographically located micro-
business networks.
2.3 ‘Best practice’ HRM and the small firm: A critique
Returning to issues of ‘best practice’ HRM, having outlined the question of firm size,
despite a lack of overall agreement on the overall performance and employee impacts
of ‘best practice’ HRM, recognition that HRM more broadly can facilitate a positive
influence on organisational performance has become somewhat ubiquitous (Boxall and
Purcell, 2003). While the expanse of research conducted in the field of HRM is vast,
contributors have to a large extent focussed on large organisations as a means to derive
theoretical underpinnings and draw such conclusions (Hendry et al., 1995; Wilkinson,
1999; Harney and Dundon, 2006). Some of the origins of the ‘best practice’ approach
can therefore be found in attempts to understand ex post facto what happens in large
successful US corporations (see ‘Halo effect’, Rosenzweig, 2014), although the validity
of this approach is not immune from criticism, specifically relating to generalisability
when accounting for the contingent factors.
A major stumbling block for claims to universalism concerns the relative lack of
take up of ‘best practice’ (Kaufman, 2001). If there is one best way of managing then
Kaufman (2001) argues that it follows that there should be a dispersion of practices. A
48
number of reasons are consequently cited to explain a lack of take-up, such as path
dependencies, sunken costs and a lack of manager education. Such explanations could
conceivably be applied to the SME context as a means of understanding why they fail to
adopt best practice. It could be because the SME lacks the resources or skill capacities
internally in terms of functional HRM expertise, it could be because the SME lacks
education as to ‘what works’, or it could be that such practices just do not fit the needs
and contingencies of small businesses at the current stage of their life-cycle: a
contingency argument. Thus, a simpler explanation explored in more detail in Chapter 3
is that there is no one ‘best’ approach to HRM, but instead, the suitability may rest on
the specific contextual, organisational and strategic contingencies of organisations and
the ‘best fit’ of policy and practice (see Schuler and Jackson, 1987; Delery and Doty,
1996). It is within this context that firm size and life-cycle stage could potentially be
evaluated as a critical variable in shaping people management practices.
Consequently, a key question raised by the present thesis is the applicability of
‘best practice’ HRM to the small firm context, the reasons why such organisations may
not adopt more formalised HR systems and the barriers and challenges such
organisations may face in implementing HR policies. The very notion of universalism
espoused by HRM theories, models and frameworks for their proposed applicability in
the context of the SME somewhat implies that small organisations should be managed
on the basis of similar principles to those of large organisations, but on a smaller scale,
adopting normative, ‘best practice’ models of HRM. This has been aptly termed ‘little big
business syndrome’ by some critics (Welsh and White, 1981; Cassell et al., 2002);
49
moreover, such accounts promote notions of homogeneity, in direct contradiction to
Storey’s (1994) and Edwards and Ram’s (2009) admission that SMEs are in fact highly
complex heterogeneous entities: differing in terms of context, family and kinship as well
as variable labour and product markets.
The mainstream SME debates focus on normative models of HRM (Ram et al.,
2001a; Marlow, 2006), wherein HRM is strongly associated with strategic formation and
purported to effect organisational performance. That being the case even when
investigating the small firm, and when such formal policies and practices through which
HRM is usually articulated are not found, the conclusion most often drawn is that labour
management practices in the small firm are lacking (Marlow, 2006). Wapshott et al.
(2014) concur and argue that the broad SME literature discusses HRM from an inherently
deficit position: it identifies what small firms are not doing or do not have in place. It is
thus argued here that conclusions appear to be being drawn largely based on unwritten
customs and tacit understandings. Similar conclusions drawn concerning the existing
literature, with respect to an SME’s HRM agenda, have been compiled in Table 2.
50
Table 2: Conclusions drawn regarding an SME’s HRM agenda
An SME’s HRM agenda Associated reference
They suffer from ‘resource poverty’ Welsh and White, 1981
They lack strategic impetus and ‘muddle through’ Windolf, 1986
They are inherently informal Storey, 1994; Matlay, 1999; Wilkinson, 1999
They lack of strategic foresight and awareness Hannon and Atherton, 1998
They lack of expertise in the field of HRM Cardon and Stevens, 2004
An inability to achieve economies of scale: serving to only further escalate the cost of implementing formalised HRM practice for the SME
Sels et al., 2006
They adopt a ‘piecemeal approach’ Harney and Dundon, 2006
Labour management practices in the small firm are lacking Marlow, 2006
They suffer from a ‘HR deficit’ Behrends, 2007
Conversely, an alternative argument put forward in this thesis is that rather than
taking a universalistic approach, HRM is a concept that needs to be sensitive to context2.
Thus, there is a need to expose an omission in existing theory and research on ‘best
practice’ HRM and a need to consider contingency arguments (as the Chapter 3
literature review – The small and medium enterprise in context: Development,
contingencies and regulation – will do). To that end, Heneman et al. (2000: 18) comment
2 Perhaps adoption of the ‘Harvard model’ of HRM, an analytical framework first articulated by Beer et al. (1984), would allow for the subtleties and nuances of a firm’s positioning within the wider external environment (and the accompanying situational factors) to be sufficiently accounted for in the generation of HRM policy and practice, in addition to the subsequent influences on a small firm’s HRM agenda as derived from any number of stakeholders co-habiting the ‘regulatory space’. This approach would also offer a greater institutional awareness closely associated with the work of DiMaggio and Powell (1983) pertaining to institutional isomorphic pressures. The role and influence of context is to be considered in the following chapter.
51
that “growth orientated CEO/founders do not seem to be concerned with traditional
human resource management practices”, instead placing focus on identifying people
who ‘fit’ with their organisation from a social and productive standpoint.
Current research agendas thus appear to be encouraging abstracted empiricism,
with excessive focus on collecting data as opposed to clarifying concepts (Marlow, 2006).
Using HRM as a ‘vehicle’ through which to examine labour management practices in the
context of the small firm is thus problematic. It remains devoid of context, ill-defined to
the particularistic nature of labour management and employment relations in SMEs.
Much of the existing research has sought to identify ‘traditional’ HRM processes in SMEs
at the expense of critical analytical research (Marlow, 2006). There remains a need to
challenge contemporary analyses, or lack thereof, when conceptualising HRM in small
firms. Ultimately, there exists an overarching obsession with and focus on the
identification of a link between HRM and improved organisational performance that
neglects the nuances of the SME.
The definitional issues surrounding HRM have led some commentators on the
field to describe HRM as a ‘fuzzy concept’ (Markusen, 1999; Marlow, 2006), which has
only compounded matters. Issues surrounding firm size definitions have already been
established as a chief cause of a lack of dedicated HRM and SME literature, but criticism
can also be directed towards the existing conceptual underpinnings of HRM: the central
tenet of the argument is that without a careful definition of HRM, there exists a
vagueness and difficulty when operationalising such concepts in an uncritical manner in
the context of the small firm (Marlow, 2006).
52
Clarification is ultimately needed to allow for further coherent and comparable
research endeavours in the context of the SME. Perhaps widening the concept to
incorporate informality, flexibility and ad-hoc approaches to HRM, which are forecast to
be heavily prevalent in the SME, would allow HRM to rest on more robust foundations
conceptually. Taylor (2005) sought to do just that, with his work critically evaluating how
the concept of HRM is operationalised within a small firm context, going beyond merely
claiming that small firms find it difficult to adopt normative HRM practices. To advance
the debate, theoretical constructs must be drawn up in such a manner: evidence-based
as opposed to referencing existing models of HRM and drawing upon process in a
somewhat descriptive fashion.
One further stimulus to thought, which has to a large degree been neglected by
the literature, would be to map the shift in definition in line with a firm’s growth or life-
cycle stage: HRM would at some point in time adopt a more formal position in line with
the perceived complexity that accompanies increased staff numbers, expanding
operations and the growing influence of environmental stimuli. Such associations
between the SME and life-cycle models will be expanded upon in the next chapter.
3.0 Understanding the internal organisational and ‘political’ environment
The previous section sought to position the research by undertaking a brief analysis of
the SME and offering a critique of ‘best practice’ universalistic principles to which the
SMEs are often criticised for failing to adhere to. This section will present existing
53
literature pertaining to HRM and the SME in order to better understand drivers of people
management practice in small businesses. The next chapter will draw attention to the
external dimension.
3.1 Depictions of HRM and employment relations in the small firm: The binaries of
consensus and coercion within SMEs
Much of the existing literature pertaining to employment relations in the context of the
SME has tended to conflate the characteristics of smaller firms along opposite ends of a
continuum: ‘small is beautiful’ and ‘bleak house’ (Wilkinson, 1999; Wilkinson et al., 2007;
see Table 3). The concept of ‘small is beautiful’ (Ingham, 1970) has influences drawn
from beyond the field of HRM, some of which are closely aligned to an economic school
of thought (Schumacher, 1973), and communicates the notion that working
relationships in the small firm are harmonious, with low levels of conflict and an ease of
communication: a ‘family’ atmosphere that provides an all-round better place to work.
Such a standpoint heavily favours the use of informal communication flows between
owner/manager and employees as a means to generate commitment and loyalty
(Dundon and Wilkinson, 2004).
This can be contrasted with the ‘bleak house’ perspective that portrays a
Dickensian culture whereby employees are subject to dictatorial control, suffer poor
working conditions and inadequate health and safety standards and have little
involvement in decision making (Sisson, 1993; Wilkinson, 1999; Dundon and Wilkinson,
54
2004). This school of thought would argue that employees face great instability, the
result of the high levels of uncertainty faced by the small firm and their dependence on
a few key customers and/or suppliers (Rainnie, 1989). Within the ‘bleak house’
perspective it is the norm for employees to have less access to union representation:
thus, while the collective element required for strike action appears to be missing (Goss,
1988), conflict in these circumstances is expressed through more individualistic channels
such as absenteeism and increased levels of labour turnover (Rainnie, 1989). Ram (1994)
and Dundon and Wilkinson (2004), suggest ‘bleak house’ cohorts would maintain that
the ‘happy family’ image portrayed by many SMEs obscures a form of authoritarian
management whereby few individuals are capable of challenging senior
management/owner decisions without reprisal or that employees become bound by a
network of familial and kinship ties that govern employment relations.
Table 3: Employment relations in SME’s
‘Small is beautiful’ ‘Bleak house’
Harmonious Hidden conflict
Good HR Black hole
Little bureaucracy More instability
Family style Authoritarianism
(Adapted from Wilkinson, 1999: 207)
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However, Hyman (1987) reported that certain types of practices being
axiomatically associated with others results in a failure to adequately capture the
complexity and diversity of organisational realities. It raises a further question of how to
apply binaries. Binaries offer a lack of dynamic understanding, transition and
explanatory power. The presence of binaries perhaps reinforces the weak conceptual
underpinnings from which HRM is derived and a lack of understanding of labour
management practices and employment relations in small firms, as the preceding
paragraphs have sought to convey. Furthermore, such problems represent an important
aspect in terms of the overall purpose of conducting the research.
These polarised perspectives are the subject of much debate, wherein the degree
of harmony vs. dissonance apparent in SMEs appears to be a key theme. Harney and
Dundon (2006: 49) propose that in reality, HRM in SME’s is neither ‘beautiful’ or ‘bleak’
but “complex”: suggesting HRM is instead the result of complex interplay between
external structural factors and internal dynamics. Edwards et al. (2003) are in
agreement: they propose SMEs to be embedded in a multifaceted web of social and
familial norms, economic conditions and sector variability. Further to that, adopting an
‘either-or’ approach appears to somewhat simplify employment relations in the SME, as
the complexities apparent in reality differ considerably from the rhetoric (Wilkinson,
1999). As Roberts et al. (1992: 242) contribute: “small firms do offer more varied work
roles and greater opportunities for close face-to-face relations in a flexible social setting
with less of the bureaucracy of the larger enterprises. But, these conditions also offer
greater opportunities for interpersonal conflicts”. Ram (1991: 601) best summarised
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employment relations in SMEs by saying that rather than being harmonious or autocratic
they are in fact “complex, informal and contradictory.” This is the type of insight upon
which the thesis tries to build.
3.2 The familial dimension and the role of the owner/manager: The role of internal
social politics within management
The focus of the current thesis is on people management practices within small family-
run businesses. One defining feature of small firms is that they are often saturated with
the ideology or culture of their owners (Ram and Holliday, 1993). Family firms for
example have a symbolic significance in the national cultural identity of economic life in
Britain (Baines and Wheelock, 1998). Moving beyond the binary of ‘small is beautiful’
and ‘bleak house’, which sees ‘family’ ideals as a signifier of harmony on the one hand
and a cover-up for managerial autocracy on the other, Ram and Holliday (1993) suggest
the notion of ‘family’ in the workplace is a complex and contradictory one, entwining
social relations with workplace operations. Thus, family dynamics in the workplace are
of a contingent nature, in flux and renegotiated over time. To that end, Wheelock (1992)
was determined to emphasise during the course of her research that in the context of
the small business, work for the business unit and for the family unit were so interrelated
as to justify use of the term “familial economic unit.” Ram and Holliday’s (1993) study
into Asian-owned West Midlands clothing firms served to illustrate further the
significance of family. There, Ram and Holliday (1993) found that management of these
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firms were dominated by the family, often patriarchal in nature and giving deference to
seniority, alongside the presence of ‘negotiated paternalism’: wherein power dynamics
and labour management relations were neither harmonic nor autocratic, but negotiated
iteratively, shaped predominately by family activities and market conditions, in the
absence of union organisation.
Thus, in context of SME discussions, notions of the family can be closely aligned
with ethnicity. For a period of time during the 1990s, research interest directed towards
the SME was focused on from a migration standpoint, in particular its role in social
inclusion and entrepreneurship. Of relevance is the work of Kotkin (1992) titled ‘Tribes’,
which offers valuable insights into ethnically orientated, geographically located micro-
business networks seen to provide a source of competitive advantage. Such
advancements draw attention to how receptive SMEs are to the wider external
environment, an aspect this thesis is seeking to analyse from an HRM, employment
relations and labour management practices standpoint.
Rosa et al. (1994) found that participation in small firms by the owners’ families
was the norm rather than the exception, in the context of the UK at least, while Atkinson
and Meager (1994) determined that entry level recruitment was characterised by a
tendency toward family members or other well-known individuals. Ram and Holliday
(1993: 629) conclude: “the ‘family’ was found to be both a resource and a constraint;
management benefited from the ‘flexibility’ afforded by familial ties, but the family can
also impose obligations which contradicted economic rationality.”
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Other issues of diversity and equality of the workforce can be identified in the
literature if the SME only employs family members or those from informal social
networks, as this paragraph will consider. Firstly, Matlay (2002) suggests that employing
close relatives secures against managerial or supervisory skills shortages and the trust
and commitment provided by family members mitigates against the need for training.
At least in theory, their commitment, motivation and propensity for hard work were
taken for granted, trusted and guaranteed by virtue of family links and long-standing
interpersonal relationships. One disadvantage of this is that limited skills may be
available within the family (Pollak, 1985; Baines and Wheelock, 1998). Of a more serious
nature, another more potentially damaging disadvantage is that conflict can spill over
from one sphere of life to the other: for example, from family to work or vice-versa
(Baines and Wheelock, 1998). According to Matlay (2002), training and related issues
were perceived by small family businesses in two distinct ways: the requirements of
family members were approached mostly in terms of individual career development
while the needs of non-family employees were viewed strictly as firm-specific HRM
issues. In financial terms, family members tended to benefit from additional and/or
continuous support that included personal, institutional and developmental funding as
well as debt equity guaranteed by family members. Typically, owner/managers and key
personnel undertook most of the internally provided training. Family members,
however, were coached and mentored more extensively than other employee
categories. To that end, Matlay (2002) drew on the positive link that existed between
the management progression and the career development of owner/manager relatives
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involved in small family businesses. Further thoughts for contention in relation to the
family and SMEs include the idea that the role of the family, or a family culture, promotes
enhanced levels of informality with the uptake of fewer professional HRM practices in
comparison to non-family-run or managed small firms (de Kok et al., 2006). Additionally,
family-owned SMEs are also seen as being a significant barrier to unionism, Holten and
Crouch (2014) determined that the number of family members employed by the small
firm is associated with lower unionisation rates. As a consequence, Dundon et al. (1999)
offer up evidence that in such scenarios, where collective voice is somewhat lacking, that
small family-run firms can be seen to be exploitative: aptly labelled a ‘black hole’ by the
authors, a metaphor to signify the largely Dickensian labour management practices of
small non-unionised firms.
Therefore, what can be concluded in light of the findings presented in this section
is the apparent decisive role and influence of the family in relation to HRM uptake in
small firms. It is postulated that characteristics internal to the organisation can have a
similarly significant impact on a small firm’s HRM agenda to those derived from the
wider external environment. In this instance, the role of the family appears to promote
the notion of informality in respect of HRM although much of the HRM literature pays
little heed to this.
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3.3 The influence of founders on organisational culture: Culture and tradition within
SMEs
As noted by Alvesson (2013), definitions of organisational culture are highly variable and
whilst the concept of culture is not integral to the thesis, we need to be alert to aspects
of the internal cultural environment of the firm. For the purposes of this research,
organisational culture can be defined as “a pattern of shared basic assumptions that the
group learned as it solved its problems of external adaptation and internal integration,
that has worked well enough to be considered valid and, therefore, to be taught to new
members as the correct way you perceive, think, and feel in relation to those problems”
(Schein, 1985: 491). This definition has been chosen for its explicit recognition of the
need to account for external factors and internal idiosyncrasies in alignment with the
theorised complexities and contingencies inherent to SMEs.
Handy’s (1999) model of culture is of relevance and can be applied here as
owner/managers can be identified as subscribing to a ‘power culture’ as they, or the
family, seek to retain control of decision-making responsibilities and shape cultural
practice. However, size is typically a problem for power cultures, in line with
organisational growth and bureaucratisation: other powerful stakeholders may emerge
who are non-family members, or people who may exercise power due to formalised
rules. This can result in the transition to a ‘role culture’ where culture is determined by
practice in different functions within a bureaucracy.
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We draw tangentially now on Whittington’s (1988; 1989; 1990; 1992; 1993)
theoretical framework concerning deep social structures, agency and strategic choice,
and the grounding of human activity in social complexity and the insistence on real social
structures as a pre-condition to agency. Whittington (1992) advocates the adoption of a
Realist position to account for the stratified human actor (Bhaskar, 1979), and has
suggested adopting the institutionalist's perspective that is concerned with the wider
social influences on the firm, alongside structuration concern for individual agency.
Social structures are significant because they make a difference to strategic choice. This
difference is felt both in what agents seek and in what they can realise (Whittington,
1988), thereby inferring the influence of characteristics such as class, gender, generation
and ethnicity as some of the social idiosyncrasies that must be accounted for and fully
understood as a prerequisite to understanding managerial agency. The character of key
organisational actors needs to be explored, not only in terms of the internal hierarchy,
but also in terms of their positions within and relations to external structures stretching
beyond the organisation itself (Whittington, 1993), for as Whittington (1990: 201) points
out: “rarely, however, do these accounts trace the roots of such organisational
phenomenon out to their origins in society at large”. Thus, Whittington (1992) proposes
an account of managerial agency that also considers the organisations' engagement with
plural and overlapping social systems. In application to SME debates, and accounting for
the fact that small firms are often saturated with the ideology and culture of the
owner/manager (Ram and Holliday, 1993), Whittington’s framework represents an
important construct when attempting to study SME development and when trying to
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understand change and learning imperatives, and ultimately the degree to which HRM
is adopted, in the context of the small firm, given their accountability in the uptake and
dissemination of such a function (Gunnigle and Brady, 1984; Bacon et al., 1996;
Mazzarol, 2003; Nolan, 2002).
3.4 The influence of the ‘HR champion’: Agency and individual protagonists within
SMEs
In addition to the owner/manager of the SME and the internal culture of the firm,
another factor within the internal environment is the role of specific key individuals. For
example, an internally orientated individual who could conceivably have an impact upon
HRM development in the small firm is the ‘HR champion’. Several commentators to the
field have identified HR champions as an important facet of the development of a HR
narrative in the firm. The term was coined by Ulrich (1996; 1998) within his model which
identifies what he sees as the four key roles of HR: firstly, aligning HR and business
strategy; secondly, re-engineering organisational processes; thirdly, championing and
advocating for the employee; and fourthly, managing transformation and change.
Several studies focusing on the SME have also highlighted the apparent
significance of the ‘HR champion’, including Doherty and Norton (2013: 143-144) who
found that the “energy of a HR champion” was identified as one of a number of good
drivers of HR practice, because “their absolute commitment to eradicating problems and
treating people well has ensured a mix of compliance based and aspirational HR
63
practice.” Likewise, Cassell et al. (2002) found a key factor in SMEs deciding to adopt HR
practices to solve problems presented was the presence of an ‘HR champion’ in the firm.
Hence, any study of HRM and SMEs needs to focus on these questions of agency and
identify these roles carefully.
3.5 HRM and the line-manager: The structures and instability of management
hierarchy within SMEs
In addition to the role of owners, flatter hierarchical structures in smaller firms further
tend to raise the importance of front-line managers to people management. In the
context of the SME, mainstream rationale refers to the owner/manager as being
accountable for HRM and associated responsibilities (Matlay, 2002). However, as
organisations grow, responsibilities of this kind must be devolved to line-managers as
the workload becomes too much for the owner/manager to undertake on their own
(Kotey and Sheridan, 2004). While the body of literature pertaining to the involvement
of the line-manager in HRM is not new (Renwick, 2002), it is perhaps particularly
pertinent in the case of the small firm, where in the absence of functional specialists,
who are perceived to be too costly an asset, HR responsibilities must consequently be
contended with by the line-manager should the responsibility be delegated from the
owner/manager (Kotey and Sheridan, 2004). In fact, the 1998 WERS study found that
line-managers outnumbered employee relations specialists or HR specialists in the
handling of employee relations issues in British workplaces (Millward et al., 2000). This
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finding is perhaps unsurprising, as the 1998 WERS study was the first in the WERS series
to include SME-sourced data: entities, as reported above, who are unlikely to hire full-
time functional specialists given their cost and the perception of the workload as being
insufficient to justify a full-time hire. Brewster and Larsen (2000) concur and provide
several additional motives behind the rationale for the involvement of the line-manager
in HR decisions; these most noticeably include a reduction in costs, the adoption of a
more well-rounded and comprehensive approach wherein the responsibility for HRM
now rests with the individuals responsible for executing the action and the speeding up
of decision making as HR problems are dealt with at source.
However, as a consequence of line-manager involvement, potential implications
include a lack of capability, skills or knowledge, particularly around the subject of
employment law (Handy et al., 1987; Rollinson et al., 1996; Renwick, 2002), thereby
increasing pressure to train and/or re-skill line-managers in HRM, in addition to being
subject to elevated levels of exposure from a legal standpoint because maintaining
compliance in these circumstances is foreseen to be more difficult. Problems of
maintaining consistency in decision making are also likely to occur, presenting a strong
case for strict HR auditing (Budhwar, 2000), while the risk of falling standards also
becomes prevalent in these circumstances (Budhwar, 2000), as does the potential for
the HR/IR role to be marginalised if line management perceive such accountabilities to
be trivial or merely insignificant (Renwick, 2002). Furthermore, the time-consuming and
bureaucratic nature of HR work is seen as being problematic as it diverts managerial
focus away from issues of product/service quality, efficiencies and customers (Renwick,
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2002). Brewster and Larsen (2000) aptly summarise the apparent consequences of line
management involvement in HR by questioning their “desire, capacity, ability, [and]
training” to action HR duties.
Furthermore, Dunn and Wilkinson (2002) found that in cases where employment
relations responsibilities were left to the line-manager, the HR function became ad-hoc
and it many circumstances it became a case of ‘muddling through’. Consequently, HR
practices such as performance appraisal initiatives were found to be often performed
poorly by line-managers (Redman, 2001). One of the reasons for this is management
tend to dislike the bureaucracy involved (Harris, 2001), while other reasons for their
apparent lack of enthusiasm has been attributed to the complexity of the subject matter,
the time-consuming nature and/or a fear of shortcomings and of being exposed from a
legal standpoint (Renwick, 2002). Conversely, instances were also reported of line-
managers wanting to speed up decision making by by-passing procedure (Renwick,
2002). While Renwick (2002) concluded with the concern that in the context of the SME,
questions must be asked regarding the capabilities and commitment of the line-manager
when conducting HR accountabilities, in the absence of specialist HR support they
cannot intervene, support or ‘police’ line-manager decisions and actions, and as such
there could be instances of poorer HR practice being carried out in these establishments.
This assessment appears to be supported by an examination of employment tribunal
statistics, with SMEs being disproportionately represented in terms of the number of
claims brought against them (Wilkinson, 1999). Hence, the evolution of line
66
management and its contingencies is a key factor in the internal organisational politics
of the SME.
3.6 Section summary: Accounting for agency and deep structures
This section has sought to deliberate over existing research relating to HRM and the SME,
but more specifically in terms of the internal and ‘political’ dimensions of the firm.
Accordingly, several key areas were considered, including the binary forms of
employment relations prevalent in the literature, familial and owner/manager
dimensions, culture, ‘HR champions’ and the role of the line-manager. Furthermore,
particularly important aspects to be taken forward include the potential for agency of
individual protagonists (inclusive of the owner/manager), in addition to the usefulness
of the deep structures framework presented by Whittington (1988) to help better
understand the degree of complexity inherent to agency, and to account for the
grounding of human activity in social complexity and the insistence on real social
structures as a pre-condition to agency.
4.0 The development of ‘key levers’ of HRM to the SME
Having outlined the internal organisational politics and context of SMEs, we now need
to focus on questions of actual practices of HRM and their contingencies within the SME.
‘Key levers’ represent one aspect of a framework put together by Storey (1992): ‘the
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Storey model’ of HRM, and relate to the method or process of effectively implementing
HRM and influencing labour management practices. It is therefore both relevant and
useful to adopt such terminology in the context of this thesis and SME and HRM debates
more broadly because it allows us to better conceive and account for how HRM is being
implemented, or developed, in a small firm context.
Much of the existing literature has suggested that HRM activities in the SME are
typically characterised by informal mechanisms and levers rather than bureaucratised
relationships, this being one of the defining characteristics of HRM in SMEs (Jackson et
al., 1989; de Kok et al., 2003; Dundon and Wilkinson, 2018). Furthermore, revisiting
Table 2, presented earlier in the chapter, we see a list some of the conclusions drawn
within the broad SME literature regarding their HRM agenda and associated references.
Definitions of formality and informality in respect of HRM practice have been
construed and interpreted in several ways (de Kok et al., 2003). For the purposes of this
thesis, formalised procedure with respect to HRM practice will be the following: “the
extent to which regular and written procedures exist” (Singh and Vohra, 2009: 95), are
sophisticated in nature (Hornsby and Kuratko, 1990) and incorporate a degree of
strategic intent with the ultimate aim of “stimulating employee competence and
commitment.” (de Kok et al., 2003: 3).
In terms of the existing literature, notions of informality will become quickly
apparent in the following sections. However, what is also apparent is the potential
impact of environmental factors in influencing the design, uptake and introduction of
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formalised, ‘professional’ forms of HRM that are more likely to typically reflect ‘high-
road’ practices common to larger corporate firms. Furthermore, Storey (1992), who
introduced the above-defined term ‘key levers’ in relation to the methods used to
implement HRM, concludes by emphasising the apparent ‘avant-garde’ nature and
uptake of such ‘levers’ or HRM practices. With a growing number of firms adopting
innovative and experimental people management practices with mixed results in terms
of success or failure in their application, this appears to illustrate the importance of
context when determining the link between HRM practice adoption and its subsequent
success and, by implication, improved organisational performance.
One further noticeable finding, and as will be considered in section 4.7 of this
chapter, is that informality present in HRM practices should not necessarily be conceived
as an entirely negative attribute for the SME, with arguments to be made in favour of
the informal approach for each lever considered herein.
Existing research pertaining to the more prominent HRM practices (or ‘levers’)
have been collated for review in this section: herein, recruitment and selection practices,
training and development initiatives, employee participation schemes and performance
appraisal techniques will be considered in the context of the small firm, below and in the
thesis generally. Throughout this thesis, these levers will be examined in detail in terms
of looking at the role of context and structure in relation to the specific HRM activities.
A summary table (Table 4) will summarise the key points at the end of this section. Much
of the research referenced in this section originates from studies conducted in the
context of the UK.
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4.1 Recruitment and selection in SMEs
Recruitment and selection within the premises of the small firm is frequently associated
with informal, ad-hoc channels that heavily rely on the sourcing of new employees
through outlets such as friends, current employees and acquaintances (Dundon et al.,
1999). Carroll et al. (1999) concur and go further by suggesting informal word-of-mouth
methods offer the distinct advantages of cost effectiveness and speed. In addition, the
new recruit becomes a ‘known quantity’ (Carroll et al., 1999: 237; Marchington et al.,
2003: 18) and fitting in is seen as an important aspect of the selection process in the
small firm (Curran and Stanworth, 1979).
Millward et al. (1992) note little delegation tends to occur during the recruitment
and selection process in small firms, with the owner/manager undertaking such tasks
personally. This is arguably a result of the potential impact it can have: given the smaller
size of the firm, Atkinson and Meager (1994) and Carroll et al. (1999) claim a single event
of recruitment is likely to have a pronounced effect on the workplace. Thus, they note
from their research, firms have a tendency to rely on tried and trusted techniques, which
they elaborate on further by suggesting such an approach can result in one major
downfall: the potential neglect of untapped talent. Scott et al. (1989) and Atkinson and
Storey (1994) deliberate on further problems faced by small firms in the labour market
and the issues they face attracting the higher calibre staff they require, for reasons
including costs and employee skill gaps, while Edwards et al. (2003) consider the issues
the SMEs become exposed to from a diversity and equality standpoint by not having
70
equal opportunity policies in place, as do Kotey and Slade (2005) who claim a lack of
policies could result in nepotism or cronyism in small firms.
That said, Bacon and Hoque (2005: 1978) suggest more formal and sophisticated
HRM practices are adopted by SME’s when “the recruitment, development and retention
of skilled employees is necessary to achieve business objectives”. This idea mirrors the
findings of Baron and Hannan (2002): that the rise in the number of small knowledge-
intensive firms creates a greater dependence on sophisticated HR practices in order to
recruit, select and retain talented employees.
Wapshott et al. (2014: 88) agree that recruitment and selection initiatives are
typically relatively ad-hoc and informal in smaller firms, but their research interestingly
“demonstrates the ways in which such informality persists even when formal policies and
practices are in place. The persistent informality of small firms influences how formality
is practiced in the business and contributes to a diversity of experiences both between
and within firms when it comes to changes in those practices.” Such a dualism, or a
dichotomy, in terms of the relationship between formal and informal HRM practices is a
theme that will be repeatedly drawn on throughout the present research.
While Carroll et al. (1999) conclude that formal processes could decrease costs
by way of reduced staff turnover rates and through better quality work with fewer
defects, they argue that many small firms will be unconvinced of the ‘business case’ and
continue with their ‘amateur’ tactics given the ad-hoc connotations attached to
recruitment in the SME.
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4.2 Training and development in SMEs
In respect of training and development, SMEs are significantly less likely to train staff
than large firms or public sector organisations (Matlay, 1998; Grugulis, 2007).
Furthermore, Kitching and Blackburn (2002) contest that small firms are much less likely
to operate formal training programmes for their employees in comparison to their larger
counterparts, in favour of ‘on the job’ education (Kotey and Slade, 2005). Storey and
Westhead (1997) present two explanations: ‘ignorance’ and ‘market’, the former
suggests SME owners underestimate the potential rewards with regard to the benefits
that can be accrued, and the latter implies the smaller organisation faces higher costs
and lower rewards in comparison to the larger firm. Storey and Westhead (1997) go on
to conclude that the latter explanation of ‘market’ appears more apt for most SME
circumstances. In agreement with such findings, Lynch and Black (1998) argue that
training can be a costly exercise and larger organisations have the added benefit of
attaining economies of scale through the distribution of costs over a greater number of
employees.
Another contention that must be dealt with by the SME is employee retention:
employees sited in larger organisations are subject to greater internal labour markets,
thereby presenting an opportunity for larger firms to retain employees in whom they
have invested and allow chance for return on that investment (Green, 1993). Equally,
Schiller (1983) and Metcalf et al. (1994) defend the lack of training undertaken by SMEs
as a means to reduce the risk of ‘poaching’ by outside sources.
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Additionally, Hill and Stewart (2000) suggest that training is very much an ad-hoc
process in the small firm, taking place in a reactive manner in response to an immediate
work-related problem. Furthermore, in line with Kitching and Blackburn’s (2002) and
Storey and Westhead’s (1997) theorising, the employer motive for undertaking training
is somewhat non-existent given the lack of evidence clearly demonstrating a link
between employee training and firm performance. Thus, it seems difficult to
comprehend why the owner/manager would utilise what little resources the firm has to
undertake employee training initiatives unless other forces are at play.
Green (1993) indicates the presence of trade unions can exert greater pressure
on the small firm to increase its training provision. Further stimuli are identified by Bacon
and Hoque (2005), who lead a chorus of commentators that note the influence of being
networked to larger organisations: they claim the reliance of the SME on a larger, more
dominant supplier/customer can result in a marked increase in the formalisation of HRM
practices related to training procedures where a chief concern is the enforcement of
quality assurance.
4.3 Employee voice and participation mechanisms in SMEs
Similar to ‘bleak house’ principles, it was traditionally found that employment relations
in the small firm (in the absence of worker collective voice and formalised procedure)
were largely autocratic in nature, making an employee’s ability to participate in decision
making heavily constrained (Forth et al., 2006). Further to that, it was suggested such
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informality would allow opportunity for the owner/manager to “develop networks of
personal allegiance” (Scase, 2005: 71), and to fashion employment relations to their own
advantage via informal channels of patronage, kinship and favouritism (Forth et al.,
2006).
Forth et al. (2006: 31) analysed the WERS 2004 data and concluded: “SME
managers were more likely to subscribe to the ethos of ‘top down’ management, [but]
they were actually more likely to involve employees in the decision-making process than
large-firm managers. This resulted in SME employees being more satisfied with their role
in decision-making”. Figure 1 gives an indication as to the level of involvement
employees have in decision making in comparison with organisational size; it becomes
quickly apparent that the degree to which large firm employees are involved is
considerably lower, with 61% of larger organisations choosing to only inform or not
involve their workforce at all. By comparison 71% of all SME’s surveyed chose to involve
their employees to some degree.
Forth et al. (2006) posit one explanation for an apparently greater involvement
of the SME workforce: close physical proximity between management and employees in
SME’s is conducive to the creation of discussions between parties across an informal
medium. Whilst there is no update to the conclusions drawn by Forth et al. (2006), logic
would suggest such theorising, based on the close proximity between management and
employees, is still a viable explanation. Management in small firms may deem this route
more favourable given that the alternative is more formalised employee representative
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forms of voice, inclusive of trade unions, for whom traditionally SMEs have a large
degree of disdain (Dundon et al., 1999).
Figure 1: The involvement of employees in introducing and implementing change
(Adapted from Forth et al., 2006: 29)
Thus, while trade unions would be one potential source of pressure that grants
favour to participative mechanisms adopting a more formalised outlook (Dundon et al.,
1999), an increase in ‘numbers’ employed subsequently removes that close physical
proximity enjoyed by smaller firms, leading to the requirement for more formalised
mechanisms to participate effectively (Forth et al., 2006). Additional factors inclusive of
worker skill and bargaining power (Goss, 1991); manager perceptions of fairness and
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justice (Cox, 2005); and current product and labour market conditions (Forth et al., 2006)
can all have an impact on managerial style and the subsequent degree to which
employees are given the opportunity to participate in the small firm.
4.4 Performance appraisals in SMEs
Forth et al. (2006) state the likelihood of an organisation undertaking performance
appraisals increases with firm size. During the course of their analysis of the WERS 2004
data, Forth et al. (2006) found over half of all small firms undertook no type of
performance appraisal activity, in comparison to just seven per cent of large
organisations.
Jackson et al. (1989) and Cassell et al. (2002) suggest informal performance
appraisal methods in smaller firms are more apt given the direct lines of communication
between employees and management. Bacon et al. (1996: 89) conclude that such
informality present within small firm practices indicates they are “a more authentic
approach than the relatively bureaucratic formal change programs of larger
organisations.”
Mintzberg et al. (1995) suggest performance appraisals in the small firm are
continuous yet highly informal as the owner/manager seeks to maintain direct control
over activities. It is suggested that such activities take on a more formal stature,
occurring over longer intervals, as the span of control widens in line with increases in
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firm size, with middle management the recipients of such delegated responsibility (Kotey
and Slade, 2005).
One further implication worth considering in the context of performance
appraisal systems is with respect to such a process being an ‘empty shell’: identified by
Hoque and Noon (2004), it implies that SMEs may have procedural documentation to
which management must adhere alongside template forms which must be completed
during the process, but in reality such a practice is never carried out, as these forms exist
merely for appearance’s sake. From this issue stems a further problem: in management
training, questions arise with regard to their ability to evaluate an employee; whether
they have sufficient knowledge and experience to conduct such a process is questionable
(MacMahon and Murphy, 1999).
Huselid (1995) considers performance appraisals an ideal function to motivate
the workforce, particularly those within the high-skilled remit. Forth et al. (2006)
determined a primary motive for the use of performance appraisals as with the aim to
assess training needs. Thus, motivations for conducting performance appraisals appear
largely internal, and de Kok and Uhlaner (2001) note pressures from larger organisations
are non-existent. However, given the apparent pressures placed on small firms by the
various networked stakeholders for reasons relating to quality assurance, it could be
suggested that these parties indirectly influence the formalisation of performance
appraisals by way of their attempt to ensure that quality standards remain high and
training levels sufficient.
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4.5 An overview of the key levers of HRM in the context of the UK
This section has collated the existing literature relating to a selection of HRM practices
(or ‘levers’) in the context of the small firm. The HRM practices that were considered
include: recruitment and selection practices, training and development initiatives,
employee participation schemes and performance appraisal techniques. Table 4
presents a summary of the main aspects of the above discussions.
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Table 4: An overview of the key levers of HRM in the context of the UK
Recruitment and Selection
Training and Development
Employee Participation
Performance Appraisals
Ad-hoc in nature – lacks strategic intent
Favour ‘on the job’ training
WERS data – employees of larger firms have less opportunity to participate
Likelihood of use increases with firm size
Undertaken via word-of-mouth – usually through friends or acquaintances of existing employees. Also cost effective and quick
Higher costs in comparison to the larger firm (resulting from economies of scale)
Close physical proximity between management and employees – conducive of informal discussions/ participation
Informal approach is more apt given the typical close personal relations between employees and management – ‘more authentic’
Tend to rely on tried and trusted techniques
Lack of internal labour markets makes it difficult to attain a return of investment
Worker skill mix and bargaining power can increase opportunities participate
SME management training/ability to undertake appraisals questioned
‘Known quantity’ and fitting in seen as important
Risk of ‘poaching’ As can current product and labour market conditions
‘Empty shell’ with appraisal forms existing for appearance sakes only
Owner/manager tends to undertake recruitment tasks personally
Typically undertaken in a reactive manner – lacks strategic intent
And manager perceptions of fairness and justice
Ideal to motivate a high-skilled workforce
The needed for skilled workers can bring about formalised recruitment and selection practices
Trade union presence can result in increased training provisions
Used primarily to assess training needs and maintain quality standards
Networked with larger organisations (including customers and suppliers) can also result in increased levels of training
Owner/manager uses to maintain direct control over the workforce
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4.6 The question of new management initiatives (NMI)
In contrast to the findings summarised in Table 4, there is evidence supporting the
uptake and awareness of formalised professional forms of labour management in small
firms, indicating that such assertions in much of the existing literature that link HRM and
the SME with informal attributes are perhaps generalisations that fail to account for
contextual influences. Labelled ‘new management initiatives’ (NMI) (Bacon et al., 1996;
Wilkinson, 1999) or ‘new management techniques’ (NMT) (Duberley and Whalley, 1995;
Dundon and Wilkinson, 2004), these initiatives denote a range of practices such as
culture change programs, devolved managerial responsibilities, team working,
performance appraisals and a range of employee involvement initiatives (Bacon et al.,
1996; Dundon and Wilkinson, 2004). Bacon et al. (1996: 83) suggest the implementation
of such initiatives in SMEs to be greater than the owner/manager adopting NMTs as
mere ‘flavours of the month’ and find they are “typically reporting some positive
outcomes after implement[ation]”. So assured, Bacon et al. (1996: 87) state that “the
new management agenda has penetrated deep into the UK economy and that innovative
and progressive employee relations practices are no longer restricted to large
mainstream companies”.
Tables 5 and 6 illustrate the degree to which various HR functions are adopted
by smaller firms. Of particular interest is the apparent heightened adoption of
performance appraisals, devolved management, team working and team briefings:
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Table 5: Examples of new management techniques in SME’s employing 15-24 employees
Initiative employed
(%)
Initiative sustained
(%)
‘Considerable contribution’ to objectives
(%)
Culture Change Programme 23.2 54.5 40.9 Devolved Management 56.8 81.5 61.1 Team Working 74.7 83.1 69.0 Performance Appraisals 44.2 71.4 61.9 Mission Statement 14.7 100.0 92.9 Team Briefings 61.1 82.8 67.2 Quality Circles 20.0 78.9 57.9 Harmonised Terms and Conditions 33.7 96.9 65.6 Psychometric Tests 3.2 0.0 0.0 Delayering 8.4 50.0 37.5 Increased Flexibility Between Jobs 73.7 82.9 64.3
(Adapted from Bacon et al., 1996: 86)
Table 6: New management techniques in SME’s employing 25-199 employees
Initiative employed
(%)
Initiative sustained
(%)
‘Considerable contribution’ to objectives
(%)
Culture Change Programme 18.7 80.0 72.0 Devolved Management 54.5 75.3 61.6 Team Working 76.9 89.3 70.9 Performance Appraisals 46.3 75.8 59.7 Mission Statement 26.9 77.8 58.3 Team Briefings 63.4 84.7 69.4 Quality Circles 31.3 76.2 66.7 Harmonised Terms and Conditions 40.3 92.6 63.0 Psychometric Tests 5.2 14.3 0.0 Delayering 14.2 68.4 68.4 Increased Flexibility Between Jobs 74.6 89.0 79.0
(Adapted from Bacon et al., 1996: 86)
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Downing-Burn and Cox (1999) directed a greater focus towards the adoption of
NMTs in small firms positioned in the engineering sector: they found wide-spread take
up of high commitment practices inclusive of quality audits, team working and job
rotation for reasons relating to quality assurance. Similarly, Bacon and Hoque (2005)
quote SMEs as spending £5.8 billion on training annually while Cully et al. (1999: 272)
found twenty-eight per cent of SMEs utilised five or more management practices,
leading them to conclude: “small workplaces do not operate in a purely informal
manner”. Similarly, Bacon and Hoque (2005: 1978) conclude: “informality is widespread
but not universal”.
Notions of formalised activity in the context of the small firm endorses further
examination of the extent to which firm size is more or less important than other
contextual factors in the development and progression of HRM in the SME. Dundon and
Wilkinson (2009) assert that sophisticated HRM techniques in large firms are not simply
a function resulting from their being large; such an assertion is critical of the impact of
size and questions why such reasoning cannot hold true for small firms. The proposed
research will examine the relationship between, and the influence of, contextual factors
in small firms to better explain HRM and patterns of employment relations rather than
assume one particular type, be it ‘small is beautiful’ or ‘bleak house’.
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4.7 Informality as an advantage?
Katz et al. (2000) suggest there is an inherent assumption in the existing literature that
formal policies must prevail. Consequently, investigation in SMEs presents dilemmas for
people using traditional HRM paradigms as informality is seen to be an aberration or
transitory stage of SME development. Further consideration must also be given to the
idea that informality in HR practice is not necessarily a negative attribute for the small
firm. An informal approach to labour management can be beneficial because it allows
the owner/manager to utilise their proximity to employees to construct personal and
particular relationships. A principal benefit of informality is one of flexibility and
pragmatism in the absence of bureaucracy and the ability to confront future change by
reacting quickly to changing environmental conditions (Hill and Stewart, 2000). Mayson
and Barrett (2006) agree and acknowledge how research has shown that informality can
work well and lead to good productivity results in firms with less than twenty employees.
This could indicate that the emphasis of studies in HR practices should be more focused
on ‘best fit’, meaning that informality should be used by small firms if this particularly
suits their context. The ‘best fit’, contingency, configurational perspective is therefore
considered and returned to in the next chapter in relation to SME context.
Furthermore, the informality-formality spectrum as theorised by Misztal (2000)
puts forward the notion that the degree of formality adopted should be seen as dualistic
rather than dichotomous, reordered and renegotiated over time. Similarly, Marlow et
al. (2010: 954) “challenge the notion that small firms must, should or inevitably do move
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from informality to formality”, suggesting discussion be “reframed through thinking of
informality and formality as a dualism rather than a dichotomy.”
In line with Misztal’s and Marlow et al.’s theorising, a key contribution of this
thesis is an illustration of the complex and curious manner of HRM development that
accompanies growth in small businesses. Alongside this, a recognition of the apparently
deliberate and conscious decisions taken by management in light of formalised
structures, and being aware of the benefits attributed to being small and informal
contrasted with influences derived from contingent factors outside the organisation – to
be considered in the subsequent chapter – is therefore important. The resulting need to
find balance between such antagonisms and make decisions accordingly represents one
of the research questions of this thesis.
5.0 Summary conclusions
The objective of this chapter has been to synthesise and critically analyse literature on
HRM and the SME and to locate the thesis within the context of existing literature and
relevant theoretical frameworks. Despite their ubiquitous nature, there is currently a
lack of theorising and research on the drivers of HRM development within the context
of SMEs. Mainstream HRM models have tended to be biased towards normative
prescriptions regarding ‘best practice’, often drawing insights more applicable to larger
organisations with more formalised HRM systems.
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A principal objective of this PhD thesis is to illustrate the complexities and
subtleties of life in small firms: to move beyond the contemporary accounts that are
critical of SMEs for their lack of uptake of ‘best practice’ HRM and for having an informal
agenda – as opposed to having bureaucratised relationships – and to provide a more
nuanced understanding of the drivers of HRM development and change in the context
of the SME, with a particular interest in the internal organisational political environment
and the particularities of labour management in small firms. The thesis therefore seeks
to move away from prevailing dichotomisations of formal vs. informal or ‘small is
beautiful’ (Schumacher, 1973) vs. ‘bleak house’ (Sisson, 1993). Rather than relying on
one universally applicable static model, as has been critiqued herein, the thesis
hypothesises that the influence of various contingencies will shape HRM development
in the small firm alongside the presence of a complexity which serves as a pre-requisite
to understanding processes of development and adaption.
Finally, key aspects to be taken forward from this chapter relate to a critique of
‘best practice’ HRM in the context of understanding HRM development in the small firm,
and a consequent question raised is whether a position more aligned with adherence to
‘best fit’ contingent principles – to be considered at length in the next chapter –
represents a more accurate reflection of the organisational and political realities of HRM
in the small firm. Secondly, there is the decisive and influential role of the
owner/manager on HRM development and of deep social structures (Whittington, 1988)
and Handy’s (1999) model of culture in explanation of their influence. Thirdly, we
introduce the idea that informality, rather than bureaucratised relationships, will form
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an important aspect of the research as it may be combined and developed with more
formal practices in curious ways, and this is something we need to be alert to. So, having
focused on internal dimensions, the following chapter will review existing theoretical
and empirical data relating to contingent forces and the broader regulatory context, with
a particular consideration of life-cycle approaches and notions of ‘regulatory space’
(Hancher and Moran, 1989) as an analytical construct and how it can help us to better
understand how human resource management practice and formalisation is shaped in
the SME.
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CHAPTER 3: The small and medium enterprise in context: Development,
contingencies and regulation
1.0 Introduction
Whereas the previous chapter focused more on research pertaining to the internal
functioning of people management practices in smaller organisations and the
applicability of broader mainstream HRM theory and practice to this context, this
chapter goes on to consider the relevance of various perspectives as to contextual
factors. The factors considered relate to the role of specific organisational contingencies,
the stages at which a firm finds itself, the role of path dependency and memory and,
quite importantly, the broader regulatory space (Hancher and Moran, 1989) or
idiosyncrasies linked to other external organisational or strategic contingencies faced by
organisations. The chapter will outline the contribution of these perspectives in terms
of how they shape people management practices.
Consequently, the chapter begins with a critique of ‘best fit’, contingency and
configurational perspectives of SHRM (Schuler and Jackson, 1987; Delery and Doty,
1996; Boxall and Purcell, 2000), an approach which may determine more closely the
objectives of the research as it attempts to illustrate the importance of contingency
factors and the influence of internal and external dynamics. A key argument put forward
is that the size of organisations, resource levels, and people management and
coordination issues faced relative to the current growth stage may be important for their
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human resource management practices. Life-cycle models (such as Greiner, 1972) are
consequently considered and critiqued.
Secondly, the subsequent section focuses on organisational design and structure
literature and their relevance to growing organisations, particularly in relation to
structural dynamics and span of control, particularly how these changes can influence
the HR narrative of the firm. Also, in this section matters of path dependency and curious
issues such as organisational memory are then considered to determine if such
contingent factors influence HRM development.
Thirdly, the final section will provide examples of complexities in regulatory
dynamics which include a key analytical component of the thesis – ‘regulatory space’
(Hancher and Moran, 1989) – and one that accordingly holds an important position in
the theoretical framework. At this juncture it will be considered how SMEs are
contending with a broader set of issues and influence in terms of regulation as conceived
in this thesis, using a much broader concept in line with MacKenzie and Martinez-Lucio’s
(2005) theorising, which critiques dominant understandings of regulation for failing to
locate the discussion within a broader political context. The role of the trade union and
worker representation more broadly within SME contexts will then be focused on along
with whether or not SMEs reside beyond the reach of conventional industrial relations
pressures. Further aspects for analysis include the influence of coercive networks, supply
chains and outsourcing literature, the role of industrial districts and institutional
isomorphism, the impact of changing state policy and the consultant. An ‘open-systems’
framework (Harney and Dundon, 2006) along with the conceptual framework devised
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by Mallett et al. (2019) will then be considered given their relevance to the thesis’
objectives in accounting for complexities internal and external to the organisation.
Lastly, a summary conclusion will focus on a critique of life-cycle models, such as
the Greiner growth model (1972) and the teleological prescribed approach it has come
to represent; while serving as a useful template, it does not sufficiently or accurately
capture the complexities and nature of organisational development and growth. The
chapter also concludes by providing further critique of mainstream SHRM literature and
debates on a need to supplement current thinking with a greater accommodation of
external regulatory functions. This leads to a focusing on the importance of ‘regulatory
space’ when attempting to understand the complex and curious nature of HRM
development in the SME. In addition to the importance of also recognising how these
types of firms respond to and interact with these external pressures – linking back in
with aspects of the internal organisational political environment considered in the
preceding literature review – the issue of how determinants of historical and structural
factors can shape the nature of HRM will also be considered. A final consideration is also
made of how the information presented in this chapter, and the preceding chapter, have
been ‘mapped’ on to the research questions.
Hence, in terms of applicability to the theoretical framework of the thesis, whilst
the previous chapter noted the difficulties in conceiving such a framework because of a
lack of existing research, this chapter will consider life-cycle models (Greiner, 1972),
‘regulatory space’ (Hancher and Moran, 1989), an ‘open-systems’ framework (Harney
and Dundon, 2006) and Mallett et al.’s (2019) conceptual framework that focuses on
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interactions across the organisational boundary and how small firms engage with or
adapt to regulations as being key pieces of theory that are to be specifically drawn upon
as a way of understanding the complexity and nature of growth and evolution of the
small firm in relation to the environment.3
2.0 ‘Best fit’, contingency and configurational perspectives
This section will build upon the definitions of ‘best fit’ reported in the previous chapter,
with the argument being that contingencies of SMEs must be accounted for in
understanding why they do not necessarily adopt ‘best practice’ principles of HRM.
Subsequently, one of the more prominent types of the ‘best fit’ model – the life-cycle
model (for example Greiner, 1972) – will be applied and analysed as part of that process.
3 It should also be made apparent at this point that this thesis is not trivialising or ignoring the influence of numbers employed and the scale of the firm entirely in respect of the dynamics bringing about change, believing it will arguably play a contributory (emphasis added) role in the decision to formalise HRM processes, for example as Dundon and Rollinson (2004) and Barrett and Mayson (2008) suggest, the use of numbers employed can be a beneficial marker in that with increases in employee numbers comes increased hierarchical levels and elongated communication channels that can only logically be countered by increased formalisation and bureaucratisation. Examples of studies where contributors have suggested actual threshold numbers include Storey (1994: 13) who notes a “marked shift in formality around the 10-20 employee mark.” Likewise, Roberts et al. (1992) note that at the twenty employee mark problems pertaining to informality become apparent in company processes. However, it is to be argued that the promotion of such ideals represents a failure to account for contextual idiosyncrasies: the vast array of market conditions with which small firms must contend, structural forces that cement their unique position within an intricate web of actors and regulatory spaces, not neglecting variable internal dynamics, which all combine and bear influence and shape HRM in a unique way. A similar mind set led Harney and Dundon (2006) and Timming (2011) to conclude that while size constraints impact HR decisions, size in isolation does not determine HRM, thereby making numbers employed and firm size best used a generic indicator only, given the positive correlations between firm size and the uptake of professional HR practice (de Kok et al., 2003).
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2.1 A critique of the ‘best fit’ model of HRM
The theoretical debate around the nexus of strategic HRM has been dominated by two
normative models: ‘best practice’ and ‘best fit’ (Boxall and Purcell, 2000). To date, there
has been no shortage of limitations or critiques, of either model; as considered in the
preceding chapter, a major critique of ‘best practice’ models of HRM is that they are
simplistic and not attuned to wider environmental forces or issues of strategic choice
(Marchington and Grugullis, 2000). Accordingly, Storey (2001: 6-7) suggests that
decisions about HR practice should instead “take their cue from an explicit alignment of
the competitive environment, business strategy, and HRM strategy”.
The contingency-based argument of the ‘best fit’, contingency or configurational
perspectives covers a range of alternative perspectives that acknowledge contextual
variables or strategic choice, placing emphasis on contextual or situational factors as
being able to explain patterns of variation among SMEs and their uptake of HRM practice
(Baird and Mesaulham, 1988; Paauwe and Boselie, 2005). Generally speaking, the
foundations of the ‘best fit’ paradigm include three types of ‘fit’: horizontal or internal
fit, vertical fit and external fit. Horizontal fit refers to the degree of congruence between
the various HRM practices and so relates closely to issues of bundling discussed in best
practice approaches (Baird and Meshoulam, 1988). Vertical fit refers to the alignment of
HRM practice with the broader market strategies of the firm (Schuler and Jackson, 1987).
External fit concerns the external environment, whether this be market or sectoral
contingencies, national institutional arrangements and regulatory environment or
broader societal culture (Jackson and Schuler, 1995).
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However, whilst the contingency-based argument does explicitly acknowledge
contextual variables, one risk is that it does so in a somewhat static and narrow manner,
failing to truly account for processes of change and limiting the scope of ‘fit’ to
acknowledge influences derived from business strategy and organisational life-cycle
variables (Miles and Snow, 1978; Stace and Dunphy, 1991; Boxall and Purcell, 2003). A
further thought for contention is that the time horizon of ‘fit’ is important here; does
‘fit’ relate to current or future contingencies for example? Moreover, organisations
operate within a pluralistic system wherein influences are multiple; however, the ‘best
fit’ models have a tendency to put a primacy on a single contextual factor whilst
assuming that these alone determine patterns of HRM (Mabey and Salaman, 1995).
Additionally, contingency perspectives risk being over-deterministic – ‘contingent
determinism’ – emphasising the role of structural factors to the detriment of managerial
choice (Paawue, 2004). For example, although specific sectors may have “table stakes”
in terms of the minimum HRM standards required by organisations to remain viable and
compete within a given sector (Boxall and Purcell, 2003; Marchington et al., 2003), there
is still scope for a high degree of discretion in strategy and HRM formulation, as Baron
and Hannon (2002) suggest by drawing attention to the impact of founders’ expectations
and ‘mental models’ of HRM.
Perhaps the adoption of any one model of SHRM in isolation is disadvantageous
because of the theoretical flaws they present: namely, the characteristic of being limiting
in their scope. This thesis will therefore seek to engage with and build upon the central
premise of ‘best fit’ – albeit that this thesis is more than just about ‘best fit’ or SHRM–
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as part of the entry into the research’s theoretical framework, albeit with some degree
of modification, allowing for an increase in scope to account for and accommodate the
perceived heterogeneous nature and dynamic fluidity of SMEs in such a way as to more
effectively capture the complex nature of the HRM narrative. Ultimately, this thesis is
careful not to neglect internal contingencies or external dynamics. The following section
will consider one of the more prominent models of the best fit perspective: life-cycle
models.
2.2 Life-cycle models: The moments and stages of SME development as a factor
Supporters of the ‘best fit’ paradigm have previously attempted to marry HRM
development with business or product life-cycle models in an effort to explain variance
in the uptake of HR practices amongst businesses (Greiner, 1972; Kochan and Barrocci,
1985; Kochan and Chalykoff, 1986; Baird and Meshoulam, 1988; Schuler and Jackson,
1989; Hendry and Pettigrew, 1992; Rutherford et al., 2003). Baird and Meshoulam
(1988: 117) surmise the basic premise of the models: “human resource management’s
effectiveness depends on its ‘fit’ with the organisation’s stage of development. As the
organisation grows and develops, human resource management programmes, practices
and procedures must change to meet its needs. Consistent with growth and development
models it can be suggested that human resource management develops through a series
of stages as the organisation becomes more complex.” Accordingly, Kochan and Barrocci
(1985) suggest the recruitment, selection and staffing, training and development,
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compensation and benefits and employee relations functions need to be altered to
deliver different responses at different stages in an organisation’s business cycle.
Termed the organisational life-cycle (OLC) concept by some contributors, it
typically consists of four phases or stages of development: start-up, growth, maturity
and decline. In the start-up phase the span of control will be narrow and as a
consequence HRM activities are largely informal and flexible, performed by the
owner/manager and focused on hiring and firing (Doherty and Norton, 2013). For firms
in the growth stage of the model, formal and systematic HR systems become prevalent,
quite likely including the introduction of functional HR specialists: in order to build upon
previous successes, attracting and retaining expertise becomes a high priority in this
stage, while employee participation schemes ensure commitment levels are maintained
(Schuler and Jackson, 1989). In contrast, as markets mature, profit margins shrink and
performance levels plateau, firms enter the maturity stage of development. Thereafter,
focus is directed towards consolidation and cost control, maintaining employee
performance levels, appraisals and labour relations (Doherty and Norton, 2013). In the
decline phase, the HR function is typically involved in difficult decisions, with emphasis
shifting to rationalisation, downsizing and potential redundancies (Kochan and Barocci,
1985).
The observation of a firm and its HR needs through a lens sensitive to life-cycle
variations can be beneficial because it recognises not only current but also future needs:
that organisations are not static and have differing HR needs and requirements over
time. For this reason, Greiner’s (1972) model (Figure 2) will be applied to the findings of
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this thesis in Chapter 5 – Organisational contingencies and people management in the
small firm: Life-cycle stage, change and culture, albeit in a tentative manner given that
the methodological underpinnings of life-cycle models are liable to be critiqued. This is
because life-cycle models can represent a teleological prescribed approach to
organisational growth; such an approach assumes an ultimate objective which in turn
guides the course of events. Accordingly, the implicit assumptions of teleological
guidelines force ‘historical facts’ into the straitjacket of the author’s theoretical claim
(van Baalen and Bogenrieder, 2009). This thesis will consequently question the extent to
which such models can accurately capture aspects of growth and development
experienced by the SME, a process that by contrast is theorised to be highly idiosyncratic
in nature, nuanced and susceptible to complex internal and external forces of influence.
To that end, criticism of life-cycle models is not hard to come by. For example,
when Rutherford et al. (2003) considered HRM problems relating to life-cycle models in
SMEs, they found that prior studies examining the link between HRM and SME
development have largely ignored context and the degree of heterogeneity present in
small firms, with the studies and life-cycle models not controlling for industry effects, for
example, whilst Doherty and Norton (2013) have criticised such studies for assuming
linear progression. Life-cycle models only allow for a uniform path of growth of a
deterministic kind (Fombrun and Wally, 1989); moreover, they build on assumptions
that organisations must pass through all of the stages of the life-cycle.
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Figure 2: Greiner’s growth model (1972)
Harney and Dundon (2006) concur and suggest that while life-cycle models are
useful as a template, these models largely depict change as a one-way sequential
process synonymous with growth. Further criticism directed towards life-cycle models
includes the fact that they see processes of growth as primarily dependent upon the
factor of time, suggesting that organisations follow the same consistent pattern over
time as they grow (Hofer and Charan, 1984). The role of managerial agency in life-cycle
models is typically underdeveloped too; it is contended that their motivation, decisions
and actions can have a great impact on the growth process (Andersson and Tell, 2009).
A final criticism, and one that is of particular relevance to this thesis, is that life-cycle
models mainly focus on the evolution of formal structures, understating the role played
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by informal structures and processes, even though informal mechanisms can be of great
importance and relevance to organisational growth (Kitching and Marlow, 2013) – a
feature this thesis is seeking to illustrate. In light of such criticisms, the extent to which
these types of models will be valuable as a way of understanding the complexity and
nature of growth in relation to the environment is uncertain.
3.0 Aspects of structure and growth
As attested in the previous section, associations can be drawn between life-cycle models
and growth. This section will consider the links between aspects of growth and the
existing literature relating to organisational design, including structural dynamics and
span of control. The concept of path dependency and organisational memory will also
be considered in due course, to understand their impact upon dynamics within the SME.
3.1 Organisational design, structure and its relevance to growth
Organisational design and structure have been popular topics of research for
commentators on the field while also being considered from several different
perspectives. For example, Mintzberg (1979) has written extensively on the structuring
of organisations. Pugh et al. (1968) suggest there to be five dimensions of organisational
structure: specialisation, standardisation, formalisation, centralisation and
configuration. Handy (1990; 1993), as considered briefly in the preceding chapter in
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relation the role of the owner/manager, sought to investigate the relationship of
organisational structure and design with culture. Miller (1989) considered organisational
structures and their association with strategy, while Mabey et al. (2001) recognised how
organisational structure and design are closely entwined with aspects of HRM.
In line with the levels of organisational growth that SMEs experience, middle-
management positions are logically required to take responsibility for daily operations
and to supervise employees as the span of control increases (Pugh et al., 1968; Collins
and McLaughlin, 1998). Moreover, and of further relevance to the levels of growth and
associated complexities, and their impact on organisation design, is the degree of
“differentiation and integration in complex organisations” as considered by Lawrence
and Lorsch (1967): they suggest that as differentiation increases within an organisational
structure (and sub-systems thereof), the process of integration between the sub-
systems is to be deemed a more challenging process. Finally, accounting for the notion
of the ‘ambidextrous organisation’ (Duncan, 1976; March, 1991) and the act of balancing
‘exploitation’ with ‘exploration’ is useful when exploring SMEs which are experiencing
levels of growth, a concept which invariably increases in difficulty as organisations grow
and potentially become less flexible and adaptive to immediate stimuli.
3.2 Organisational memory and path dependency
The theory of path dependency (Pierson, 2000; Teague, 2009) suggests that
organisational functioning in the present is to a large extent shaped by past events.
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Moreover, these experiences frame and shape strategic choices relating to people and
organisations as they respond to new developments. There are strong and weak forms
of path dependency, with the strong version suggesting that institutions are deeply
embedded, making radical departure from established patterns of behaviour difficult
(Teague, 2009). The weaker form of path dependency, while recognising the importance
of the past, does allow for a degree of re-calibration (Crouch and Farrell, 2004). Closely
associated with the concept of path dependency, particularly the milder version, is the
concept of critical junctures – or critical moments in time – which can trigger a process
of pathway departure (Thelen, 2002), thereby allowing actors to shape the institutional
landscape in which they find themselves.
In a similar manner to how the deep structures concept put forward by
Whittington (1988) – and dealt with in the previous chapter – can provide us with a more
sensitive understanding of why particular decisions have been made, so too can path
dependency theory, perceived to be a potentially critical aspect to understanding
decisions made in the SME and the path being followed. It is possible for path
dependency to be nuanced by factors such as the role of the family, inclusive of ethnicity
and cultural factors more generally, the role of the state and its associated legal systems,
and the role of the sector, as shown by Lubinski (2011).
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4.0 Illustrating the complexities of regulatory dynamics
The OECD broadly defines regulation as the “imposition of rules by government, backed
by the use of penalties that are intended specifically to modify the economic behaviour
of individuals and firms in the private sector” (Khemani and Shapiro, 1993).
Furthermore, Mallett et al. (2019: 295) add “business regulations represent an attempt
by governments and other bodies to influence or control organisations’ environment and
practices, for example, in maintaining open markets but also in areas such as protecting
employee rights.”
In addition to comprehending the role of internal HRM practices, or the absence
thereof, in understanding people management within SMEs, an understanding of the
role of regulatory context in shaping people management within SMEs is additionally
important. Edwards et al. (2004) and Kitching et al. (2013) state that a more complex
scenario is apparent, with regulation often having dynamic and indirect effects on firms.
This section consequently begins with a consideration of the concept of
‘regulatory space’ (Hancher and Moran, 1989) and its ability to account for pluralistic
forms of influence. This section will go on to consider changing state policy, the role of
clusters and industrial districts and how they result in isomorphic pressures of
development, as well as the influence attributable to coercive networks, consultants and
business mentors (professional employer organisations; PEOs). Then, literature relating
to supply chains and outsourcing and its relevance to SME debates will also be
considered, alongside the extent to which SMEs are beyond the reach of conventional
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industrial relations pressures. Harney and Dundon (2006) proposed an ‘open-systems’
framework that will be discussed and analysed for its potential ability to capture the
multi-faceted nature of external regulatory functions. This is followed by Mallett et al.’s
(2019) conceptual framework for understanding the potential array of effects imposed
by regulation on the SME and how they interact.
4.1 Exploring the ‘regulatory space’: Understanding the political tensions and nature
of regulation and regulatory actors
Hancher and Moran (1989) adopt the term ‘regulatory space’ as an analytical construct
designed to move beyond the command-based view of employment regulation which is
seen as being limited to government regulators (Frazer, 2006). Berg et al. (2005: 73)
define ‘regulatory space’ as “the range of regulatory issues subject to public decision.
Proponents claim that its dimensions and occupants can be understood by examining
regulation in any particular national setting, and by analyzing that setting in terms of its
specific political, legal and cultural attributes.” Other contributors that have sought to
utilise ‘regulatory space’ as an analytical tool for assessing the impact of employment
regulation include Scott (2001) and Barry (2009). Furthermore, Scott (2001: 331)
observes that: “the regulatory space metaphor draws attention to the fact that
regulatory authority and responsibility are frequently dispersed between a number of
organisations, public and private...it looks at the interactions of each of the players in the
space, and can recognise plural systems of authority”.
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Regulation is thus conceived to be a much broader concept, a common space
concerned with norms and regularity alongside the establishment of rules and order.
Regulation has become dispersed and fragmented; extending beyond legal systems it is
now recognised as the sum total of numerous intersecting and conflicting interests and
value systems. A multiplicity of sites, spaces and actors, both formal and informal in
origin, can be seen to exert influence in a particular area of interest to them, a highly
political process; boundaries between these spaces may be constantly renegotiated and
regulatory jurisdictions may overlap (MacKenzie and Martinez-Lucio, 2005). Such spaces
and actors do not operate in isolation, but on the basis of a diversity of linkages between
them – meaning there is not always a clear ‘recipient’ of external pressures. There is also
competition between these actors and tensions as they vie for critical positions and try
to colonise specific points, thus pointing to a more political process and set of tensions
within regulatory spaces (MacKenzie and Martinez-Lucio, 2014). Only through a
comprehensive understanding of the complexities of these relations, of the multiple
roles and diverse spaces in which they operate, can we truly understand the role and
impact of regulation. For example, industrial relations debates have typically placed the
notion of regulation high on the agenda; in fact, it encompasses a large part of their
identity, albeit, it could be argued, with a rather narrow focus, failing to locate the
discussion of regulation and change within a broader social and economic context
(MacKenzie and Martinez-Lucio, 2005).
This thesis will attempt to recognise and account for regulation originating from
numerous indirect actors, including conciliation bodies and learning agencies (Martinez-
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Lucio and Stuart, 2011), and to understand how these various competing and
intersecting interests locate themselves and colonise the space within the context of the
aerospace sector. This is alongside the subsequent behaviours of SMEs, of the questions
and choices that manifest themselves, and how they resolve or manage living tensions
placed upon them by these competing regulatory forces. This is perhaps most noticeable
in terms of the tension between the desire to maintain informal processes for reasons
of flexibility and the adoption of more formal, professional systems in line with
regulatory pressures.
In terms of state governmental regulation in the UK, declining levels of state
intervention were apparent throughout the 1980s and 1990s during an era of de-
regulation and neo-liberalism that brought with it strategies to internalise forms of
governance and individualise employment regulation (Martinez-Lucio and Stuart, 2011).
New forms of regulation in British employment relations have become apparent over
the last two decades, that which could be construed as a form of re-regulation and
increasing re-involvement of the state, not least in the wake of the recent 2008 financial
crisis, a change which has seen the state adopt new roles in “developing frameworks for
new management practices: these have come in the form of supporting networks,
establishing standards and using targets and objectives” (Martinez-Lucio and Stuart,
2011: 3670); one could see this as new form of consultative state which supplements
other roles (Martinez-Lucio and Stuart, 2011).
Consequently, organisations are deemed to be contending with a more complex
and dispersed form of regulation, whereby the state due to various economic factors
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develops a more indirect and differentiated set of roles in the face of changing
employment relations needs at the workplace level (Martinez-Lucio and Stuart, 2011;
Martinez-Lucio and MacKenzie, 2018). Heery and Frege (2006) suggest as much in their
research titled ‘new actors in industrial relations’ and posit the need for a shift in focus,
particularly by IR scholars, away from the traditions of trade unions (in line with their
decline and diminishing levels of influence) to in turn adopt an institutionalist
perspective that emphasises an awareness of the plurality of interests shaping firm
behaviour and employment relations, achieved primarily by having an awareness of the
institutional configuration of a particular business system or variety of capitalism (see
also Hall and Soskice, 2001).
Accordingly, there have been growing concerns raised by SMEs and employers’
bodies regarding increasing levels of regulation, bureaucracy and red tape, specifically
with respect to employment law compliance. The Federation of Small Business (FSB,
2016) recently stated: “small businesses are increasingly under pressure from a series of
significant new challenges like the introduction of the national living wage and pensions
auto-enrolment”, while the Forum of Private Business’s head of campaigns indicated
that “despite several government initiatives – some more effective than others – it is
clear that we are heading in the wrong direction as far as reducing regulation for small
business owners is concerned” (FPB, 2011). The CIPD (2015: 6) stated “the overall
regulatory burden associated with employment has increased since the mid-1980s”
based on evidence that wages, working time, pensions, migration and anti-
discrimination legislation have all been generated and/or strengthened in that time
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period (CIPD, 2015). Finally, further evidence to suggest an increase in regulations with
which businesses must comply can be found in the rise of employment law consultancy
services (Sullivan and Garcia, 2005), as small firms seek to comply by adopting more
formalised process, but typically lack the financial resources and workload to recruit
functional specialists (i.e. full-time HR personnel).
However, a counter-argument to the increases in regulations which are
perceived to be burdensome by some small firm employers is that it could be suggested
that they try to externalise their risks and costs onto the government and their
employees, and consequently label actions such as dealing with their environmental and
societal impact ‘burdensome’. This regulatory discourse would argue that businesses
need to be accountable for their impacts. Also, it could be suggested that those
managing SMEs are adopting a short-term parochial view as a consequence of a lack of
basic management skills or education – not aided by the aforementioned enhanced
levels of complexity in the ‘regulatory space’. In line with a growing complexity, a
recently published article by the Quarterly Survey of Small Business in Britain (2014),
who undertook a comprehensive analysis of British SMEs in chronological fashion for
their thirty-year anniversary review, cited regulation as one of the main challenges
facing SMEs today. The article suggests the devolution of powers by the government to
other newly created public bodies, for example the Low Pay Commission (LPC), the
Arbitration and Conciliation Advisory Service (ACAS) and the Health and Safety
Commission (HSC), has made it increasingly difficult for these small firms to keep up with
changes to regulation due to an added degree of complexity as more institutions
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colonise and locate themselves within the ‘regulatory space’: dispersed and fragmented,
all with intersecting objectives and exerting influence on the current status of HRM. This
is relevant to the thesis because any study of SMEs needs to map the actual complexity
of regulatory pressures as the state shifts to more indirect strategies. Moreover, it will
be contested in this thesis that it is actually such complexities that are posing a significant
contributory factor in the perceived burdensome landscape of contemporary labour
relations.
That is not to say that instances of government assistance for small firms are not
apparent. A recent example includes the 2011 ‘micro business moratorium’, a temporary
three-year hiatus exempting small businesses and start-up firms from new domestic
regulations. In 2013 the moratorium was extended and increased in scope: thereafter,
firms employing up to fifty members of staff would be eligible in a scheme that has since
been renamed the ‘Small and Micro Business Assessment’ (SMBA). Admittedly, such
forms of assistance have been heavily criticised and labelled a ‘gimmick’ by some
sceptics: for example, changes to equality legislation in 2012 saw micro businesses avoid
only one obscure rule therein (Peacock, 2012). According to the FSB (2012), 86% of small
businesses claim they have not experienced any positive improvements, with these
businesses still waiting for everyday regulatory burdens to decrease and for a greater
clarity of their regulatory requirements. Hence, the more extensive panorama of
‘regulation’ is more complex as a dynamic.
A further point for consideration relates to the impact of the 2008 global
recession on smaller firms, who typically find it much more challenging to ‘ride out’
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difficult periods in the way larger firms may be able to, with access to borrowing and
other financial resources at their disposal (OECD, 2009). It is arguably during these times
where a moratorium pertaining to regulatory burdens would perhaps have the most
positive impact. Recessionary pressures have resulted in enhanced levels of uncertainty
and instability in the small firm, with an SME’s typical dependence on a few key
customers certainly a contributing factor. This has meant that employment relations in
the SME have more closely reflected ‘bleak house’ (Sisson, 1993) principles, wherein
employees are subject to pay freezes, short-time working, a lack of training and
development and all-round poorer working conditions (van Wanrooy et al., 2013).
Examples of the government removing regulatory burdens for smaller firms during these
challenging times are difficult to locate.
Finally, from the discussion in this section, and in line with the objectives of the
research stated in the introduction chapter, it can be seen that many people
management practices within SMEs can be driven by external regulatory compliance
issues. These include (but are not limited to): pay determination and pensions,
recruitment and selection processes, working time regulations, rights to various forms
of statutory leave and health and safety standards.
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4.2 Coercive networks and supply chains: The role of inter-corporate pressures on
quality and HRM
The influence of stakeholders within ‘coercive networks’ is predicted to stimulate the
development of HRM to a greater extent than advisory mechanisms of change (Bacon
and Hoque, 2005). One such influence originates from supply chain pressures and
customer demands (Kinnie et al., 1999). Downing-Burn and Cox (1999: 50) suggest the
allure of ‘preferred supplier status’ is resulting in the adoption of a more comprehensive
portfolio of policies and practices geared towards ensuring quality standards remain
high, whilst Hunter et al. (1996: 253) found instances of ‘supplier development’ whereby
partnerships and alliances between firms led to the “wider diffusion of current HRM
techniques”. Regulatory bodies are foreseen to have similar influencing effects, whereby
conformity may not dictate standards in specific HR related terms, but to perform well
and remain accredited the workforce need to be skilled, well trained and
knowledgeable, and HR plays an important role in that process (Doherty and Norton,
2013).
The blurring of organisational boundaries and the move towards networked
forms of organisation can be deemed to be a consequence of, at least in part, a growing
trend towards de-verticalization, outsourcing and subcontracting initiatives
(Scarbrough, 2000; Gereffi et al., 2005). Fragmentation of this kind can have implications
for the HR practices and employment relations of firms within the supply chain (see also
Rubery et al. (2004) relating to the notion of the ‘permeable organisation’).
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Outsourcing and the networked organisation is particularly evident in the context
of the aerospace sector, wherein, from a technological point of view, the complexity of
the process behind the design and production of an aircraft is substantial: an Airbus has
more than two million parts (Frigant and Talbot, 2005). Not surprisingly, then, aircraft
manufacturers have sought to reduce this complexity by dividing the process into a
series of distinct entities and utilising sub-contracting initiatives that allow the speciality,
mastery and innovative capacity of the supplier to come to the fore (see Edgerton, 1991
and the sector background review (Appendix B) for a more detailed examination of the
structure of the aerospace sector and the role of subcontracting). This apparent
‘modularity’ of the subcontracting process (Sturgeon, 2002) brings with it a heightened
degree of complexity to operations, believed to have consequences for organisational
processes, including the HR agenda, of supply chain firms.
In the context of the SME, Kinnie et al. (1999) recognise the multifaceted and
intricate environment within which these organisations are so often embedded and the
subsequent impact upon the management of employment relations therein. Indeed,
existing literature relating to the nexus of outsourcing and supply chain management
has tended to highlight the political and exploitative nature of supply chain relationships
(Rainnie, 1991; Turnbull et al., 1993), of the unequal power relations between large
buyers and smaller suppliers, alongside the presence of work intensification, wherein
the larger buyer can use the supply chain as a weapon to transfer costs, and ultimately
risk, onto the smaller supplier firms (Turnbull, 1991).
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With much of the existing literature having a tendency to imply that HR practices
are relatively insulated from supply chain effects, Scarbrough (2000) suggests that this
is unlikely to be the case and that to account for such influences we must adopt an
institutional perspective of supply chain relationships, perceived to better illuminate the
pervasive effects of supply chain positioning and firm-level reactions. Scarbrough’s
(2000) postulations thereby imply that the degree and types of influence that supply
chain firms will have to contend with will vary: for example, it could depend in part on
the closeness of the buyer and the supplier and their relationship (Hunter et al., 1996),
or on the nature of the product or service being offered. Rothwell (1992) found that in
instances where quality was perceived to be a significant attribute, there existed robust
training and development schemes for the supplier workforce, as instigated or insisted
upon by the buyer. To that end, according to Scarbrough (2000), when viewed from an
institutional perspective, the observation of ‘patchiness’ in reactions to the supply
chain’s impact, or variance between organisations, on aspects including the HR agenda,
can be tentatively explained in terms of the uneven spread of activities which promote
the supply chain relationship – or contingent factors, linking back to the ‘best fit’
perspective considered at the outset of this chapter. Scarbrough (2000) concludes that
the supply chain creates important demands on HRM, particularly in securing the
necessary skills and behavioural flexibility to support tighter levels of integration
between buyer and supplier. Supply chain effects are therefore more noticeable in
respect of HR activities when related to quality enhancement, training, efficiency,
flexibility and team formation. Hunter et al. (1996) concur, finding there to be a
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significant transfer of knowledge from buyer to supplier firm as new work practices are
passed on through supplier development activities or kaizen programmes.
4.3 Clusters and industrial districts: Isomorphic pressures for change within local
spaces
As mentioned at the outset, particular attention will be directed towards the influences
and pressures devolved from industrial clusters. This is done with the aim of examining
the incidence of collaboration amongst clustered firms and the degree to which localised
environmental conditions facilitate shared spaces of development and thereby
constitute a learning environment, including via channels of inter-firm support, learning
and skill diffusion, particularly in respect of a highly skilled specialist workforce.
Clusters and industrial districts are foreseen to act as enablers, facilitating
networking and linkages between small firms and specialist external knowledge
providers, be they other small firms, academic institutions, customers, suppliers or other
training bodies. The coming together of different actors in clusters supports the
development of collective learning capacities and the sharing of knowledge, which can
be of immense benefit to small firms, particularly from an innovation standpoint, all the
while transmitting strategic undertones, direction and purpose to SME operations. By
contrast, small firm literature has suggested organisational that learning tends to be
informal and reactive in nature, in response to an immediate work-related problem,
although this understanding is devoid of context.
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Clusters are determined to facilitate the dispersion of tacit knowledge through
increased close personal interactions between people and parties. Steiner and
Hartmann (2006) sought to better understand the role of clusters in organisational
learning, knowledge creation and diffusion: how do clusters learn? What forms of
learning prevail? Immaterial flows of learning and knowledge exchange between
clustered firms led Steiner and Hartmann (2006) to conclude that clusters themselves
can be regarded as one big learning organisation. They also determined two important
learning systems: informal learning (consisting of informal meetings, for example at
conferences) and participative learning (e.g. inter-firm projects or R&D teams).
Returning again to the importance of context, a characteristic repeatedly drawn upon,
Steiner and Hartmann (2006) concluded that the dominant learning systems favoured
varied from industry to industry. Other conclusions drawn highlight further influential
factors as including the working culture prevalent, the spatial orientation and the
competitive structure, but, interestingly, not the number of firms within the cluster: they
found this factor had negligible impact.
Of further relevance to the discussion on clusters and their role in organisational
learning and knowledge advancement is the work of Jensen (2004) and ‘the networking
arena’: a case study pertaining to a company called United Spaces which offers shared
office space for small innovative firms. Operating out of workstations in one large room,
the set-up is conducive to an environment and culture in which networking is perceived
to flourish and grow through the stimulation of flexible and lateral ad-hoc connections.
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Moreover, such environments were perceived by Jensen to stimulate knowledge sharing
between people and organisational units.
Closely associated with the notion of clusters are the theoretical contributions
made most prominently by DiMaggio and Powell (1983) and more recently by Dacin
(1997) and Ferner and Quintanilla (1998) and their respective studies investigating
institutional isomorphism: the presence of normative, mimetic and or coercive
pressures to conform to the institutionalised expectations of the local environment. For
example, normative pressures could amount to requiring the attainment of legitimacy
for the small firm, perhaps conceived through licensing or accreditation with a
regulatory body. Mimetic pressures would typically involve the small firm modelling its
business on other cluster members who are perceived to be more successful, while
coercive pressures could include governmental mandates or customer and supplier
pressures, particularly if these organisations are considerably larger and hold a greater
share of power in the working relationship, i.e. the small firm may be heavily reliant on
one particular customer for a large proportion of its business.
4.4 Professional employer organisations (PEOs) and business mentors: The role of
consultancy networks in the developmental aspects of HRM
Taking account of the evermore dispersed, fragmented and complex forms of
governmental regulation as described in the previous sections, coupled with an SME’s
typical lack of financial resources to recruit functional specialists, namely HR personnel,
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has resulted in an increase in the number of PEOs or employment law consultant
specialists operating in the UK, as SMEs seek to maintain compliance (Klass, 2003). A lack
of in-house expertise and knowledge of the HRM discourse could leave small firms liable
to a breach of employment regulations. Earnshaw et al. (2000: 69) found that SMEs do
not follow effective disciplinary procedures due to a “lack of specialist knowledge of
employment law or access to a personnel adviser.” Earnshaw et al. (2000) went on to
state that smaller firms are thus the principal source of unfair dismissal applications to
UK employment tribunals. The presence of PEOs also serves to further colonise the
regulatory space as they also seek to exert a degree of influence over goings on in the
small firm.
4.5 The impact of the erosion of collective worker voice: Are SMEs beyond the reach
of conventional industrial relations pressures?
When considering trade unions and industrial relations, the consensus remains that
SMEs are typically non-unionised, with smaller firms preferring the individualisation of
labour relations, an ideal that appeals to many workers in this post-industrial age where
workers seek to commodify their skillset. The rise of the ‘knowledge worker’ has resulted
(Sisson, 2011); this term was originally conceived by Drucker (1999), with the main
premise being that through knowledge ultimately comes growth. Such a development
has heavily contributed to the individualisation of the employment relationship:
individual employees have obtained greater power within the employer-employee
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relationship that was at one point falling heavily in favour of the employer. In turn,
employees are now opting in favour of a differentiation through skills approach to
employment, thereby allowing them to reap the financial and welfare benefits on offer
(de Silva, 1997). Kelly (1998: 1) best summarises the apparent changes: “[the]
transformation, from the traditional, class-conscious collectivism of the industrial
manual worker to the self-interested individualism, of the skilled, mobile and career-
centred white-collar worker.”
The ability of the employer to adopt a more individualised, ‘one-to-one’
approach to HRM and as such ‘fragment’ the employment contract is thought to be the
consequence of numerous societal advancements, including a marked increase in those
opting to partake in higher educational degrees in favour of vocational qualifications
(Machin and Vignoles, 2005) alongside the feminisation of the workforce (Lewis, 2001).
Furthermore, employers have also sought to individualise their relationship with labour
through de-regulation and the influence of governments to pass laws to restrict trade
union power, in order to increase their relative strength in the political economy,
particularly since the 1970s (Standing, 1999). Such trends, amongst others, have led to
an increased level of competition in the labour market. All the while, trade unions have
remained geared towards achieving the needs of a mass and stable core workforce
during much of the 20th Century and the “‘golden age’ of collective bargaining” (Brown,
2010: 259). As a consequence, collective voice and similar forms of employee
involvement have been replaced in part by individualistic forms of employee
involvement that bypass trade unions (Wilkinson et al., 2007). Such individualisation has
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meant a lack of requirement for trade unions in the workplace and for their role within
the collective bargaining process, although legislation since the 1970s in the UK has
limited the ability of unions to engage with SMEs due to complex recognition laws and
an anti-trade union bias (Howell, 2005). To that end, WERS 2004 data determined that
the incidence of collective bargaining was eight times greater among workplaces
belonging to large firms as opposed to SMEs, whilst also suggesting that only 7% of
employees in small private sector firms are union members (in comparison to 28% of
employees working for larger organisations) (Forth et al., 2006). Union membership is
also less common among those working in family-owned firms (5%), than among those
working in small firms where a single individual or family does not own a majority of the
business (15%) (Forth et al., 2006).
Whilst the growth of small firms and an individualisation of the employment
relationship appear to go hand in hand, firm size is not the only contributing factor when
determining trade union recognition and acceptance. According to Gunnigle and Brady
(1984: 22-23) the role of the owner/manager must be taken into consideration also. For
the most part, owner/managers perceive a trade union presence as a “curbing of the
management prerogative” and ‘superfluous’ as “smallness facilitates better
communication”. Owner/managers ultimately perceive the firm very much as “their
organisation” and will often only formalise relations as a way of legitimising authority
and behaviour (Gunnigle and Brady, 1984: 22-23).
Moreover, the absence of forms of collective bargaining arguably impacts
another group of workers more emphatically: those without the aforementioned
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attributes that lend themselves towards a more individualised form of bargaining, those
undertaking the more generic low-skilled forms of precarious work. It is perhaps these
individuals to whom Dundon et al. (1999) refer when discussing the ‘black hole’ of
employment relations, of the risks of being exposed to forms of exploitation and the
subsequent benefit to them that can be attained from trade union recognition and
collective forms of bargaining. Therefore, in the absence of trade union influence and a
collectivist approaches to labour relations, regulations can be identified as being
increasingly important as they protect this body of workers, examples include the
National Minimum Wage and the National Living Wage (Sellers, 2017).
Furthermore, according to the Migration Advisory Committee (2014), there are
presently thirteen million low-skilled jobs in the UK, 2.1 million of which are positions
held by migrant workers, holding occupations that include labourers, cleaners and basic
administrative positions. Thinking specifically about members of the migrant workforce,
these individuals could be especially vulnerable to forms of exploitation, especially if
they are working in the UK illegally. At its most extreme, there have been instances of
SMEs employing ethnic minorities under illegal pretences, particularly within the
food/catering and clothing/textile industries in the UK (Ram et al., 2001a). It is unlikely
that small firms employing these individuals, especially if they are doing so in an illicit
manner, will observe and adhere to basic employment rights, for example national
minimum wage regulation or the working time directive, and thus there is the potential
for SMEs to adopt a path of down-market illegitimacy (Ram et al., 2001b; Arrowsmith et
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al., 2003) and operate outside the regulations: a submerged economy with a large, hard
to reach workforce.
Moreover, it is worth mentioning that while SMEs are normally beyond the reach
of conventional forms of IR pressures and such forms of regulation, there are instances
that challenge this assumption, showing that not all SMEs are outside the margins of
such forms of regulatory influence. For example, the WERS 2004 data found that while
only 3% of SMEs recognised a union, in comparison to 5% of manufacturing firms (a slight
increase), the industry sector that provided the exception to the rule was the health
sector, where the density of SMEs that recognised unions was 17% (similar to large
private sector firms operating in the sector, with levels of recognition standing at 18%).
Perhaps this is the result of the high levels of industry specific regulation to which these
organisations are subjected, or the role played by health unions as professional and
educational bodies (Forth et al., 2006).
Furthermore, the prevalence of multi-employer bargaining agreements could
also influence the degree of interaction between SMEs and the various IR bodies.
However, this is something that in the context of the UK at least, has declined in line
with the above-described transformations in the architecture and landscape of British
industrial relations over the latter half of the twentieth century. In the 1960s, 60% of UK
employees were covered by such agreements, a statistic that fell to just 14% by 1998
(Brown et al., 2000). Further to that, there appears to be a significant contrast between
public and private sector workplaces when considering the use of multi-employer
bargaining in the UK: the 2011 WERS survey found that 43% of public sector workplaces
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used some form of multi-employer bargaining, for example with respect to pay level
determination, in comparison to just two percent of private sector workplaces (van
Wanrooy et al., 2013), although if multi-employer bargaining used in many parts of
Western Europe is considered, particularly Spain, the incidence of such forms of
bargaining is much higher (OECD, 1994). As stated, SMEs are typically less likely to
engage with, or acknowledge any form of, industrial relations originating from outside
the organisation, favouring company-level forms of bargaining and the attainment of
greater levels of control in line with the management prerogative. However, if they are
operating in a sector that adopts multi-employer bargaining initiatives, this will no doubt
result in a more conscious effort being made on the employer’s part to engage with IR
pressures and demands.
To summarise, and in contrast to some of the other factors cited in this section
that appear to be influencing dynamics of HRM in the context of small firms: in terms of
trade unions, it is more a case of declining levels of influence. That said, one of the more
interesting findings of the case study exercise undertaken for this thesis illustrated the
idea of memory of the trade union and associated levels of expectation in relation to
aspects of work such as participation opportunities and worker voice. These ideas will
be considered in Chapter 6 – The peculiar nature of how the human resource function
evolves in the small and medium sized firm.
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4.6 Section summary: Highlighting the role of the external environment
Having considered some of the wide-ranging (and indirect) forms of influence originating
from the external environment on the SME, it can be concluded that the external
environment is in fact more complex and that we need to account for the diverse
pressures which are not always central to the SME debate, particularly in terms of their
diversity. In line with the need to account for such external factors, the following section
will consider two frameworks that are believed to be of some use when attempting to
account for and understand contextual dynamics.
5.0 Accounting for and interacting with context
This section will begin by discussing the relevance of an ‘open-systems’ framework to
explaining pluralistic forms of influence. This will be followed by a conceptual framework
devised by Mallett et al. (2019) for understanding interactions across the organisational
boundary and how small firms engage with or adapt to regulations.
5.1 The attributes of an ‘open-systems’ framework?
In light of the contextual determinants considered in this section in respect of external
influences originating from the ‘regulatory space’ in which the SME resides, alongside
the internal organisational political influences considered in the preceding chapter,
there is evidence of a complexity inherent to the SME in respect of its HRM agenda, far
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from the homogenous characteristics reported by broad tranches of the existing
literature. Harney and Dundon (2006), building on the earlier work of Arthur and Hendry
(1992) and Cassell et al. (2002), suggest an ‘open-systems’ conceptual framework (Figure
3), could be utilised to more accurately portray the complexity inherent to HRM in the
SME and the multifaceted forms of influence to which they are subjected.
According to Harney and Dundon (2006: 51), an “appreciation of environmental
interdependency allows for consideration of the numerous factors simultaneously at play
in organisations.” Other contributors, including Kinnie et al. (1999) and Dundon et al.
(2001) have recognised the importance of locating SME debates in relation to wider
macro factors and how that may in turn shape managerial action in a micro-context,
acknowledging the tensions between external pressures and internal HRM structures,
policies and practices in doing so. An important aspect of the framework, and something
that Harney and Dundon (2006) stress, is that while the framework directs attention
towards external structural factors and how they can shape the parameters of HRM, the
actual form HRM takes is likely to be contingent on idiosyncratic firm responses. It is
these interactions, across the organisational boundary, and how the SME responds to
such choices, that form one of the key questions this thesis is attempting to further
elucidate (something that is reflected as such in the research questions presented at the
end of this chapter).
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Figure 3: An ‘open-systems’ conceptual framework of factors influencing HRM in SMEs
(Adapted from Harney and Dundon, 2006: 54)
The next sub-section, which follows shortly, will consider a framework for
understanding such processes of interaction across the organisational boundary (see
Mallett et al., 2019). Thus, the conceptual framework contributed by Harney and
Dundon (2006) is an attempt at developing a more holistic approach for looking at HRM
in SMEs and is perceived to be useful from the point of view that it is a synthesis model
which combines and maps the various dimensions of influence. However, given the
nature of the object under investigation and the aforementioned cited complexities,
dynamism and heterogeneric nature inherent to the SME it is suggested that it be used
as a ‘sensitising framework’ to guide the empirical investigation. We need to be more
specific about what the external environment is and more innovative in our
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understanding of the ‘space’. This thesis aims to focus in on specific dimensions in terms
of the internal and the external, for example, how regulation plays itself out in the
politics of change within the firm and beyond: what appears to be missing is the intensity
of internal political aspects, the complex reality of external ones and how they interact.
The model therefore needs to be more sensitive to the dynamic and contradictory
features and relations inherent to HRM development in the small firm.
5.2 Understanding interactions across the organisational boundary
Building on the important question raised by Harney and Dundon (2006) which relates
to understanding idiosyncratic responses of the firm and how they engage with or adapt
to regulations, Mallett et al. (2019: 305) claim that “SMEs are often subject to, rather
than shapers of, their external environment. They tend to have limited resources and as
such regulations are ‘competing’ for owner-manager attention among other external
and internal factors.” Accordingly, they have developed a conceptual framework,
comprising four interconnected processes, which can be used to better understand the
processes involved in how regulations affect and are internalised by SMEs. The four
processes are: identification–interpretation; strategisation; negotiation; and adaptation
(Table 7).
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Table 7: How regulation affects SMEs
Process Description
Identification–
Interpretation
The processes through which SME decision-makers (often owner/managers,
or ‘HR champions’ considered in the previous chapter) become aware of
regulations.
Strategization The process used to capture how actors, often owner-managers again,
evaluate and exercise whatever degrees of discretion they might have in the
face of regulatory requirements.
Negotiation Those instances where decision-makers (again, often the owner/manager)
have to account for factors in the external and internal environments that
have a bearing on the business’s ability to pursue the intended strategy in
response to regulation.
Adaptation The processes by which SMEs enact changes in practices in response to
regulations.
(Adapted from Mallett et al., 2019)
This conceptual framework is well aligned with the objectives of this thesis that
seek to understand internal interactions with the external environment, with a view to
illustrating the presence of a complexity and to demonstrate how organisational
contextual determinants frame choices and responses. Explanations of the different
processes detailed in table 9 show the importance derived from the owner/manager in
understanding how regulation is perceived or reacted to, aligned with considerations
made of owner/manager influence in the preceding literature review – an aspect that
will be explicitly accounted for when conducting the research.
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6.0 Summary conclusions: Mapping research gaps and generating research
questions
Over the course of these two literature reviews, an important message to be conveyed
is that HRM within the context of the SME can only be understood by locating discussions
within a framework or interface that accounts for external regulatory functions and
internal dynamics, beyond what broad tranches of the existing literature, including the
‘best fit’ paradigm as considered herein, or any singular SHRM model, can accurately
depict.
This chapter has effectively demonstrated that there is clear evidence of
institutional structures, including regulatory and market pressures, inhabiting the
‘regulatory space’ to influence the development of HRM in the SME, at odds with the
informal ideals conveyed by existing literature that tend to be heavily characterised by
elements of size determinism and an adherence to normative best practice HRM ideals,
perpetuated further still by ‘fuzzy concepts’ of HRM (Marlow, 2006) and a lack of existing
theoretical frameworks that better understand and prioritise contextual influences,
thereby simplistically labelling HRM in the SME (Harney and Dundon, 2006).
Such an assessment suggests that a ‘best fit’ contingency approach struggles to
comprehend the complexities inherent to SME development with life-cycle models, such
as Greiner’s growth model (1972) – critiqued in this chapter along with the teleological
prescribed form it has come to represent – failing to accurately capture the complexities
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and nature of organisational development and evolution, something this thesis will seek
to clarify through use of the case study exercise.
It will be contended in this thesis that HRM must ultimately be studied through
a lens that is sensitive to context, to move beyond abstracted empiricism and critique
the ‘best practice’ perspective of HRM for its inability to better conceive contextual
determinants and build upon ‘best fit’ contingency models to account for the apparent
complex interplay of regulatory, organisational, strategic and structural factors.
The previous chapter placed a particular focus on the internal organisational
political environment of the small firm, with particular attention directed towards
stereotypical employment relations, the role and influence of familial dimensions, HRM
and the line-manager, the influence of an ‘HR champion’ or the owner/manager and the
deep social structures (Whittington, 1988) and ‘power cultures’ (Handy, 1999) to which
they subscribe. This chapter has considered additional contextual determinants in the
form of strategic and structural contingencies including the role of memory, path
dependency and critical junctures on HRM development in line with the notion of
expectation, agency and the ability of SME actors to shape the institutional landscape in
which they find themselves, alongside the perceived recognition of the various
determinants that frame choices that are often presented to them by the external
environment in terms of organisational context, including cultural, historical and
structural pressures. Mallett et al. (2019) offer a conceptual framework to account for
such processes, particularly regarding the influence derived from the owner/manager,
which accordingly informs aspects of this thesis.
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The mapping of the external environment to understand the pressures exerted
by external outlets helps to realise the importance of the ‘regulatory space’ concept, a
key aspect of this chapter and the thesis more generally given the SMEs’ proximity and
susceptibility to environmental stimuli, recognised by mapping the ‘regulatory space’
and accounting for the complex array of actors, sites and spaces as a precondition to
understanding HRM and change in the SME. Equally important, though, is how these
firms respond to and interact with these external pressures – linking back in with the
abovementioned internal organisational political environment and aspects thereof as a
key influencer. Adopting the metaphor of ‘regulatory space’ allows for a 'holistic'
standpoint, in that it takes into account the interactions of each of the actors in the space
and can recognise plural systems of authority alongside a complex amalgamation of
competing interests and actions (Hancher and Moran, 1989; Scott, 2001). Moreover, and
serving to only heighten complexities, contextual forces and boundaries are forecasted
to vary over space and time: ongoing regulation and development require a degree of
flexibility and pragmatism that must ultimately be better understood, accounted for and
conveyed in the literature.
In line with such theorising, it is suggested an emergent ‘open-systems’
framework as proposed by Harney and Dundon (2006) could be utilised as a sensitising
framework to more accurately capture SME heterogeneity and the influence of the
various dimensions upon HRM development in SMEs. However, we need to be more
specific as to what the external environment is and more innovative in our
understanding of the ‘space’ as has been shown in this chapter. This thesis aims to focus
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on specific dimensions of the internal and the external; the example presented in this
chapter related to how regulation plays itself out in the politics of change within the firm
and beyond; what appears to be missing is the intensity of internal political aspects, the
complex reality of the external and how they interact. The model therefore needs to be
more sensitive to the dynamic and contradictory features and relations inherent to that
process.
A review of the existing literature exposed several ‘gaps’ that this thesis is seeking
to address. First and foremost, the overarching assumptions and focus towards
‘numbers’ employed and the scale of the firm as being the principal driver towards HRM
formalisation is an inference believed to be to the neglect of structural and regulatory
dynamics and is therefore a simplification in the debate, as is the notion of ‘little big
business syndrome’ and the implicit assumption of an HRM prescription being of
universal relevance to all, with SMEs told to adopt normative ‘best practice’ models of
HRM. Much of the existing literature has chosen to study the small firm in relative
isolation, making conclusions drawn for the main part devoid of context. By contrast, it
is contended that SMEs encounter similar dilemmas and interactions with the external
regulatory environment to those of larger firms, and that there are similarly curious and
complex interactions across the organisational boundary and processes of adaption,
albeit that these are missing from the literature, and it is questionable whether the ‘best
fit’ paradigm, with its simplistic understanding of contingency, can accurately convey
what normative best practice HRM has struggled to do.
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To that end, a complexity of causation is believed to exist, with contextual
dynamics and notions of ‘regulatory space’ and deep social structures within which these
organisations are embedded containing a multitude of actors and bodies who appear to
have a considerable interest in and influence over small firm directives but are to a large
degree ignored by mainstream contributors. For example, an actor who is nowadays
ever-present in most small firm operations: employment law consultants and business
mentors alike, whose influential role in HRM development appears somewhat absent.
Similarly, while much has been written on the role of the state from a regulatory
standpoint, there does not appear to be much written about the other more discreet
roles adopted thereby, particularly serving as a learning function or as a consulting
source. These are but two examples of actors who potentially influence HRM
development in the small firm.
Finally, it has been contended herein that research focused on the SME is full of
ambiguity and contradiction, often reporting on HRM and SMEs in purely binary terms.
For example, employment relations often assume the conflated ideals of ‘small is
beautiful’ or ‘bleak house’. This serves to simplify the current state of affairs by ignoring
context specificities and characteristics unique to the research site. Thereby, current
research agendas appear to be encouraging abstracted empiricism with excessive focus
on collecting data as opposed to clarifying concepts, particularly encouraged through
the decision to adopt a quantitative medium. Such a strategy for data collection remains
devoid of context, ill-defined to the particularistic nature of labour management and
employment relations in SMEs. To reaffirm, a large proportion of existing research has
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sought to identify ‘traditional’ normative HRM processes in SMEs at the expense of
critical analytical research. There remains a need to challenge such contemporary
analyses when conceptualising HRM in small firms and to move away from an apparent
overarching obsession with and focus on the identification of a link between HRM and
improved organisational performance, ultimately to the neglect of the nuances of the
SME – succinctly demonstrated in these literature reviews by a discussion illustrating the
potential benefits to be accrued from informal mechanisms. For these reasons, this
thesis will seek to undertake a comprehensive qualitative review to gain a better
understanding of the role of contingent influences. Furthermore, and in light of the
analysis presented within this chapter and the preceding literature review, the research
questions are:
1. How complex are aspects of growth and the development of HRM in the
SME?
2. How are SMEs contending with the contradictory pressures of
formalisation and what organisational contextual determinants frame
these choices?
3. How influential are the actors and bodies occupying the external
‘regulatory space’ in which the SMEs are embedded upon the
development of HRM in the firm? How do firms respond to and interact
with external pressures?
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The subsequent chapter – Methodology and research context – will provide a more
detailed explanation and justification for the research questions this thesis is seeking to
answer.
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CHAPTER 4 – Methodology and research context: Researching the complexity of the
internal and external organisational spaces
1.0 Introduction
This chapter will provide a rationale behind key methodological decisions made with
respect to a study that seeks to achieve a better understanding of HRM in the context of
SMEs. It will begin with the presenting of the research questions and a rationale for their
development. Thereafter, consideration will be made of the researcher’s philosophic
positionality: one’s ontological and epistemological viewpoints. Subsequently, the
section titled ‘Case study selection: Organisational profiles’ will provide justification of
the logic behind the selection and use of the two cases due to their specific and
contrasting characteristics. Next comes a comprehensive examination of the research
method by way of data collection and analysis: a rationalisation for adopting a
qualitative research strategy and the utilisation of a case study design will be
undertaken. This will be followed by a critical discussion pertaining to data
interpretation: a validation of utilising thematic analysis and a reflection on the
somewhat interdependent, subjective relationship that exists between researcher and
qualitative data analysis, with a particular awareness of the researcher’s own
interpretive suppositions. This section will also consider how the researcher developed
his argument: a transition from data to theory. Gaining and maintaining access and
ethical considerations will be discussed before an overview and background to the UK
aerospace sector is provided, which will form the remainder of this chapter.
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This thesis is made up of two distinct cases (SMEs). One of the research sites –
Case A – has close personal connections with the researcher by way of familial ties and
professional working experience. The resulting potential methodological difficulties
arising from ‘insider research’ will be considered throughout this chapter. It is the
intention of the researcher to disclose such a fact at the outset, to promote a degree of
honesty and integrity, thereby allowing the reader to be better positioned to make an
informed decision with regards to the research’s plausibility, credibility and authenticity.
To that end, the researcher believes in a firm reflexive disposition towards the research
methodology, to the craft of fieldwork, which must be negotiated iteratively, as it
ensures greater researcher validation within the subjective realms of a qualitative
research design. Again, notions of reflexivity will also be drawn upon throughout.
2.0 Research questions
The aims, objectives and research questions will drive the research design: “knowing
what you want to find out leads inexorably to the question of how you will get that
information” (Miles and Huberman, 1984: 42). The rationale for inclusion will be
presented after each question.
1. How complex are aspects of growth and the development of HRM in the
SME?
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This question relates to the implicit assumption that a best practice normative HRM
prescription is of universal relevance to the SME, or that much of the existing theory is
dislocated from its environmental context. An HRM prescription being of universal
relevance to all is an ideal at the heart of broad tranches of the existing HRM and SME
literature (‘little-big business syndrome’ (Welsh and White, 1981)) which largely
stigmatises SMEs for their traditional lack of uptake or preference for the informal.
Consequently, it draws on themes of growth, change, enhanced levels of
bureaucratisation and complexity and its consequent impact upon the SME. While
existing research principally holds numbers employed as the primary motive for
introducing HR protocols, this question is asking what factors of growth are impacting
upon the HR agenda, whether they be numbers employed, the scale of the firm or other
factors. The question therefore serves to introduce and frame the impact derived from
contingent forces: seeking to understand the extent to which environmental influences
impact the HR discourse in the SME – an influence postulated to be significant. The
opening question frames the research, and thus is broader in scope in comparison to the
subsequent research questions.
2. How are SMEs contending with the contradictory pressures of formalisation and
what organisational contextual determinants frame these choices?
There exists a living tension between wanting to remain small, focused, flexible and
particularistic and the development of the ‘high-road’, ‘professional’ forms of HRM
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common to larger corporate firms. This provides a reference point for one of the key
tensions facing SMEs that have been subjected to a degree of growth, aligned with one
of the key hypotheses considered within the thesis: ‘flexible formalisation’ – a term used
by the researcher to label an apparent adjustment between newly established formal
ideals and the informal mechanisms of old that appear to run in parallel. Also, it seeks
to understand what frames these choices in terms of organisational context, including
cultural, historical and structural influences.
3. How influential are the actors and bodies occupying the external
‘regulatory space’ in which the SMEs are embedded upon the development
of HRM in the firm? How do firms respond to and interact with external
pressures?
This question seeks to identify what pressures influence the development of HRM in
SMEs operating in the aerospace sector. It seeks to better understand how SMEs
respond to and interact with these external pressures and the extent to which
institutional positioning of aerospace sector SMEs can coerce, facilitate or encourage
HRM developments. It also seeks to demonstrate the complexities in terms of causation
in respect of HRM development when the influences derived from the numerous actors
and bodies occupying the regulatory space are accounted for, a factor hypothesised to
be of significant impact prior to conducting the research. Finally, do isomorphic
processes of development, including normative, mimetic and coercive pressures,
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influence operations in any way? How are rules or norms facilitated? Are they coerced
for example? Asking this seems prudent, especially given the highly regulated nature of
the sector.
3.0 Philosophical suppositions: Researcher positionality and epistemological
intimacies
It is essential that the research philosophy and subsequent philosophical suppositions
adopted by the researcher (‘researcher positionality’ (Sikes, 2004: 17)), which underpin
the research process, be taken into consideration and that a coherence between the two
exist. As Crotty (1998) indicates, an interrelationship exists between the ontological and
epistemological position assumed by the researcher and the theoretical perspective
adopted, the methodology chosen and, ultimately, the research method(s) selected, of
a somewhat hierarchical nature. Furthermore, making transparent the philosophy which
underpins the research, as Kincheloe and Berry (2004: 8) testify, can only be of benefit
to the quality and integrity of the research: making “use of various philosophical tools to
help clarify the process of inquiry and provide insight into the assumptions on which it
conceptually rests.”
To reaffirm, a principal aim of the research is to attain a deeper understanding
of HRM, to attach meaning and present ‘thick descriptions’ (Geertz, 1973; Lincoln and
Guba, 1985) relating to processes of change and associated complexities in the context
of the SME; to elucidate ‘how’ SMEs negotiate this living tension between the adoption
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of formalised process and the suppression of informal desires and to understand ‘why’
they do it. Alongside this, a better understanding of the role played by actors and bodies
with whom they interact serve to influence this transformation.
The researcher subscribes to a Critical Realist ontological paradigm wherein
“reality is stratified, emergent, transformational, systemically open, becoming,
processual and often relational” (Fleetwood, 2014: 191). Critical Realism offers a
position beyond the subjectivism verses objectivism debate. Critical Realism holds that
“an (objective) world exists independently of people’s perceptions, language or
imagination. It also recognises that part of the world consists of subjective
interpretations which influence the ways in which it is perceived and experienced”
(O’Mahoney and Vincent, 2014: 2-3). Critical Realists envisage the world as influenced
by human agents and social structures. Clear alignment exists between the research
objectives or questions posed for this thesis and the adoption of a Critical Realist
theoretical underpinning, as it involves identifying underlying causal mechanisms, with
an appreciation of social agency and structures which are not always obvious, or
structures nested within structures: deep structures encompassing (but not limited to)
family, workforce characteristics, cultures, critical incidents or moments of time, for the
past is determined to influence and shape the present, particularly relevant when
exploring themes of organisational growth and change. Ultimately, the ability to explain
empirical tendencies in terms of antecedent causes that operate at other levels,
including at the level of the individual or the organisation, alongside interactions
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between micro and macro factors and the roles of broader institutional arrangements,
mechanisms, rules and structures, is entirely compatible with a Critical Realist ontology.
Furthermore, and according to Kessler and Bach (2014) and Vincent and
Wapshott (2014), the tenets of Critical Realism encourage a particular interest in the
case study approach to exploring managerial and organisational issues. A consequence
of the emphasis placed by both on context and causation, Critical Realism has a strong
interest in causation, particularly underlying generative mechanisms (Sayer, 2000). This
is echoed in the case study approach, as Geering (2007: 45) asserts: “case studies, if well-
constructed, may allow one to peer into the box of causality to locate the intermediate
factors lying between some structural case and its purported effect” or, as Harrison and
Easton (2004: 195) comment: “the use of case studies allows a researcher to attempt to
tease out ever-deepening layers of reality in the search for generative mechanisms.”
During the investigation process, the researcher could contextualize aspects of the
objective world as well as constructs from the social world that influence or determine
the link of causation.
In conjunction with the researcher’s examination of the research problem
through a Critical Realist lens, a qualitative enquiry was deemed most apt when
recognising the complexity inherent to phenomena such as organisations and when
accounting for the complexity of generative mechanisms therein. Critical Realism’s
depiction or understanding of social reality as being complex and differentiated, where
causal powers are contextually dependent (Bhaskar, 1978), creates a preference for
purely qualitative methods as an intuitive response. A preference for a qualitative mode
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of enquiry is stronger still upon recognition that Critical Realism sees reality as mediated
and influenced by agents’ understandings and actions (Sayer, 1992). The qualitative
process encourages research participants to describe in great detail their experiences of
HRM, to better understand social processes and contextual factors and give the ability
to assign meaning, to discuss that which is intangible and unconsciously held, for
example, culturally embedded organisational norms and values which are otherwise
difficult to articulate, particularly via a quantitative mode of enquiry.
An understanding of one’s own philosophic positionality is a heuristic journey.
This is best achieved through the adoption and acknowledgment of a reflexive
standpoint, iteratively throughout the duration of the research, thereby allowing for a
deeper awareness of the ontological and epistemological structures informing the
research, which will ensure the transparency and quality of the inquiry by allowing the
researcher to consider the relationship between himself and the object of the research.
A reflexive and self-evaluative examination of one’s epistemological stance (the way in
which we obtain valid knowledge (Guba and Lincoln, 1994)), particularly with respect to
the contextual understanding and interpretation of collected data and the nature and
depth of the researcher’s involvement (O’Gorman and MacIntosh, 2015), are considered
to be critical aspects of this PhD thesis. As mentioned, the researcher is invested in one
of the case study sites, having worked there in a professional capacity for eight years
and also being related to the owner/manager of the firm, an individual foreseen to
emanate a high level of influence over the extent to which HRM is adopted by the firm
(Bacon et al., 1996). Furthermore, notions of the ‘insider researcher’ (Brannick and
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Coghlan, 2007; Unluer, 2012), auto-ethnography and phenomenology become apparent
because of closeness to the subject being researched, and the ability to remain
‘objective’, impartial, to not construct meaning and to not guide research participants
by asking leading questions in a bid confirm one’s initial assumptions, is best achieved
through reflexive practice (Brannick and Coghlan, 2007; Unluer, 2012) and the ability to
attain an ‘epistemological intimacy’ and find the optimal epistemological position in
which to place oneself (Smith, 2005). Ultimately, it is through the attainment of a
reflexive disposition that the true benefits of a closeness to the subject, or the sector
more generally, including cultural idiosyncrasies for example, can be gained and utilised
to the benefit of the research findings, beyond the theorised detached or superficial
outlook that would likely be employed by another researcher undertaking a similar study
‘going in blind’ without prior exposure to, or a rich understanding of, the sector. The
researcher’s knowledge and experience thus provided a starting point, and a better
understanding of the research setting was gained: “to find out what an organisation is
‘really’ like, as opposed to how it formally depicts itself” (Bryman, 2012: 446). Moreover,
such closeness to the research setting was well matched with the subscription to a
Critical Realist ontological lens because it offered the researcher the right attributes to
gain the most from the data, to get below the surface and to realise antecedent causes
that operate at deeper levels. However, the researcher must remain vigilant to the risks
associated with being too close to the research subject and ensure that any form of
critical distance is not lost. Hammersley and Atkinson (1983: 102) remind us of the need
to never to relinquish any form of analytical distance or subjective awareness: “there
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must always remain some part held back, some social and intellectual ‘distance’. For it is
in the ‘space’ created by this distance that the analytic work gets done.” Again, reflexivity
remains a key tool at the researcher’s disposal: an introspective stance whereby
acknowledgement and honesty surround the research process.
4.0 Research design
This section will offer justifications for the research methodology adopted. Further
rationalisation will be provided for the adoption of a qualitative research strategy, in
addition to why the researcher has chosen to utilise a case study research design. At this
juncture there will be an opportunity to briefly present a profile of the two case study
firms. Thereafter, focus will turn to the process of gathering and generating the data:
the sampling method chosen and the data collection techniques selected. Existing
qualitative research and published literature on methods will be drawn upon throughout
to validate decisions made.
4.1 Case study design: A comparative analysis
It is proposed in this section that a case study methodology was most applicable: “it is
the method of choice when the phenomenon under study is not readily distinguishable
from its context” (Yin, 2003: 4): what contextual determinants are influencing the SME
adoption of a more professional HR narrative? Bryman (2012) recognises the important
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role played by case studies, particularly multiple site case studies, in the understanding
of causality: the attainment of an “in-depth understanding of the mechanisms of change”
(Gummesson, 1999: 3), while Ackroyd (2009) suggests the intensive nature of the case
study exercise serves to enhance the researcher’s sensitivity to factors that lie behind
the operation of observed patterns within a specific context (cited in Bryman, 2012).
An example of the effective use of case study research to elucidate meaning with
respect to organisational research is a study conducted by Delbridge (2004): a multi-site
case study of two ‘high-performance’ firms, operating in the same industry, where he
identified the unusual presence of informal organisation and subversion in one of the
firms. Delbridge was able, by way of conducting an in-depth comparative case study
analysis, to identify the causal mechanism producing the variation. In this instance, the
contextual factor was illustrated to be the blame culture prevalent in one of the firms.
Delbridge concludes by emphasising the importance of the need to take contextual
factors into consideration, including organisational dynamics alongside the broader
environmental influences that are at play. In this case, the prevailing blame culture, a
consequence of a company policy that dictated any mistake had to be attributable to an
individual, was the result of practices and processes enforced by the Japanese owners
of the firm: a contextual influence.
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4.2 Case study selection: Organisational profiles
This section provides a brief description of the two case study organisations that form
the basis of this thesis. Drawing from the Delbridge (2004) study, a case study
methodology was utilised in a comparative manner, with two case studies forming the
basis of the research, with the aim of ascertaining, by way of conducting an in-depth
comparison, causal mechanisms responsible for HRM development in SMEs operating in
the aerospace sector. Moreover, the concentration of aerospace firms operating in the
North-West of England presented an opportunity to select two SMEs from the same
region, allowing some external environmental factors to be held constant in an attempt
to isolate the theorised influence of industrial districts on the development of HRM.
Both SMEs operate wholly within the confines of the aerospace sector.
Furthermore, and what makes this PhD thesis particularly unique, is the ability to
undertake an immersive qualitative study into two SMEs which are actively experiencing
transitional forms of growth and change that place demands on them to strive for the
next level of professionalism and providing an opportunity also to apply organisational
development analytics such as Greiner’s Growth model (1972) in the process.
Both organisations have been subject to a significant and comparable degree of
organisational growth over the last five to seven years, and as a consequence, they
provided a unique opportunity for the researcher to immerse himself within both
organisations, to present findings from an in-depth qualitative case study that is seeking
to elucidate meaning and experience through ‘thick descriptions’ (Geertz, 1973) in a
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manner that will enable the researcher to analyse a cause-effect relationship beyond
merely quantifying the strength of a relationship between the two variables. Moreover,
such a pursuit is well aligned with a Critical Realist positionality as presented within
section 3.0 of this chapter.
The initial research proposal comprised the undertaking of three case studies
across two regions, albeit that this approach was heavily contingent upon access
arrangements. However, access to the third case never materialised, and upon
reflection, it is doubtful whether the third case site would have provided the same
extensive level of access as the two cases ultimately chosen for this study have done,
principally because of a lack of personal connections to assist with access arrangements,
making any eventual comparisons across the three cases difficult.
Access to Case A and Case B was extensive: a combined 33 interviews were
undertaken at both case sites (not including the fifteen external-level interviews also
undertaken). The number of interviews conducted was in a ratio of 15:18 interviews
respective to the two companies; these were conducted until data saturation, in respect
of responses and themes, was judged to have occurred.
The intensive nature of the case study exercise is intended to offer systematic
micro-level analysis of SMEs, growth and the impact of regulation (and de-regulation)
and actors upon HRM development. As detailed in the preceding paragraphs,
comparisons can easily be drawn between the two case study firms, which are ostensibly
similar organisations. However, a deep level analysis afforded to the researcher by the
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aforementioned access arrangements helped isolate differences between the two cases:
variations become telling, as the empirical chapters will illustrate.
Furthermore, the objective of this study is not to attain results that are
generalisable, but it is instead seeking counterfactuals as against much of the existing
literature by demonstrating the role of conditional variables upon HRM development,
alongside a complexity inherent to such processes of change. The details described
herein were accurate at the time the interviews were conducted: between October 2016
and May of 2017.
4.2.1 Case A
Established in September of 1991, Case A is the largest independent maintenance, repair
and overhaul (MRO) facility for aircraft wheel and braking components in the United
Kingdom. The company was described quite aptly by the managing director in layman’s
terms as:
the Kwik-Fit of the aviation game. (Case A, Director 1)
With the Kwik-Fit brand being synonymous in the UK with offering an automotive tyre
change service. All work is conducted away from the physical proximity of the airports
and the actual aircraft, with the wheel and brake units being couriered to and from the
facility, which is located approximately five miles from a major international airport. The
organisation has in excess of thirty customers, some from as far afield as Asia and Africa,
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while some of their more pre-eminent contracted clients include British Airways, TUI,
Flybe, Jet2.com, Eastern Airways, logistics company DHL and military mid-air refuelling
outfit AirTanker.
Case A, which is based in the North-West of the England, operates as a Limited
company; it is owned by two individuals: the chairman (who is also a co-founder of the
organisation) and the managing director, with 95%-5% shares respectively. Governance
structures had at the time of the interviews recently been reformed with the formation
of a board of directors. This coincided with the chairman’s decision to remove himself
from the day-to-day running of the organisation, taking on a more advisory role after
entering semi-retirement. In addition to the managing director, three newly created
positions comprise the board of directors. These individuals have been promoted from
within and hold the following job titles: operations director, director of compliance and
finance director. Prior to the inception of the board of directors, decisions were made
solely by the two shareholders: the owner/managers of the company.
It was not until after a long period of relatively plateaued development and
growth, the preceding eight years have seen extensive transformations: the organisation
has been subject to substantial, rapid growth, the result of the procurement of several
contracts with major airlines. To put such changes into perspective, during the
aforementioned time period turnover has increased by approximately five hundred per
cent, employee numbers have risen from fourteen to fifty-four and wheel component
throughput has escalated from 1,500 to 9,000 units annually (between 2010 and 2016).
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In that time period, the organisation has invested approximately one million pounds in
plant and machinery, creating a workspace
…that visiting customers are in awe of and surprised by, in terms of how professional the set up is.
(Case A, Director 3)
4.2.2 Case B
In a somewhat contrasting growth strategy to Case A with the expansion of its customer
base, Case B’s growth can be attributed to the organisation’s transition from operating
wholly as a recruitment agency to an organisation that is now for all intents and purposes
an engineering firm, with the recruitment arm of the business now providing a minority
or smaller percentage of the annual revenue. This change occurred after Case B lost a
major recruitment contract with Thomas Cook; thereafter, senior management made
the conscious decision to diversify into a workshop outfit or engineering firm, before
subsequently adding to the capabilities or services offered. Presently, Case B provide the
following services:
1. Recruitment agency
2. Base and line station maintenance
3. Aircraft interiors
4. Engine services
5. Composite component manufacture, machining and sheet metal fabrication
6. Maintenance of:
a) Air conditioning and pressurisation systems
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b) Doors and hatches
c) Electrical systems
d) Structures
e) Flying controls
f) Engines etc.
Entering its fortieth trading year, Case B has been operating since 1978 and is also a
Limited company. The owner/founder of the organisation, who retains one hundred
percent share ownership of the firm, presently holds the title of chairman after entering
semi-retirement approximately ten years ago (holding what appears to be an advisory
role in a manner not too dissimilar from the role held by the chairman of Case A). In
respect on the governance structure adopted there is a strong familial presence, with
the owner/founder being joined on the board of directors, by two of his children: one
holds the title of managing director and the other holds the title ‘Director of
Recruitment’.
Case B employed approximately 60-70 members of staff at the time the
interviews were conducted, with the figure being variable given the presence of
contractors and ongoing additions being made with the recent opening of a new aircraft
hangar or line station in Scotland. The 60-70 employees are spilt between the
Manchester and recently opened Scotland sites at a ratio of 70:30 in favour of the
former; the opening of a second site in Scotland was aided significantly by local
government subsidies.
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4.3 A qualitative enquiry
As previously stated, a qualitative method of enquiry is deemed most appropriate, taking
into account the aims of the research and the underlying researcher positionality. The
following paragraphs will analyse qualitative and quantitative paradigms in greater
detail, thereby serving to further validate the researcher’s decision.
Anderson (2004) identifies a principal difference between qualitative and
quantitative modes of enquiry: the ability to explain ‘why’, a facility eluded by
quantitative methodologists, who focus on cause and effect: to be able to identify the
extent of causality between variables (Bryman, 2012). By comparison, a qualitative
research enquiry will allow the researcher to delve deeper and understand ‘why’: to
elucidate ‘meaning’ and ‘experience’, spaces and choices. Anderson (2004) considers a
further benefit to be accrued by adopting qualitative research mechanisms in terms of
their relevance for gaining an insight into past events: allowing for respondent reflection.
A qualitative enquiry would therefore allow the researcher to attain a more
comprehensive understanding of respondents’ personal and immediate lived
experiences of working in SMEs and of their familiarity with an HR agenda. For example,
when did they first notice they were being asked to adopt more ‘professional’ forms of
working? How was this change ultimately received by members of the workforce? What
were the driving forces behind the adoption of a more formalised approach? A
qualitative investigation has the additional benefit of providing the researcher with the
ability to undertake a more immersive exploration, of a somewhat biographical flavour:
to attain a more comprehensive understanding of the participants in terms of their
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careers and experiences of working for an SME, thus, facilitating a more profound and
complete understanding of the research site and organisational cultures, values and
norms therein. Of further relevance to this study, Delbridge (2004: 235) also raises
methodological concerns surrounding a quantitative strategy as a means to justify the
adoption of a qualitative case study design in SME-focused research: “these debates
have been dominated by positivist analyses of quantitative survey findings and there is a
price to be paid for this: a paucity of explanation… what is needed is a research approach
that seeks to explain what positivists can only record.”
There exists a dichotomy around how authentic research can be when it is
strongly influenced by the idiosyncrasies and interpretive suppositions of the researcher.
Notions of reflexivity again come to the fore; the researcher must pose the question
“have I really understood?”: as mentioned, the present researcher has amassed in excess
of eight years’ professional experience at one of the case study sites; does that warrant
that he has a firm understanding of organisational workings, company culture or the
influence of pressures driving HR change, or will that pre-exposure serve as a negative
and ‘blind’ the researcher from the actual issues (Brannick and Coghlan, 2007; Unluer,
2012)? Pressures of which the researcher was unaware that were influencing HR might
be one example. These are underlying contentions addressed by the researcher on an
ongoing basis. Ultimately, a balance between ‘fashioning’ (Geertz, 1973; 1995) and
collecting data has been sought, albeit with a critical appreciation for the social
construction of the data.
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4.4 Data collection: Semi-structured interviews
The primary method of data collection was through interviews; more specifically, a semi-
structured interview technique was adopted by the researcher as this provided an ideal
compromise between flexibility and rigidity (Merriam, 2009). The inductive nature of the
investigation warranted a degree of flexibility, albeit that an amount of structure needed
to be present to guide questioning in line with the research agenda and answering the
research questions. Furthermore, Bryman (2012) denotes the presence of some
structure as being invaluable when undertaking multiple case study research, with a
degree of structure needed to ensure cross-case comparability, while Beardsworth and
Keil (1992: 261-2) found the use of a semi-structured interview regime particularly
accommodating: their interviews were “guided by an inventory of issues which were to
be covered in each session. As the interview programme progressed, interviewees
themselves raised additional or complementary issues, and those form an integral part
of the study’s findings…an iterative process of refinement, whereby lines of thought
identified by earlier interviewees could be taken up and presented to later interviewees”.
Therefore, prior to undertaking data collection, a series of interview guides were
compiled (Appendices C–E), albeit that these documents were not used to enforce a rigid
structure of questioning but as a guide to ensure topics of discussion remained relevant
to the research aims.
Questions generated sought to consider the nature of HRM in the SME: the
degree of formality present, informal desires and living tensions, the prominence of HR
levers responsible for guiding change alongside the pressures emanating from external
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actors and contextual forces. Themes were identified through a review of existing
literature and interview questions were developed to map closely on to the research
questions. Explicit attempts were made to capture informal processes within the cases.
Additional questions were included in the interview schedule for line-managers
(Appendix D), particularly in relation to how their role has changed when considering
organisational motivations for formalising procedures, alongside those for the
owner/managers of both cases (Appendix E), which sought to understand their role, the
difficulties they encountered with organisational growth, more strategic elements in
terms of where they see the business heading and their personal background, with a
view to attempting to understand the reasoning behind the decisions they make.
Alternative qualitative methods were considered but determined to be inferior
in these particular circumstances, taking into account the aims and objectives of the
research. For example, focus groups were considered but deemed problematic in the
sense that in group contexts, participants may be more inclined to express culturally
expected views (Morgan, 2002). Such a limitation is only amplified when the particular
characteristics of the research sites and the close personal interactions provoked by the
very nature of these organisations being small are considered. It was doubtful for
instance whether many participants would happily share any negative thoughts or
feelings about members of the senior management team in such a setting, as they went
on to do on many occasions when conducting the interviews on a one-to-one basis, as
the empirical chapters will attest.
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A principal concern for the researcher was getting the respondents to ‘open up’.
These individuals are working in smaller firms where everyone is typically on first name
terms with everyone else, including senior management. The interviewees may
consequently be cautious in their responses when discussing contentious information,
particularly with respect to senior management, perhaps over an apparent fear of
reprisal. This is despite being told prior to the interview that all information would be
kept strictly confidential and their names would be anonymised. This is believed to be
indicative of small firm culture, where close personal interactions take place on a daily
basis, although the researcher’s familial relationship with one of the senior management
team is likely to have exacerbated this aspect further still. However, the researcher
believes that he stood an improved chance of getting respondents to ‘open up’ when
undertaking individual, one-to-one interviews as opposed to in a group setting, as would
be the case if a focus group methodology were chosen.
McNamara (2009) considers the importance of various practical activities that
can be undertaken by the researcher, pre- and post-interview, to further enhance the
level of rapport and trust. These include: making the candidate aware of the purpose of
the research prior to the event, explaining the format of the interview and how long it is
likely to take and also addressing issues surrounding confidentiality. Such activities were
undertaken during the data collection process in both cases. Participant information
sheets were also disseminated amongst participants to further assist in the
enhancement of rapport and trust (Appendix F).
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While a consideration of these facets helped strengthen the interviewer-
interviewee bond and by association the acquisition of rich quality data, the researcher’s
options were limited with respect to distancing himself from his personal connections
to one of the case study sites. However, this has to be weighed up against the resulting
levels of access that have been granted as a result of that connection. The non-sensitive
nature of the research was another factor taken into consideration and one which made
such a decision easier.
Elwood and Martin (2000) consider the significance of ‘socio-spatial relations’
when choosing an appropriate interview site: for example, participants permitted to
choose the location of the interview site may feel more empowered in their subsequent
interactions with the researcher and more inclined to open up. Thus, the micro-
geographies of potential interview sites were taken into consideration by the researcher,
that is, considering elements such as who would be there. Could they be overheard?
How would the participants (and researcher’s) identity or role be constructed within that
particular place? Could the use of the Boardroom in Case A, for example, intensify
associations drawn between the interviewer and their familial relations to the
owner/manager of the firm, with the Boardroom subconsciously representing senior
management and power in something of a synonymous manner? Ultimately, a degree
of pragmatism needed to be present, to successfully negotiate power and positionality
constituents in a way that encouraged respondents to feel comfortable to speak freely.
Managers with whom access was arranged were asked to provide a room where
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interview participants could not be overheard and where the general traffic of people
would not be distracting.
A further point for thought relates to the fact that the researcher has worked at
Case A within the remit of HRM and should by association know (or be assumed to know)
the answers to a lot of the questions being asked (DeLyser, 2001; Hewitt-Taylor, 2002).
Notions of auto-ethnography come to the fore: is the researcher pre-conditioned by
what they want to hear? There was a temptation to ask leading questions, and this was
reflected upon, not only when producing the interview schedule but also when carrying
out the data collection, when analysing the transcripts and when writing up the research.
For the social construction, the epistemological standing of the interviewer, as has been
discussed throughout, can directly influence the outcome. Roulston et al. (2003) suggest
that the use of pilot studies represents an ideal setting to identify the intrusion of
researcher bias. Therefore, a series of three pilot interviews were conducted at Case A,
which were also used to determine if there were any weaknesses, flaws or previously
unexpected limitations with respect to both the theoretical and methodological
underpinnings of the study.
4.5 Sampling method: Purposive sampling
It has been suggested by Glaser and Strauss (1967) that sampling decisions should be
guided by the theoretical issues underpinning the research alongside the objectives and
aims the research has set out to accomplish. Interview candidates were chosen using
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purposive sampling, whereby conscious decisions are made with respect to which
employees should be selected for interview (Klenke, 2008). Pre-requisites to selection
included: their level within the company hierarchy; department of operational
deployment; and employment tenure. These selective criteria were introduced to
ensure a representative sample of each workforce had been included in the study, in
order to understand the employment relationship and the nature of HR at all levels of
the hierarchy. Fifteen participants were selected from Case A (28% of the workforce)
and 18 from Case B (21% of the workforce).
4.6 Respondent profiles and characteristics
Appendix G provides a breakdown of key characteristics of the interview participants
from both cases. Respondent pseudonyms have incorporated their position with their
respective organisational hierarchies, demonstrating that a range of interviews were
undertaken at all levels of authority in both cases. Respondent age, gender and length
of service have also been included. Interview lengths and associated transcription
document word counts have been provided with the express intention of illustrating the
intensive nature of the data collection process.
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4.7 Institutional interviews and a mapping of the external environment
In addition to the two case studies, supplementary research was conducted with a
number of different leading experts and with officers of various stakeholders with the
aim of mapping the social, political and regulatory environments within which the case
study sites are situated, in addition to identifying their potential roles exerting an
influence on HRM development. Table 8 provides a list of the interviews undertaken.
Interviews were also proposed with employers’ associations and federations relevant to
the aerospace industry: the Manufacturers’ Association (EEF) constitutes the most
prominent actor in the sector. Additionally, trade unions including Unite, along with the
TUC, were also sought for interview; however, access never materialised.
Table 8: A list of the institutional interviews undertaken
Actor
BIS - Aerospace Marine and Defense Sector
BIS - Research Division
CIPD
ACAS
HSE
Greater Manchester Chambers of Commerce
North West Aerospace Alliance (NWAA)
Midlands Aerospace Alliance (MAA)
West of England Aerospace Forum (WEAF)
Case A HR and employment consultant
Academics in the field (external)
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A mapping of the external environment in this manner is seen as an important
aspect of the research: it considers SMEs from a different perspective, from a regulatory
standpoint. The intention in undertaking these interviews was to go beyond the
identification of pressures that various actors exert on SMEs and to elucidate their
current understanding and awareness of SMEs: of their operations, people management
initiatives, cultures and norms alongside the more general dynamics of the small firm
and what it ultimately entails, in a bid to reveal what they perceive to be the main issues,
their motives and how they are attempting to guide, assist or impose change in SMEs.
The requirement to interview such individuals and institutions makes the notion
of the ‘expert interview’ highly relevant. According to Deeke (1995: 8) the label ‘expert’
is reserved for those who are “particularly competent as authorities on a certain matter
of facts.” Bogner and Menz (2009) suggest expert interviews can be used to collect
context information complementing insights coming from applying other methods,
while Flick (2014) comments that these individuals become integrated into the study not
as a single case but as a representative of an institution or group.
The practical exercise of gaining access to these individuals and conducting
interviews raises further issues that had to be contended with: these individuals are, by
their very nature of being labelled ‘experts’, in many instances hidden behind personal
assistants and under time constraints as a result of their busy schedules. It was therefore
imperative that once access was assured the interview schedule adopted a relatively
narrow focus to ensure the topic of discussion remained relevant: “to extemporize his or
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her issue and view on the matters” (Meuser and Nagel, 2002: 77), resulting in a much
stronger directive and structure to the interview format.
Finally, the question generation process followed a similar process to that
outlined in section 4.4 of this chapter when the researcher sought to compile interview
schedules for both cases. By adopting a consistent approach to the interview toolkit
(where possible) when interviewing the representatives of these actors, it allowed for
ease of comparison. Appendix H contains the interview schedule used when
interviewing institutional actors.
5.0 Interpreting data and developing an argument
This section will begin with an examination of data interpretation and analysis: the
adoption of thematic analysis principles will be analysed and justified. Preceding this will
be a critical discussion of qualitative data analysis, to discuss the symbiotic relationship
that exists between the data and the researcher and why it should not necessarily be
viewed as undesirable. Thereafter, attention will be turned to the ways in which the
researcher hopes to develop his argument: to connect the acquired data to the theory.
5.1 Qualitative data analysis: A critical discussion
“You have your way. I have my way. As for the right way, the correct way, and the only
way, it does not exist.” This a quote from Friedrich Nietzsche effectively utilised by
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Namey et al. (2007: 137) to signify the highly subjective nature of data analysis and
interpretation in a field where a cacophony of competing prescriptions, rules and
assertions exist. While advocates of a quantitative mode of enquiry have tended to
emphasize the need for positivistic rigor and systematic analysis as a means to ensuring
a high level of reliability, the scientific undertones espoused by positivistic frameworks
become somewhat cloudy when applied to a qualitative dataset, resulting largely from
the subjective nature of researcher interpretations, which are likely to vary between
analysts. The procurement of large amounts of rich descriptive data coupled with a
difficulty in applying defensible analytical interpretative mechanisms was described by
Miles (1979) as an ‘attractive nuisance’. The introduction of coding techniques into the
field of qualitative data analysis was an attempt to alleviate such issues, albeit that these
approaches are not without limitation; perhaps most crucially there still remains an
inability to completely eliminate the subjective influence of the researcher: qualitative
data analysis has not reached the same degree of codification of analytical procedures
as its quantitative counterpart. Although contributors have argued such complete levels
of codification are not necessarily desirable, Bryman and Burgess (1994), along with the
aforementioned Geertz (1973; 1995) are but two examples of researchers defending the
attributes of qualitative data, suggesting that qualitative research’s primary aim is to
elucidate meaning through the accumulation of viewpoints, opinions and narratives. To
summarise, the qualitative experience is not in search of fact: such a unilateral notion
placing emphasis on cause and effect is a central component of the quantitative mantra.
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Qualitative research requires researchers to immerse themselves in the data,
adopting a somewhat biographical orientation as the examination of participants’
careers and lived experiences of working in SMEs become a central tenet of the research.
It emits a richness, an authenticity, through the anecdotes and stories they tell. While
there exists a pressure to be objective, to be replicable, placed on researchers by and
large from the more orthodox ‘hard’ science traditions, this researcher would contest,
in agreement with Geertz and others, that a lack of objectivity or replicability does not
make data useless; that through researcher immersion in the field, in the data, comes a
deep contextual understanding, a sophistication, the manifestation of fieldworker
presence, that could not otherwise be attained through the utilisation of a survey, for
example. A principal aim of this PhD thesis, referring back to the research questions
outlined in section 2.0, does not amount to the search for proof or generalisability, but
instead seeks to illuminate understanding of HRM within a specific context, in this
instance that being within the confines of aerospace sector SMEs and the intricate web
of external environmental actors and regulatory pressures in which it resides. To
reaffirm, this PhD thesis is a micro-study of regulation, de-regulation and SMEs, seeking
to attain counterfactuals in relation to broad tranches of the existing literature by
demonstrating the role of conditional variables upon HRM development.
How then does the researcher analyse the data accurately, so as not to
misrepresent the data and provide a fair and balanced viewpoint? Interview and
fieldwork data can have a multiplicity of meanings; furthermore, researchers are
ultimately going to be drawn to the stories they like, or information that proves their
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hypothesis; these factors have to be contended with by the researcher and countered
by a reflexive approach to data interpretation. Recognising and discussing the
researcher’s own influence on the data will ultimately lead to a higher level of
abstraction. Contrastingly, it must be noted that data can also ‘speak for itself’:
individuals’ lived experiences and viewpoints become a powerful notion, deep in
richness and difficult to interpret differently no matter who the researcher may be or
their philosophical suppositions. Ultimately, the researcher must take a ‘leap of faith’
when analysing data but also remain acutely aware of the potential limitations of any
one point or aspect of the data.
5.2 Thematic analysis
Subsequent to the interview process, the audio-recorded interviews were transcribed
verbatim manually. The transcribed texts were then combined with fieldwork notes. To
further ensure a degree of impartiality, to synthesise and to bring order to large,
complex and detailed data sets, coding strategies were utilised, although the researcher
would like to convey at the outset that such a process is viewed as providing a broad
guideline, not to the disadvantage or the detriment of utilising narratives and stories:
allowing the data to ‘speak for itself’ to attain contextual depth is deemed a crucial
aspect of this PhD thesis by the researcher in order to emphasise impact and
authenticity. However, the researcher recognises this mind set must be coupled with a
firm reflexive understanding of one’s pre-dispositions. The researcher’s intention to
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adopt analytical strategies in this manner is perhaps best justified by Okely (1994: 32)
and her recognition that “analysis comprise[s] a movement between the tangible and
intangible, between the cerebral and sensual, between the visible and invisible.
Interpretation moves from evidence to ideas and theory, then back again. There can be
no set formula, only broad guidelines, sensitive to specific cases.” While Okely (1994: 31)
does not neglect the need for textual scrutiny, she does emphasise the importance of
fieldwork experiences that are “unwritten but inscribed in the fieldworker’s being.”
Thematic analysis was selected as the coding method of choice by the researcher
as it provides a more involved and nuanced approach to data analysis than its
counterparts, for example content analysis. It places focus on the identification and
description of both explicit and implicit ideas: it goes beyond simply counting explicit
words or phrases in a text (Namey et al., 2007). Thematic analysis thus offers a higher
level of abstraction and a compromise between the emic and etic approaches to data
collection. Braun and Clarke (2006: 78) “celebrate flexibility of the method”: a much-
emphasised attribute of thematic analysis adoption, thereby allowing for the review and
refinement of themes and codes to best capture the intricacies of a data set.
Furthermore, Bacon et al. (1996) support the notion of adopting thematic analysis when
investigating the uptake of new management ideas among small firms; recognition that
prominent contributors to the field of HRM and the small firm are implementing similar
analytical strategies served to provide the researcher with a degree of assurance.
The heterogeneous nature of the object under study (SMEs), coupled with a lack
of existing research in the field, led the identification of codes and themes to be a
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consequence of predominantly data-driven (inductive), and to a lesser extent theory-
driven (deductive), forms of analysis. The initial coding categories or themes that formed
the basis of the coding template were derived from existing literature and the research
questions. Appendix I lists the themes and sub-themes.
A manual approach to coding was utilised during the data analysis phase, thought
to provide a significant advantage over software-driven forms of coding analysis given
researchers’ ability to immerse themselves in the data and assess tacit knowledge that
would otherwise be missed by computer-aided forms of analysis. A further benefit of a
manual coding approach to data analysis was that the process is well aligned with a
Critical Realist positionality that seeks to understand stratified levels of reality and
associated underlying causal mechanisms.
Subsequent to coding application, the themes were reviewed, and through a
process of delineation and differentiation themes were merged together, separated,
demoted to sub-theme status or disregarded altogether. Such engagement with the data
resulted in a higher level of abstraction. This process was undertaken until thematic
saturation occurred, when emerging concepts had been fully analysed and no new
theoretical insights were being generated (Bryman, 2012).
After coding and classifying the data, the researcher transposed it on to a table,
similar to the table presented in Appendix J, to allow key findings to be summarised with
relative ease and comparisons drawn between the cases and, where applicable, their
relevance to a particular research question (or questions) and associated literature.
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Organising the results in this manner assisted the researcher in making sense of the raw
data, subsequently informing the arrangement of the empirical chapters.
The researcher would like to briefly discuss the issues and pitfalls associated with
data analysis and coding techniques. One issue is the risk of data fragmentation: a
reductionist perspective, resulting in the narrative flow of what respondents say being
lost (Coffey and Atkinson, 1996). A further criticism amounts to a potential loss of
context by simply ‘plucking chunks’ of text out of the context within which they
appeared: this can alter the intended meaning and deprive it of its social setting
(Bryman, 2012). Finally, the process of engaging in coding strategies across a
comparative case study base is predicted to yield a further complication: the ability of
the researcher to systematically analyse and compare the data from several sources in
a cohesive manner is deemed to be problematical, resulting from a forecasted lack of
alignment between coding outcomes and identified themes, thus making comparisons
difficult.
5.3 Theorising the data
While it is hard to dispute the fact HRM is premised on the large firm (Storey, 1994): with
the overarching assumption of ‘little-big business syndrome’ (Welsh and White, 1981)
leading to the neglect of HRM within the context of the smaller firm, the researcher’s
unique first-hand experience of working in a developing SME has illustrated the differing
yet intricate nature of HRM, at odds with prevailing patterns of thought. A lack of
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exploration sees Sandberg and Alvesson’s (2011) notion of ‘gap spotting’ become highly
relevant to elucidate understanding, contribute to the HRM narrative and challenge
dominant thinking.
Through the identification of themes and the reporting of narratives, the
researcher hopes to emit an ‘authenticity’ (Golden-Biddle and Locke, 1993), resulting
from direct immersion in the field and a deep level of interaction with participant actors
that clearly demonstrates a familiarity with the vernacular of the field to accurately
portray the state of HRM within a particular context and the influence of various
stakeholders on that position. Furthermore, through the adoption of a reflexive
standpoint that critically depicted and analysed the researcher’s influence and
subjective interpretation of the data, alongside a disciplined pursuit to data analysis,
including activities such as post-hoc respondent validation, the research process
assumed more robust genuine foundations.
The posited inductive nature of the investigation which sees theory ‘emerge’
from the data must be coupled with theoretical pre-conceptions and prejudices held by
the researcher. However, “an open mind is not an empty head” (Dey, 1993: 229):
knowledge held by the researcher formed a heuristic framework which guided and
focused his attention towards certain phenomena. Thus, by explicitly providing the lens
through which the researcher is perceiving and interpreting the empirical world, the
reader becomes better placed to make an informed decision vis-à-vis the authenticity,
plausibility and criticality of the findings.
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However, it must also be taken into consideration that hypotheses within the
remit of qualitative research are not usually precisely formulated propositions which can
be empirically tested in order to verify or falsify them. Rather, they are assumptions or
conjectures, sometimes vague in nature, about possible relations between certain
domains. For example, in respect of this project, the researcher planned to study the
relationship that exists between small firms and various external actors with a view to
better understanding their influence on the state of HRM in the SME.
Finally, the researcher understands the generation of theory as an oscillation
between theory emerging and the collection of further data, an iterative process
wherein the research process allows for a degree of flexibility that can bring about
tighter specification of the research questions followed by the collection of further data
to reaffirm the researcher’s interpretations. The utilisation of a semi-structured
interview guide aligned well with such a strategy, albeit with an acute awareness of how
the researcher’s ontological and epistemological approaches develop throughout the
process, as such positioning could influence the direction taken.
6.0 Questions of access and ethics
Access arrangements will be discussed first, before ethical considerations relevant to
this thesis are considered; these include a lack of informed consent, anonymity and
affiliation bias. Background to and characteristics of the aerospace sector will then
follow, with chapter summary conclusions then being drawn.
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6.1 Access
Access to the organisations is the result of professional connections amassed throughout
the researcher’s tenure at Case A alongside personal family ties held to that company.
The following paragraphs will discuss the nature of access, gaining and maintaining
ongoing access alongside a consideration of political ramifications, in addition to
contingency plans has access arrangements fallen through.
Methodological literature has placed relative importance on the role of specific
individual(s) in the attainment of organisational access. This individual has attracted
numerous labels including: the ‘gatekeeper’, ‘champion’ and ‘sponsor’ (Bryman, 2012).
Thinking about Case A, personal connections with the ‘owner/manager’, or ‘gatekeeper’,
ensured a high level of constant access. The additional proposed case study sites proved
more challenging: the researcher utilised the personal connections of senior
management at Case A to make contact with the relevant people on his behalf. Whilst
this strategy was sufficient to gain access to Case B, it was unsuccessful in seeking access
to other organisations. A decision was therefore taken to concentrate on Case A and
Case B and undertake a deep level of comparative research across both sites.
Political ramifications are deemed to be an integral component of gaining access.
The personal connections held with one of the cases made political ramifications
particularly relevant: it could have created difficulties when seeking to gain access if the
researcher was perceived to hold biased intentions. The researcher therefore made the
decision not to approach direct competitors, believing access would be limited and not
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representative of organisational workings and cultures through apparent fear the
researcher would use this newfound knowledge for reasons other than conducting
research.
An additional point to consider concerned contingency planning: the very nature
of small firm characteristics denotes an increased level of vulnerability to unforeseen
fast changing environmental conditions. The researcher put contingency plans in place,
these included the identification of other suitable aerospace SMEs alongside their
approval for provisional access arrangements. While the proposed strength and depth
of the research matter places only one sector under examination, a further option
identified by the researcher was the introduction of a second sector, which would allow
for a comparative analysis and the isolation of industry-specific pressures.
6.2 Ethical considerations
Ethical considerations are deemed situational in nature – contextually located –
therefore each research project generates its own singular and idiosyncratic ethical
questions that must be answered by the researcher (Bell and Bryman, 2007; Sikes, 2012).
The researcher determines ethical considerations relevant to this PhD thesis to be a lack
of informed consent, anonymity and affiliation bias. Throughout the research process,
ethical procedures and guidelines applied by AMBS, The University of Manchester and
the ESRC were also adhered to.
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6.2.1 Informed consent
The open-ended nature of qualitative studies and their inductive style sometimes make
the direction of the enquiry less predictable (Bell and Bryman, 2007). The emergence of
new lines of enquiry in such a manner makes it difficult to be too specific when gaining
informed consent as to the precise nature of the research and the questions that are
going to be asked. A further thought for contention is raised by Coghlan (2001), who
suggests that if the researcher is also an employee in the research setting it may be
difficult for participants to distinguish between these dual roles when consenting to their
involvement. How, then, does the researcher ensure complete transparency and
openness throughout the process? Sin’s (2005) suggestion of the need to adopt a more
reflexive approach to the engagement of informed consent becomes relevant: through
a recognition that the notion of consent is a fluid, ever-changing concept. The researcher
believed a degree of pragmatism and flexibility therefore had to be present to ensure
informed consent was gained, with the establishment and maintenance of rapport
perceived to be a vital component in that process, which sees consent continuously
renegotiated, not only through explicit means but also through intersubjective and
interactional experiences of the interview (Sin, 2005). Ultimately, due to the nature of
the enquiry and a focus on employee’s experiences in the work place with respect to
HRM adoption, the researcher did not anticipate emergent issues to be of a traumatic
or sensitive nature or any issues with gaining informed consent to be aligned with
anonymity and confidentiality concerns around what was being discussed, which will
form the topic of discussion in the following section.
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6.2.2 Anonymity
A primary motivation for ensuring the confidentiality and anonymity of the research
participant is to avoid the potentially harmful effects of victimisation. The researcher has
therefore used pseudonyms and removed information that could lead to the
identification of individuals. Whilst concessions of such a kind will be made, the
researcher is aware he must strike a balance between the need for maintaining
participant anonymity and the requirement to ensure a fair and accurate representation
of events. Bell and Bryman (2007) believe it to be extremely difficult to protect the
identity of individuals in single case studies unless a significant amount of detail relating
to the organisation is changed. The relatively small size of the organisations under study
only heightens those difficulties. The researcher’s judgement about what aspects of the
research are integral and must be included, coupled with a duty to maintain participant
anonymity, has been negotiated iteratively, including post-hoc participant approval
where necessary.
6.2.3 Affiliation bias
Finally, the researcher has aimed to be transparent throughout, declaring his affiliations
and identifying potential conflicts of interests arising primarily from close personal
connections with one of the case study sites, thereby allowing members of the research
community and practitioners alike to take this into account when evaluating the
research and forming their own judgements. It is also hoped that the reader has
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identified the importance placed on the adoption of a reflexive disposition by the
researcher, repeatedly acknowledged as a requirement in the procurement of high
quality, unbiased, ethically sourced data.
7.0 Background to the aerospace sector: Disorganisation, fragmentation and state-
led intervention
This section will outline key characteristics relating to the UK aerospace sector. Appendix
B will chart the historical and changing structure of the aerospace industry in the UK in
greater detail. The aerospace industry has a unique and noteworthy cultural identity,
particularly from a regulatory and compliance standpoint, and accordingly it warrants
the inclusion of this section (as well as the text within the appendices) by virtue of the
complexities inherent to how the sector is arranged, a firm understanding of which will
aid understanding of the arguments and discussions presented in the empirical chapters.
Furthermore, this section should not be confused with the content of chapter 8 – The
SME and its dynamic interactions with the regulatory space – the empirical chapter
which considers the regulatory environment more broadly and its influence on HRM in
SMEs.
Globalisation and the emergence of developing economies have contributed to
increased levels of demand and a highly competitive global marketplace demanding
cutting-edge technology, exceptional quality standards and high differentiation in the
market, albeit with a focus on continual improvement in productivity levels and a
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reduction in manufacturing costs (AGP, 2012). In line with increased levels of
competition, there is now a recognition of the important role of the small firm for the
UK in the continued attainment of their leading market share, particularly from an
innovation standpoint, and consequently an increased level of fragmentation in the
market, with larger aerospace organisations outsourcing or subcontracting elements of
their work to the highly specialised and innovative SME.
The UK aerospace sector has the largest number of SMEs in Europe; more than
3,000 companies are actively operating in the sector (and over 9000 supply chain SMEs
operate in the sector indirectly) (AGP, 2012). However, while the industry appears as a
whole to be highly complimentary and appreciative of the contributions made by the
SMEs, concerns raised with utilising SMEs in the aerospace sector were summarised by
Airbus: “a disconnected and fragmented supply base operating with non-standardised
processes with high levels of waste and duplication” (BIS, 2010: 29).
Thus, supply chains are seen by many as the potential ‘weak link’ in the
exploitation and attainment of the aforementioned levels of projected sector growth.
Consequently, there has been an increase in the level of intervention from various
actors, most noticeably the role of the state. In 2011 the UK government, alongside
numerous industry leaders, formed the Aerospace Growth Partnership (AGP) and
committed to investing £2 billion towards improving and strengthening the UK’s position
as a world leader. Objectives appear to be geared predominantly towards offering
support and developmental mechanisms to supply chain SMEs. The initiative seeks to
encourage stronger links between entrepreneurs, innovators, academia, original
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equipment manufacturers (OEMs), aircraft manufacturers and financiers. This is deemed
significant to the thesis, as it identifies the aims and objectives of key stakeholders with
a particular interest in SME activity and the subsequent pressures and influences they
may be exerting upon supply chain SMEs. Furthermore, it is entirely possible that such
mechanisms and interests encroach onto people management and HRM-related
activities.
Closely aligned with the objectives and purpose of the AGP is the national trade
association ADS (Aerospace, Defence, Security and Space), who seek to champion these
industries at both a national and an international level. While such initiatives offered by
the AGP and ADS amount to help and guidance at a national level, there are additional
bodies and initiatives at a regional level. BIS recently praised the aerospace industry for
“the proactive steps it has taken to improve the quality of the supply chain… we are
encouraged by the steps taken by Regional Development Agencies to support this” (BIS,
2010: 31). One of these regional aerospace alliances includes the North-West Aerospace
Alliance (NWAA), which represents and supports the cluster of aerospace firms located
in the North-West of England: the largest industrial district in Europe and the fourth
largest in the world, responsible for contributing in excess of £7 billion in the UK
economy, and accounting for one quarter of total UK aerospace turnover (NWAA, 2016).
These regional bodies work closely with the aforementioned national federation, the
ADS, and also play a crucial role in the dissemination of AGP objectives.
Interviewing regional aerospace alliances as part of this PhD thesis was
accordingly considered important given that these actors appear to occupy a critical
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segment of the regulatory space and are the primary link between the SME and wider
external regulatory environment, particularly with other actors functioning in the
aerospace sector. These support organisations were foreseen to be acting as enablers,
facilitating the networking and linkages between small firms and external knowledge
providers, including other small firms, academic institutions, customers, suppliers or
training bodies. Associated with regional aerospace alliances and the clusters or
industrial districts which they represent are the theoretical contributions made by
DiMaggio and Powell (1983) and more recently by Dacin (1997) and Ferner and
Quintanilla (1998) and their respective studies investigating ‘institutional isomorphism’,
see Chapter 3 section 4.3 for a more comprehensive understanding of the concept and
for its application to this thesis: Chapter 8, section 3.2.
Whilst Appendix B provides a more detailed examination of the UK aerospace
sector, this section has served to provide an overview and identify who the aerospace
actors currently participating in the sector and occupying the ‘regulatory space’ are,
including: the British government, regional aerospace alliances and sectoral primes.
These actors offer differing degrees and forms of support to the SME, particularly from
an operational efficiency, quality control and innovation standpoint. These frameworks
are complex and appear to be becoming increasingly fragmented in nature. This PhD
thesis will attempt to advance understanding by intricately mapping the framework’s
arrangement and accounting for all the actors, influencers and intermediaries (of both
state and civilian origin) who are occupying the ‘regulatory space’; such an objective is
particularly well aligned with the fourth empirical chapter (Chapter 8) and its attempts
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to better understand how the stimuli derived from those inhabiting the space can
encourage HRM formalisation.
It is interesting to understand where these small firms go for HRM-related advice,
and if the aforementioned aviation-specific actors offer forms of guidance over and
above the more generic forms of advice and assistance provided by ACAS, the CIPD or
the HSE. Further questions to be answered by this thesis include the extent to which
clusters and shared spaces of development (in line with the abovementioned regional
alliances) facilitate or encourage organisational learning in aerospace sector SMEs,
particularly in relation to people management and employee relations.
This thesis is also seeking to better understand the extent to which these SMEs
identify and perceive themselves as an integral part of the aerospace sector, particularly
as their roles typically focus on one specific aircraft component part and are undertaken
at a location that is usually physically removed from the aircraft and in many cases the
airports also. Moreover, organisational memories, particularly those of ex-British
Aerospace employees for example, are to be considered and evaluated, as this thesis
seeks to understand how the cultures, values and norms experienced by these
individuals as part of such a sector and labour market are linked to the changing
structure and fragmentation of the sector.
Finally, industrial relations have historically been active in the sector and trade
union membership has been high, particularly within the larger aerospace firms. The
trend does not appear to have followed and remained stable in relation to the
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abovementioned forms of fragmentation and disorganisation. No sectoral agreements
are in place and SMEs in the sector appear largely unaffected by industrial relations
influences. This line of analysis will be duly analysed and reflected upon in the
succeeding empirical chapters.
8.0 Summary conclusions
Returning to the topic of research methods, a principal objective of this chapter has been
to show how the researcher is reflecting upon the research process, on the tensions and
choices faced. The notion of reflexivity has been an ever-present concept throughout
this chapter, with respect of the philosophic positioning or interpretive suppositions held
by the researcher, through to the writing up of the thesis within a framework of
academic rigour; but perhaps most significantly, the adoption of a reflexive outlook to
help combat potential methodological difficulties arising from the close personal
connections the researcher has with one of the research sites: of undertaking ‘insider
research’ and ensuring affiliations held or prior experiences do not inhibit the research
by allowing the researcher to maintain a critical distance. To that end, and as stated at
the outset of this chapter, the researcher believes honesty and openness to be a key
attribute, allowing the reader to form their own judgements.
It was through attaining of a reflexive disposition that the true benefits of a
closeness to the subject, or the sector more generally, could be gained and utilised to
the benefit of the research findings. The researcher’s knowledge and experience
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provided a starting point, and a better understanding of the research setting was gained.
Moreover, such closeness to the research setting is well matched with his subscription
to a Critical Realist ontological lens: this offered the researcher the attributes to gain the
most from the data, to get below the surface and to realise antecedent causes that
operate at deeper levels.
A primary limitation of the study centres around a lack of external validity: the
heterogeneous nature of the object under study suggests an overbearing influence of
contextual characteristics on the development of HRM. This study focuses exclusively on
SMEs operating in the aerospace sector: a highly regulated, high-skilled division of the
economy wherein SMEs are sited within industrial clusters and interact with various
large corporate external actors, all forecast to bring about more formalised and
developed HR mechanisms than organisations of comparative size in other sectors of the
economy. Determinants would no doubt differ in the furniture-making industry or the
food-manufacturing sector, for example.
Contrastingly, while the research findings may only be accurate for the aerospace
sector, the research is foreseen to generate a better understanding of HRM in the
context of SMEs, with the subsequent degree of causality resulting from their location
within an intricate web of stakeholders being worthy of further examination across
different sectors of the economy. Perhaps most significantly, the research serves to
illustrate inaccuracies in dominant modes of thinking, resulting in part from a degree of
neglect shown to SMEs by the academic research community, showing that SMEs are
not necessarily informal, unprofessional entities with respect to HRM and employment
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relations. This thesis is therefore seeking counterfactuals against much of the existing
literature by demonstrating the role of conditional variables in HRM development,
alongside a complexity inherent to such a debate.
Finally, it is hoped the influences of a further limitation, those surrounding
researcher bias and subjectivity, resulting from the adoption of a qualitative line of
enquiry, have to a large degree been offset by the researcher’s aforementioned
commitment to reflexive practice throughout the process.
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CHAPTER 5 – Organisational contingencies and people management in the small firm:
Life-cycle stage, change and culture
1.0 Introduction
Small and medium enterprises (SMEs) are often situated within a multi-faceted web of
social and familial norms (Edwards et al., 2003). A contingency perspective further
highlights understanding of the reasons why small firms configure their people
management practices in particular ways (Schuler and Jackson, 1987; Delery and Doty,
1996). A principal objective of this chapter is to analyse some of the internal drivers of
practices and people management approaches. From the empirical work a number of
inter-related themes emerge as important to understanding HRM in the small firm.
These are: growth, life-cycle stage and change, strategy and managerial choice; the
effects of organisational design considerations and structure, and the influence of
organisational culture and identity. Aligned with research question 1, the discussion
centres on how these key themes shape the HR discourse and practice within the case
organisations and the degree of complexity inherent to that process.
The first half of this chapter examines the historical backgrounds of the case
organisations, charting their growth, change and differing HR needs. This begins with a
discussion pertaining to the idiosyncratic nature of growth, before moving on to a
discussion of the enhanced levels of complexity associated with elongated hierarchies
and the development of more formalised organisational structure. Greiner’s (1972;
1998) growth model features prominently in these discussions. In relation to research
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question 3, the manner in which enhanced levels of bureaucratisation, or presence of
rational-legal authority (Weber, 1958) institutionalise mechanisms and regulatory
dynamics within organisations is subsequently considered. This is in conjunction with
the idea that management can accordingly be perceived as a shared function, or one
that draws from various other actors. An additional aspect considered at this stage
includes employee awareness of bureaucracy: “more Chiefs than Indians” (Case B,
Employee 5). Within the context of formalisation, the difficulties encountered by line-
managers is then examined, a consequence primarily attributed to a deficiency in their
management capacities, alongside the organisation’s awareness of this very issue.
The second half of the chapter takes the themes of culture and identity as its
focus, and the relevance or influences of these considerations upon the HR narrative of
the SME. The role of owners or founding fathers in shaping organisational culture is
highlighted here (Gunnigle and Brady, 1984; Bacon et al., 1996; Handy, 1999). Within
this context, the empirical work highlights that owner/manager ideology, power and
interests can act as a potential barrier to the formalisation of organisational structure
and processes, or dissemination of human resource management practices, partly due
to the desire to retain control and decision-making responsibility. Whittington’s (1988)
theoretical framework relating to deep structures will also be utilised to better
understand the motivations and actions of the owner/manager: social structures
(including class, gender, generation and ethnicity) are determined to act as a pre-
condition to managerial agency. Subsequently, a comparison of employee profiles and
characteristics provides insight into their perceptions of the aerospace sector.
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Fascinatingly, employees of one case appear to use the sector of operation to enhance
their status, with aerospace identity being used to upgrade and represent their work.
Latterly, the cultural identities of both organisations are found to be strongly associated
with a firm sense of familial values, creating something of a dichotomy when contrasted
with cultural influences derived from the sector of operation.
Finally, summary conclusions will be drawn, summarising what has been learnt
from the study of SMEs transitioning through a period of development and growth for a
deeper understanding of HRM, formalisation and change (research question 1).
Moreover, it will highlight the importance deriving from the subtle yet substantive
differences between the cases that have been introduced in this chapter, deemed to be
a consequence of deep structures, path dependency, historical and contextual
idiosyncrasies, which will be re-evaluated at this stage.
2.0 Growth, change and differing HR needs
2.1 The idiosyncrasies of growth and life-cycle stage
Although many small businesses do not necessarily evolve into large scale organisations
as might be inferred from a more teleological reading of organisational life-cycle models
(Greiner, 1972; 1998) organisations still need to be conceived from a dynamic rather
than static perspective, necessitating an understanding of processes of change. The two
cases succinctly illustrate the highly idiosyncratic nature of organisational growth,
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inextricably linked to and influenced by varying contingencies such as increases in the
level of output and responding to growth in staff numbers. Such growth experienced by
Case A is illustrated by the following respondent comment:
When I started here there were seven staff and that was inclusive of the two owners…now, we own six buildings on the retail park as opposed to the one when I started. And we’re now pushing 60 staff...I think we used to average out 1,500 wheels a year when I first started. We’re now probably topping out at about 9,000. So the company’s pushed itself forward in terms of gaining more contracts and establishing itself as one of the biggest MRO centres in the UK. Probably one of the biggest in Europe.
(Case A, Director 3)
Shifts in market strategy as knowledge and experience grows can be a further
driver of change and the requirement for a different workforce skill mix. In a contrasting
growth strategy to Case A, with the expansion of their customer base, Case B’s growth
can be attributed to the organisation’s transition from operating as a recruitment agency
to an organisation that is now for all intents and purposes an engineering firm with the
recruitment arm of the business now providing a minority or smaller percentage of the
annual revenue. Adopting a strategy of diversification into a workshop outfit or
engineering firm, before subsequently adding to the capabilities or services they offer,
has been the principal reason this case has experienced high levels of growth. Their
recent expansion into Scotland in particular, with the opening of an aircraft maintenance
hangar, has brought with it a sudden increase in ‘numbers’ employed, from 43 to 77
members of staff (a 44% increase) almost instantly.
A central question of the thesis concerns whether existing theory relating to HRM
development under-emphasises the importance of environmental context (research
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question 1). The current examples provide some evidence for the idiosyncratic drivers
of change. Both organisations have been subject to significant and rapid forms of
growth, developments which have brought with them an increase in the ‘numbers’
employed, a more structured and elongated hierarchy, increased levels of delegation
and new forms of management. This has meant as the organisations grow and personnel
numbers increase additional levels of management must be implemented to administer
and oversee those employees. Such developments are in agreement with literature
relating to organisational structure and span of control, including Pugh et al. (1968) and
the Aston study: that increasing staff numbers typically leads to a greater number of
managers and intermediate management levels as organisations grow.
Building on the critique of life-cycles in the literature review – Chapter 3 – a
question raised regarding the applicability of life-cycle perspectives is whether specific
stages of development can be identified which are precipitated as a response to
challenges or crises linked to growth. Application of Greiner’s growth model (1972; 1998
– Figure 2) to both cases is a useful exercise for illustrating some of the general issues
that have arisen, and the general paths organisations take, in relation to the
formalisation of organisational structure that accompanies growth.
To recap the central premise of Greiner’s growth model (1972; 1998): the model
can be defined as a series of phases interlinked by a crisis that which upon resolution
sees transition to the next phase of the model. As companies grow in size and mature
they may create growth through differing mechanisms. Within a small start-up firm,
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growth may occur through initial creativity or innovation. However, initial market
success and growth can taper due to the lack of functional and administrative capacity
to further expand output or service delivery, or company founders may find the time
they initially spent on product or service development is now preoccupied with business
administrative duties. The hiring of professional managers or auxiliary functions provides
a way in which company owners can solve this so-called ‘crisis of leadership’ (Greiner,
1972) and can re-focus on core value creation activities, further solving some of the
coordination issues associated with the upscaling of operations. Following such a shift,
in stage 2 of the model, growth is now purported to be achieved through the direction
of a professional management body.
In relation to a comparable transition, the presence of newly adopted and
enhanced levels of formalised structure did not go unnoticed by respondents of Case A:
There’s a proper structure, full structure, proper management team…There’s a more formalised structure, with powers devolved to the line-manager from the MD, back in the day the MD used to do everything, they had to be on the shop floor and inspect the wheels too.
(Case A, Manager 4)
I had to do my Level 1, 2, 3…they weren't in place when I first started…before that you’d get moved up ‘willy-nilly’.
(Case A, Supervisor 2)
Also, within the context of Case A, department manager positions were created:
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As the company’s grown, we’ve definitely had to bring in internal managers of each department now, so for instance we’ve got a brake shop manager, a wheel shop manager, stores manager, a safety equipment manager, accounts manager. And it definitely…it needed to be brought in. It’s far too much for one person.
(Case A, Director 3)
Further growth has also seen the creation of the departmental supervisor
position, together with the operations manager who sits above the department heads
and acts as their direct superior, creating an additional two levels in the hierarchy.
Moreover, change has occurred not only with the introduction of additional hierarchical
levels of management, but supplemented also with the introduction of various
functional specialist roles:
When I started, LC was manager and there was nothing under that, there wasn't a supervisor…and that was it...Now there's a level one, two, three. I'm manager, LC is now operations manager, JN has come on as quality manager, you've got TW as technical manager. These positions weren't here when I was here, I'm not even sure if a HR position was here when I started here. Yeah, there's at least ten roles that weren't here when I [started].
(Case A, Manager 1)
Additionally, there is evidence of the delegation of tasks that would historically
have been carried out by the managing director:
The people at the top have had to delegate their work… which has probably had a knock-on effect to the rest of the company as everyone has had to sort of move up and adjust… even from the top, so you’ve got the managing director, he used to do pretty much everything, and now he’s delegated like the operations point out, stuff like that.
(Case A, Manager 5)
One critique of life-cycle stage approaches concerns whether social reality is as
orderly or uniform as theories that denote sequential stages have suggested. For
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example, there is no reason to suggest all organisations follow the sequence and all
stages. One possibility is that organisations could skip a stage if the solutions at more
than one stage are implemented simultaneously. For example, the ‘autonomy crisis’
which relates to the growing need for professional managers hired to be given greater
devolved control and flexibility; this can be solved by greater delegation, as denoted by
Greiner, through a move from stage 2 to stage 3 could partly be seen in stage 2 in Case
A.
Such changes are mirrored in Case B: supervisory roles have been created, a sales
and marketing director is now on the payroll and an HR assistant has been employed,
tasks that would previously have been undertaken by one of the directors. In this sense,
a devolved restructuring of the organisation on a functional basis has taken place:
I think it’s just because you’re putting those people in place now, so your HR was JG [company director], so you’d go to JG, whereas now, I’m not saying JG’s door is closed, if you’ve got an issue I’m sure you can still go and talk to her, but you’ve now got EG [HR assistant] and then, again, any issues you did have you’d go to JG within your department, but now we’ve got CM [general manager]. So there’s just other people being brought in… I guess in the past, people do bits of everything, but as it grows you can’t do that.
(Case B, Employee 7)
Evidence suggests the hierarchy was “a bit blurred in the past” (Case B, Employee 2):
Things are official now, you know where you’re going if you have any problems, whereas before we had nothing like that. In fact, I reckon issues that we’ve developed over the years have probably made them realise this.
(Case B, Employee 8)
At the same time, the core business activities remained similar to the point of
start-up and there was not a sufficient diversification of product or service lines to fully
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meet other aspects of an associated ‘crisis of autonomy’ according to Greiner in the
transition between stage 2 and 3. Nonetheless, management subsequently attempted
to enact a more structured and elongated hierarchy in response to organisational
growth patterns:
It’s trying to be more professional as the company grows, because if the company grows at the rate it is… it could get fractured and we lose a little bit of control.
(Case B, Manager 1)
We are clearly trying to get more professional and structured. (Case B, Manager 2)
This can be seen as a further example of an organisation’s transition from phase
1 to phase 2 of the Greiner (1972; 1998) model. Delegation from owners to professional
managers and functions as a mode of operating have not been problem-free, and whilst
it is evident that both case study organisations, and their respective senior management
teams, have made the conscious decision to enhance the structure within their
comparative organisations, there does appear to be a degree of uncertainty amongst
the workforce as to what that new structure entails and as to the relation between
formal and informal organisational structures, a feature deemed more prominent in the
context of Case B… but firstly, relating to Case A:
Some people know, some people don’t, there’s not a good structure… the chain of command isn’t well established.
(Case A, Manager 3)
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When you've got 50 or 60 people with a view to having a lot more we should have that [the HR function] more formalised. So there's a structure there and there's a reporting structure there… [At the moment] CJ involves himself and then I'll involve myself and then LC will involve himself, and PS involves himself. And KS and what have you… And it's all emotion… I just think it's too fragmented.
(Case A, Director 2)
Such fragmentation and uncertainty is partly linked to a lack of sufficient
communications between senior management and the workforce. The following quote
illustrates as much:
With things like LC’s promotion… I’ve never actually seen a memo throughout… or even a meeting of all managers; ‘as of now I am… whatever my position is’.
(Case A, Manager 2)
Communication issues experienced by both organisations will be examined and
analysed in greater detail in later chapters. Informal structure related to word-of-mouth
and more formalised organisational growth could appear somewhat discordant.
Communication issues of this nature are very much aligned to Greiner’s growth model
(1972; 1998), in relation to the identified ‘crisis of coordination’ that comes from
delegation, something that is according to the Greiner model supposed to occur
between Stages 3 and 4 of the model; however, in the current cases such issues
appeared to manifest themselves much earlier in the organisations development. Those
interviewed from Case B indicated uncertainties similar to those experienced by
respondents of Case A in relation to the organisational hierarchy and roles therein being
described as “cloudy at times” (Case B, Supervisor 2), with employees suggesting there
has been an increase in the number of management positions created but a lack of
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clarity as to their role within with organisation and their position within the
organisational hierarchy:
It’s grown, there’s become more senior members involved, however, it’s not perfectly clear as to what their role is and how they impact what we’re doing and it doesn’t seem to get totally clarified as to what they’re doing… Not entirely certain of what people’s roles are outside of the immediate workshop… I’d make it more structured and clear as to what people are expected to do and if they have issues who they need to see and how that chain then works going down from management through to shop floor. It’s too varied, it’s too cloudy at times, it’s not clear at all.
(Case B, Supervisor 2)
The lack of cohesion in relation to job roles and the newly elongated hierarchy
amongst both workforces suggests the current ‘crisis’, to use Greiner’s (1972; 1998)
terminology, is still very much ‘live’ within both organisations. However, which ‘crisis’ or
phase of the model the case organisations are currently experiencing is difficult to
accurately pinpoint, as the above examples illustrate, with the issues, or ‘crisis’,
identified by Greiner not appearing to occur in the linear, pre-determined manner. This
is a finding in agreement with criticisms directed towards life-cycle models for their
teleological approach and for being simplistic in nature and not attuned to the
complexities of growth and development (something that research question 1 asks).
Greiner’s (1972; 1998) model, while simplistic, is certainly a useful tool for
charting patterns of growth and illustrating the general problems encountered by
organisations as a result of such growth. However, the model is considered to be
prescriptive in nature, with growth theorised to occur in a stable and linear manner,
alongside deterministic assumptions of homogeneity in relation to organisational
growth (Storey, 1997), but more significantly in relation to this thesis, regarding the
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importance of environmental contingencies (research question 3) and the complexity of
internal factors, the model neglects the spatial context in which these organisation’s
grow (O’Farrell and Hitchens, 1988: 1372), particularly those derived from the workforce
and the degree of agency attributed to such a body.
Finally, in application of Lawrence and Lorsch (1967) and their research
concerning organisational structure and integration verses differentiation: happenings
do appear to be aligned with their findings in that as differentiation increases within an
organisational structure, the integrative mechanisms, including standardised
procedures, liaison roles, inter-department teams or coordination roles, follow second
or are often not sufficiently developed.
2.2 Enhanced bureaucratisation: Accounting for regulatory provisions
The regulatory environment within which the organisation is located provides one
important contextual contingency that may shape the formalisation and standardisation
of processes within organisations. Such an assertion forms the basis of research question
3. Bureaucratisation is a term that is difficult to define with any form of consensus
amongst social scientists (Mouzelis, 1967). However, features of bureaucracy include
functional specialism, formalisation, tall organisations with relative narrow spans of
control and standardised operating rules, features that are identifiable within both cases
here. It is generally accepted that informal rather than bureaucratised relationships are
one of the defining characteristics of HRM in SMEs (Dundon and Wilkinson, 2018). The
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intention of bureaucratisation can be to provide clear lines of control over operations,
standardisation of practices and, in relation to operational risk, clear lines of
accountability.
There are two depictions of bureaucracy that occur in modern parlance. One is
that this is often an unavoidable but sometimes undesirable aspect of growth which,
although it may begin with good intentions, such as to solve the coordination problems
of the larger organisation, may constrain, limit or pervert organisational behaviour away
from primary objectives or goals (making it a pejorative term related to ‘red tape’). A
slightly less emotive conception can be found in that it can be a response to changes to
the regulatory environment and one that requires the standardisation of procedures and
standardisation of roles to provide accountability in the Weberian sense of rational-legal
authority. The latter definition is particularly applicable to the current case in the context
of the Civil Aviation Authority (CAA), the aerospace sector’s regulatory body, that can be
identified as an important actor originating from the regulatory environment:
Aviation is a bureaucratic industry with lots of paper. Planes fly on paper, they don't fly on air.
(Case B, Manager 2)
2.2.1 Case A
Within the context of Case A, notions of professionalisation are apparent as the
organisation has sought to move away from the “backstreet garage” (Case A, Manager
5) mentality under which it had operated for so long in the past:
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I’d probably also say professionalism as well, we’ve kind of moved away from that backstreet garage that we kind of used to have a little bit of; it’s a bit more mature and professional now.
(Case A, Manager 5)
As a consequence of the organisation adopting a more professional ideology, the
familial culture appears to be waning. Of relevance here is the work of Handy (1999)
relating to culture, Handy debates power cultures and role cultures. Family businesses
are often power cultures in that it is the ideas and values of the family owners that shape
cultural practice. As organisations grow and bureaucratise, other powerful stakeholders
emerge who are non-family members, or people who may exercise power due to
formalised rules. This can lead to a role culture: where culture is determined by the
practice of different functions within a bureaucracy. Culture is considered in greater
detail in section 4.0 of this chapter.
Bureaucratic developments were identified in respect of personnel management
more generally, which the following comment succinctly helps one to visualise:
There’s a company handbook, it’s as thick as a bible. (Case A, Employee 3)
The following respondent’s reply illustrates the progression made within Case A:
There’s a proper structure, full structure, proper management team. Good organisation…A lot of it is procedural, yeah, which is a good thing…You know where you’re going, you know what you’ve got to do, things are set down for you, you’ve got a track to follow. I mean, if you didn’t have procedures, you’d have anarchy...In this industry you can’t do that.
(Case A, Manager 4)
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Furthermore, the last sentence; “in this industry you can’t do that” alludes to the
influence derived from the sector of operation. Whilst not disregarding the impact
caused by increased employee numbers as sufficient reason to introduce a more
formalised modus operandi, in respect of Case A, the mounting influence resulting from
the sector of operation is worthy of further investigation, as it appears to be the principal
motivating factor behind the adoption of enhanced levels of process, procedure and
regimentation from a quality control standpoint:
The volumes have increased, and I think what has happened over the years is that the quality side of the business, I think there was an ignorance to that side of the business from management. Probably the quality management side of it as well, that understanding the law and how things have changed, it was sadly lacking at [Case A]. I think it's quite different now.
(Case A, Director 2)
Conforming to regulatory standards is becoming ever more vital as the
organisation is subjected to an increasingly frequent series of audits:
We’re a lot more professional now, the audits we’re subjected to from the CAA, customers, OEMs and the quality department internally make sure of that.
(Case A, Manager 3)
It’s not just a case of doing the work. It’s all the paperwork that goes with it as well. I mean, that’s what I...my job’s changed in that respect, probably compared to say, even five years ago, you could argue I’m doing less of the actual work and more actual paperwork to get that stuff out of the door, but that’s just the way it is.
(Case A, Employee 3)
The influence of the CAA, a key actor occupying a central part of the ‘regulatory
space’, upon organisational procedures is a recurrent theme of this thesis, aligned with
research question 3 and the influence derived from the institutional positioning of
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aerospace sector SMEs. Returning to differing definitions of bureaucratisation outlined
at the outset of this section, it would be pertinent to deliberate which type of
bureaucratisation has driven standardisation more. For example, would an organisation
in a weaker regulatory space move towards bureaucratisation of this nature? One would
be inclined to disagree with such an assertion in light of the evidence presented herein,
suggesting the influence derived from rational-legal authority is greater.
2.2.2 Case B
Concentrating now on Case B in respect of its recent attempts to adopt a more
professional, and bureaucratic means of operating: “there’s loads more paperwork now”
(Case B, Employee 2); there appears to be a greater level of procedural enactment and
HR or people management functions are being administered:
You can’t be expected to run it like a cottage industry anymore. So, you have to do your bit in the right way, to enable the next person to do their bit in the right way. You can’t sort of make things up from the hip, as much as before.
(Case B, Manager 4)
More staff, gone for bigger buildings, bigger...bigger hangars, they’ve tried to develop all of the legislation side of stuff, with like Human Resources and stuff. We never really had anything like that when we started.
(Case B, Employee 2)
There was a definite awareness of bureaucracy, amongst responders within Case
B, illustrated by the following respondent comment:
There’s more Chiefs than Indians (Case B, Employee 5)
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Consequently, and as research question 2 enquires, there is evidence apparent
within Case B of how those involved are wrestling with the dichotomy of autonomy
versus control; of adhering to greater levels of structure with the adoption of more
formalised process and a more relaxed form of operating with which a form of flexibility
is so often inherently associated:
It’s changed physically as it’s grown…there’s more people, more premises, bigger premises, more company vehicles or all those fundamental observations… The business is…I think it’s kind of in a state of flux, but trying to…move from a cottage industry, if you like, a smaller company to a larger scale one where it has to be more professional and objective…In the cottage industry, you rely on everybody knowing everything and the relationships being good. As you get bigger, everybody can’t know everything, and everybody might not necessarily get on very well with everyone, so you have to accept that situation.
(Case B, Manager 4)
You need a happy medium in any company don’t you? You can be too relaxed…there’s probably some pros to the way we’re structured, in the fact that, we aren’t too structured, if there’s any key decisions to be made quickly, for example, in our industry, if you’ve got an aircraft that’s broken, they call it AOG, Aircraft On Ground, you’re costing yourselves or the airline, it’s hundreds of thousands of pounds to lease an aircraft, so decisions sometimes need to be made rapidly.
(Case B, Supervisor 1)
Observations of this nature will form the foundations of a concept to be
introduced within this PhD thesis: ‘flexible formalisation’, used to characterise the
transition between formality and informality in respect of operational processes and
identity. A recurrent concept within the empirical chapters, it will be reviewed in full in
the discussion chapter.
In application of literature relating to the ‘ambidextrous organisation’ (Duncan,
1976; March, 1991) now, and the balancing of ‘exploitation’ (including the efficient
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utilisation of resources), with ‘exploration’ (having the capacity to innovate), the nature
of the work undertaken by both cases suggests the strategies of the organisations (which
accordingly impact organisational structure) are more attuned to cost and efficiency
than to innovation. Bureaucratisation is often aligned with efforts concerning the former
(exploitation) rather than the latter (exploration), in agreement with comments made
by Case B Manager 2, who described how the organisation is contending with enhanced
levels of formalised process and how they “can shave some of the bureaucracy out of
it…”.
Moreover, and just as the influence derived from a regulatory and quality control
perspective was discussed in respect of Case A in the previous section, within Case B we
also noted how sector effects and the degree of regulation that must be adhered to
within the aerospace sector (research questions 3) appear to exacerbate and influence
the level of bureaucracy;
Obviously procedure is very important, and it’s something that’s...we’ve always had for, you know, the aircraft maintenance side of things, but probably not for the business as...as much.
(Case B, Employee 2)
Following this line of analysis, management can be construed as a shared
function, with numerous actors and bodies, such as the aforementioned CAA for
example, and their impact on proceedings within the firm through various guidelines,
including people management initiatives such as training and development programmes
or recruitment initiatives, sees bureaucratic boundaries becoming increasingly complex
and indistinguishable. External boundaries and relations across them, the actors and
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bodies inhabiting the multifaceted ‘regulatory space’, will be analysed in the final
empirical chapter as it is postulated that these actors and bodies exert a significant
influence upon organisational practice, while in the context of high-value SMEs, such as
the case study organisations, this problem only becomes exacerbated as they are
subjected to heightened levels of regulation and contingency factors.
2.3 The capacity issues of management
The level of organisational growth in Case A has been likened by the managing director
to “having hold of a tiger’s tail” (Case A, Director 1). Comparatively, the level of growth
and diversification in Case B was described as a “run before you can walk” mentality
(Case B, Manager 1). As a direct consequence, in both organisations, existing members
of staff have been promoted, chosen typically on a time served basis, lacking support
and “thrown in at the deep end” (Case A, Manager 1), receiving little or inadequate forms
of training to help them undertake their new role. It is therefore not surprising that
problems exist; comments made by the directors of Case A signify as much:
We’ve had key position holders who just can't keep up with the growth of the company.
(Case A, Director 3)
These individuals typically have no prior management experience, and in respect
of Case B, this transition appears to be particularly difficult and alien to them given their
well accustomed tendency to think and act like an engineer:
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Managers haven’t received any training in how to be a manager, they have taken on the role because of time served; they’re good engineers, but that doesn’t mean they’ll make good managers.
(Case B, Director 1)
Findings in relation to the low level of managerial training undertaken in SMEs
are aligned with extant literature as identified by Handy et al. (1987), Curran et al. (1996)
and Brewster and Larsen (2000).
Furthermore, what is interesting and worthy of comment at this juncture is both
organisational and employee self-awareness of the limited knowledge or capacities of
the newly established management teams. Apparent within both case study firms, the
following comment was made by a newly promoted manager in Case A:
There're things where I think I'm slacking...I've not monitored lates, until somebody's pointed out to me that someone… oh, I think he's been late two or three times. Then I've looked into it and found out he's been late 19 times that year…I think managing the workshop floor, I think I'm quite good at managing people, I'm quite good at motivating the staff. I think that's probably my main strength in getting the work done and getting the work out. My weakness is the paperwork side of things. I've really got to look at that. I don't monitor lates, sicks, absences.
(Case A, Manager 1)
Despite recognition of the problem, the rapid level of growth, an unwillingness
to adopt a recruitment strategy of professionalisation and seek out experienced
managers external to the organisation who have the skills to adequately fulfil the roles
(which is understandable from a cost saving standpoint), and the senior management’s
own inexperience, all contribute to and compound the dilemmas currently faced by both
organisations.
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Apparent difficulties were also noted within Case A in respect of newly promoted
management who must make the transition from friend and work colleague to manager
or supervisor:
It was tough making that change from being a work colleague to then potentially being somebody’s boss, but it is a step that has to made, that management is…for me, it is a pretty lonely job to be honest with you…These guys are your friends, you’ve known them a long time, but once you make that step up to management, it’s never a good thing to have to come down on somebody if need be.
(Case A, Director 3)
Another similarity across the cases: several managers from both organisations
have attained professional accreditations, specifically ILM certifications; however, the
impact of their newfound knowledge appears negligible, as the following quote from a
director of Case B intimates:
He's been basically put in his role, and then left. And his manager, who's AR, doesn't really support him, and he doesn't get a lot of support off anybody. And he gets a bit stressed out, and he can't manage his staff, he's very reactive...So if he's got something to tell them, instead of thinking about how he should do it, he reacts and does it, and then upsets them. And he’s done his ILM level 3.
(Case B, Director 1)
The findings from both of the case studies therefore provide evidence of the
need for on-the-job management training and work shadowing, albeit, given the rapid
level of growth, this may be difficult to achieve without senior management agreeing to
reassess their current situations: in respect of Case B they should stop increasing the
ever-growing list of services and capabilities they offer; in respect of Case A, that might
mean not tendering for new work or turning down requests from new or potential
customers, to invest time in training the newly formed management teams, aligning the
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organisational culture and skillset with the goals of professionalism and growth, and
ultimately ensuring the foundations of both organisations are robust enough to support
future endeavours including further growth. Alternatively, and arguably the only
conceivable next step, is one of professionalisation and recruiting individuals with the
desired management skills and experience from outside the organisation. This is the
favoured strategy for one senior director at Case A:
I think what's going to have to happen, if the company continues to grow, is that we will need more professional people to be put in place in the organisation. If it's going to grow at the rate that we think it is going to grow because of the type of work that we're bidding for at the moment...I think with the other work coming onboard it's going to need a few more professional people to come into the organisation. On a professional level to talk things like contracts and man hour rates and deliverables.
(Case A, Director 2)
Returning to the research question 1, the difficulties faced by the newly formed
management teams are indicative of the transitional peculiarities and complexities
encountered by the SME that are not typically accounted for by normative, universalistic
models of HRM which in turn encourage notions of ‘little big business syndrome’ (Welsh
and White, 1981).
2.4 Section summary
Having considered themes of growth, bureaucracy, structure and change, this section
has illustrated the presence of a complexity inherent to transformations at odds with
prevailing HRM literature by introducing the notion of a sensitivity towards
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environmental stimuli. This is a recurrent theme of the thesis and an important one in
helping to answer research question 1, which seeks to illustrate the complexities
inherent to HRM development and the attainment of a better understanding of SMEs
transitioning through a period of development and growth. The influence of the CAA
introduced in this section is also an important and repeatedly drawn upon feature
throughout the empirical chapters, principally in answering research question 3, which
is related to the influence of environmental factors on the SME’s HRM narrative.
The following section will consider aspects of identity and perceptions of the two
SME workforces interviewed for this thesis. Linking discussions to that section, from this
section which has focused primarily on themes of growth, bureaucracy and change, is
an apparent self-awareness of how the SME has grown and matured, alongside the
language used to describe how development and growth is understood by management
and staff. There appears to be a definite perception, in both case study firms, that their
organisations no longer operate like a “back street garage” or in a “cottage industry”.
Appendix K considers in greater detail how language can illustrate how the
organisation’s past and size is framed through the utilisation of various descriptive terms
3.0 Identity and perceptions
This section will focus on owner/manager and workforce identity alongside the role of
perceptions, drawing particularly on themes of labour process and aligned with the deep
structures concept proposed by Whittington (1988) to exemplify the subtle yet
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substantive differences between the cases and the subsequent complexity inherent to
any causal impact upon the HR narrative. This section is primarily aligned with research
question 1 and an illustration of how complex aspects of growth and the development
of HRM can be.
3.1 The influence of the owner/manager
As stated in the introduction of this chapter, the role of owners or founding fathers in
shaping organisational culture is to be considered in this section. Within this context, a
central premise of the empirical work is that owner/manager ideology, power and
interests can act as a potential barrier to the formalisation of organisational structure
and processes, or dissemination of human resource management practices, partly due
to the desire to retain control and decision-making responsibility. Furthermore,
Whittington’s (1988) theoretical framework relating to deep structures will also be
utilised to better understand the motivations and actions of the owner/manager and to
illustrate the presence of a complexity and the contingent forces influencing the
development of HRM, as has been probed by research question 1.
3.1.1 Case A
When speaking about the owner/manager, a concept or role so often referred to in the
SME literature (Gunnigle and Brady, 1984; Bacon et al., 1996), it is the managing director
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of Case A that is being referred to, given that it is the managing director of the
organisation who is responsible for the day-to-day running of the organisation and
therefore the individual who interacts with, and makes decisions relating to, the HR
function of the firm. Beginning his career in aviation as an apprentice at the very
company he is now at the helm of, the managing director has worked his way up the
hierarchical ladder over a twenty-year period. Furthermore, it was he who was in control
and responsible for navigating substantive levels of organisational growth. Prior to the
organisational growth, it was the norm for the managing director to take a ‘hands-on’
role; with all decisions, however minor, being run through him; “the MD, he used to do
pretty much everything” (Case A, Manager 5). However, as the organisation grew, so too
did his workload, to an extent that this became unsustainable for him to undertake
alone, something that the managing director himself now recognises with hindsight:
At one point I think I did everything, and it got too much, and it affected me, and it affected me personally…it probably caused my divorce, because I was never at home, but that’s not a work issue, that’s personal but at the time, there, I was reluctant to let it go, I was too scared to give it to someone, and I thought, oh they’re not going to be able to cope with it, and it got to the point, I had no choice, do you know what I mean? And we put a new management structure in place two years ago…
(Case A, Director 1)
[Case A] was our baby…and because of that, it’s your family. (Case A, Director 1)
As conveyed above, such a transition was not without hardships: having been
responsible for overseeing significant organisational developments and growth, he
became territorial over what he called his “baby”, finding it difficult to “let it go” and
delegate responsibilities or tasks. This is a finding in agreement with previous literature
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concerning owner/managers and delegation in SMEs (Martin et al., 2016) and a
reiteration of the ‘autonomy crisis’ proposed by Griener (1972; 1998) concerning the
decision to delegate. However, in approximately the past two years, the managing
director has slowly released aspects of the day-to-day decision-making process to
concentrate on the more significant and strategic decisions. These changes added
additional layers to the relatively flat organisational hierarchy. More recently, further
delegation culminated in the recent formation of the board of directors.
When asked what it meant to be the managing director and to be at the head of
the organisation:
It means everything to me. (Case A, Director 1)
Perhaps because he has himself worked his way up the hierarchy, having “once stood in
the shoes” (Case A, Director 1) of the very people who are now answerable to him.
Accordingly, he can relate to their needs and feels responsible for their livelihoods,
especially as some of those employees are also his friends, individuals whom he
socialises with outside of the workplace and has known for a considerable period of time,
in many cases before they started their employment with the organisation (aligned with
the informal methods of recruitment which will be analysed in Chapter 7 – The mediation
and formalisation of human resource management in the small and medium sized
enterprise). What also became apparent is that he feels accountable for ensuring the
workforce’s development, particularly the apprentices and younger members of the
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workforce. Again, his own experience as an apprentice appears to be the motivating
factor.
Returning to Whittington’s (1988) deep structures analogy that was described in
the first literature review (Chapter 2), and understanding the impact of social structures
on strategic choice: there exists a grounding of human activity in social complexity and
the insistence on real social structures as a pre-condition to agency, thereby inferring
the influence of characteristics, including class, gender or ethnicity for example, that
must be identified as social idiosyncrasies and that ought to be accounted for and fully
understood as a pre-requisite to understanding decisions made by the owner/manager.
The owner/manager’s ideology therefore represents a significant aspect of study when
trying to understand change and learning imperatives, and ultimately the degree to
which HRM is adopted in the context of the small firm, given their accountability for the
uptake and dissemination of such a function (Gunnigle and Brady, 1984; Bacon et al.,
1996; Nolan, 2002; Mazzarol, 2003). Consequently, in application of Whittington’s
(1988) theoretical framework to Case A, which serves to sensitise the reader and provide
understanding of the underlying motives of the managing director – in this instance their
motivations to be active in the training and developing of apprentices and younger
members of the workforce – can accordingly be understood given their own experiences
as an apprentice.
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3.1.2 Case B
In a comparable manner to Case A, similarities can be drawn with the reluctance of the
managing director to delegate responsibilities in line with organisational growth:
As you grow, you can’t be involved in everything, and one of the key issues, for me, is at some stage, you end up trying to ‘do’ the business, where really you should be concentrating ‘on’ the business, and having your team of managers and team leaders…they should be doing the business, and you should be focussing on developing the business. So that’s one thing that I’ve focussed on.
(Case B, Director 2)
Furthermore, a complex, albeit interesting, dynamic was identified in respect of
the relationship among the senior management team, believed to be a consequence of
familial dynamics. As noted previously, the owner/founder of the organisation now
holds the role of chairman, with two of his children holding directorships, including the
managing director role, and in a similar manner to how the managing director of Case A
is having difficulties delegating responsibilities to line management, the owner/founder
of Case B appears to have similar difficulties delegating responsibilities and allowing his
children carte-blanche in respect of day-to-day activities. This could be intrinsically
linked to the relationship between parent and child and the asymmetrical power
relations in favour of the elder as per their respective positions in the family hierarchy,
exaggerated further still by disagreements born out of differing generational attitudes,
beliefs and behaviours, herein referencing Whittington (1988) again, and the influences
derived from generational idiosyncrasies, which may go some way to explaining
disagreements between the “old-school” owner/founder and the managing director:
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But the higher managers, like LM [owner/founder]… old-school, who doesn't like spending money, doesn't want it 'till it's needed.
(Case B, Director 1)
He [LM - owner/founder] thinks you can just sack them and show them the door. (Case B, Director 1)
The owner/founder’s beliefs and opinions are arguably a consequence of his own
learned experienced amassed at the head of the organisation, although this occurred at
a time when the organisation was a lot smaller, and consequently the influences exerted
on the firm were different, most probably lesser; the goals of the organisation no doubt
differed also, and the landscape surrounding HR and employment law was likewise not
as pressing (CIPD, 2015).
3.2 Composition of the workforce: Employee profile and characteristics
This section will compare employee profiles and characteristics of the respective case
study firms. The reasoning behind the inclusion of this section is an attempt to further
illustrate the presence of contingent characteristics and a complexity inherent to how
HRM is developed (research question 1). In this instance, the nature of the product
system and skill requirements structure and play a role in defining HR needs and
influence decisions.
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3.2.1 Case A
Regarding Case A, with the exception of the chairman, the managing director (albeit
extremely briefly) and the director of compliance, no other employees had prior
experience in the aerospace sector before working for the organisation. A selection of
occupations previously held by employees of Case A have been compiled:
I’ve worked in insurance. I’ve worked in a warehouse. I’ve worked at making furniture and picture frames.
(Case A, Employee 3)
I worked for about a year and a half doing demolition at the Primark in Manchester, and before that I worked for a shop fitting company for about three years and before that I did a stint of about 19 years as a chef.
(Case A, Employee 1)
I worked for 12 years as a 3D visualisation modeller, which is creating 3D models from blueprints...Eventually, the company got bought by a guy who took it in a different direction, made me redundant. I started here as a labourer at the same time as doing a little bit of personal training in a gym, like cash-in-hand personal training.
(Case A, Manager 1)
The preceding examples can be contrasted with the director of compliance’s
career to date, which began as an apprentice for British Aerospace in 1980. To date, he
has amassed 37 years’ experience in the sector:
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Worked at British Aerospace in 1980, started as an aircraft technician. Did my apprenticeship for four years. Then concluding that at the age of 20 I went onto the shop floor to be trained as an aircraft fitter. Did that for a few years but then went back to college to do my managerial qualifications…Came out of there after that, I went to be a supervisor at Chadderton Aerospace and then was pretty much fast-tracked really. I was one of the youngest managers at Chadderton as an operations manager…So did that for a few years but I saw that there were opportunities in the workshops to make money…So we set up a company, set up our approvals...So I was the accountable manager for the company, and obviously the MD of operations…So I did that in 2004, and I did that for seven years… But following that in 2010 I left there, sold my shares and decided to go self-employed doing various things…I was approached by Hawker Beechcraft to work as an operations manager in charge of a military project...So I did that for a couple of years…And then I was fortunate to be approached by CJ, because of the quality issues that [Case A] were having.
(Case A, Director 2)
This stands in stark contrast to his colleagues and the vast majority of the
employees of Case A. It would possibly be an exaggeration to describe their experience
of working in the aerospace sector as a ‘career’ determined by conscious and deliberate
thought-out intensions:
When I first joined the company, I’d been out of work for six months after being made redundant, and I thought… ‘Cause it’s only a mile and a half from where I live, I thought, that’ll do for the time being until I find a proper job, but seven years later I’m still here.
(Case A, Manager 2)
This could be a consequence of the heavily informal recruitment methods that Case A
adopts (see Chapter 7, section 2.0 for discussions concerning the recruitment and
selection methods adopted by both cases). However, given their typical age – “there’s a
lot of fairly young staff here” (Case A, Director 2) – it is understandable that they have
yet to shape their own career path. One further observation in respect of employee
characteristics recruited by Case A:
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We've had people come into this organisation and with the greatest respect, they've come from backgrounds that they've not had a chance in life...They need every support to give them a chance in life and it's great to see young lads getting developed.
(Case A, Director 2)
These individuals typically haven’t followed an academic pathway: “I’ve always
been around spanners” (Case A, Employee 4), and have left education institutions at the
earliest possible opportunity, in order to enter the job market and/or possibly gain
vocational accreditations:
Before I came, I’ve always been into – let’s just say the common phrase – ‘a grease monkey’, I’m a welder actually by trade, I have a merit in that.
(Case A, Supervisor 1)
The following comment, made by a manager from Case A, gives us an indication
of the ease with which employees can be trained to the required standard:
[This was my] first experience of using tools. I remember on my first day, MK asking me for a ratchet. I said, if you don't point at that, you're not going to get it, literally I didn't know a spanner, a screwdriver, zero tools. I've had to learn everything from scratch, aviation included, zero knowledge whatsoever of.
(Case A, Manager 1)
Thus, the relative ease with which employees can be trained, because the work
undertaken by the organisation is generally deemed to be of a semi-skilled nature,
means it allows such individuals to occupy such roles without having attained
experience, accreditations or qualifications previously. Consequently, while training is
required to carry out typical maintenance tasks such as inspections or tyre changes, or
performing minor repairs to the components, the degree of training required is not
extensive.
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This case succinctly illustrates how the nature of the product system and skill
requirements structure and play a role in defining HR needs and can influence decisions,
in this instance promoting a degree of informality to operations, in application of
Porter’s (1985) generic strategies identified to achieve competitive advantage –
specifically, those of innovation; quality; and cost leadership – Case A have adopted a
strategy of cost leadership.
Interestingly, and in contrast, those employed in the past with academic
qualifications do not appear to have had successful spells of employment:
We got a lad in…who was an aeronautical engineer, really quite highly trained…He only worked here for a few weeks. I think he was one level down from working for NASA. Absolutely useless on a shop floor, couldn't use a spanner, didn't know which end to use a screwdriver. They're educated that way, they're so well educated in the book, they're so slow and so useless with the tools. So, it's trying to find a combination between a guy that's going to go out there and get covered in grease and dirt, and graft, but at the same time use a manual, a CMM and be able to read and do a little bit of maths…And I think if you go for the overeducated guy, if you go for a guy that's been to university, he's expecting a better working environment and he's expecting a better salary.
(Case A, Manager 1)
Thus, management appear to prefer recruiting employees with no experience or with
few academic achievements, individuals they can mould and develop:
It was sometimes a case of who you know as well as what you know. And also, what you’re like as a person. Not necessarily how qualified you are. I don’t think I’d have been any better or worse at this job if I’d got 15 GCSEs compared to what I actually have got. ’Cause I think if they get the right person, they’ll start from scratch and go from there, then they can see the potential in the people.
(Case A, Employee 3)
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Finally, when considering employee perceptions of the aerospace sector,
respondents of Case A appear to have believed it required a high degree of intellect:
Before I was in the industry, I thought it was even more – well, when you’re not in the industry, you think of an aircraft and you just think, wow, you must be a rocket scientist to work there.
(Case A, Supervisor 2)
Despite the work being undertaken at Case A not being of a particularly skilled
nature, it is still intriguing to note how by merely being associated to the aerospace
sector, and its perceived identity as being a high-end, specialised and progressive sector
of the economy, such connotations become attached to all firms operating within the
aerospace sector and by association are used by the employees of Case A to upgrade
and represent their work: their identity mediates garage work. Their sense of meaning
or purpose is heightened further still by undertaking work on an easily identifiable,
crucial and safety critical feature of an aircraft – its wheels and braking systems.
3.2.2 Case B
Employee profiles and characteristics of those employed by Case B can be split in to two
distinct groupings. The first comprises those working within the recruitment arm of the
organisation: a phone-based role with a call-centre environment, where those employed
are typically younger in age and with no previous experience in aerospace:
Some of the people out there in the office, that are dealing with aeroplanes, don’t know the first thing about them…
(Case B, Manager 3)
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A selection of previous careers or positions held by employees working within
the recruitment office include:
Before I worked here I did plumbing at college, and then I trained as a hairdresser, but then I moved here.
(Case B, Employee 4)
I did work in a hotel, it wasn’t [for] very long though, and before that for the council.
(Case B, Employee 7)
I was in college doing performing music. (Case B, Employee 8)
By contrast, the engineering-based roles comprise older contractors and
individuals with vast experience and qualifications or licenses to operate in the sector:
Started off I did a full apprenticeship at British Aerospace in Woodford. I left British Aerospace in 1984 and I went working throughout Europe for 17 years. I worked at various places some of the big European operators on a long-term contracts basis, so working as an aircraft engineer, sheet metal worker specialist, working at KLM and various places. I then returned back to the UK and worked at a company called Dan-Air, an old company for six years, they went bust or stopped functioning and operating out of Manchester.
(Case B, Director 4)
Confirmed by other respondents, an apprenticeship appears to have been the
route into the aerospace sector, particularly during the 1970s and 1980s when the
above-cited respondent embarked upon their career. Moreover, an apprenticeship at
British Aerospace seems like the main route for those seeking entry into aerospace in
the North-West. The experienced engineers have over recent years been joined by a
number of young apprentices, with the organisation having made the conscious decision
to train and develop apprentices, bestowing upon them the knowledge of the
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experienced and skilled engineers prior to their eventual retirement and in the process
attempting to circumvent an ever more competitive and challenging job market.
In comparison to Case A, who appear to have gained the benefit of keeping their
overheads low because of the lower wage demands of prospective employees, Case B
encountered problems because of the nature of the work undertaken and the
experience held by the targeted demographic:
LM doesn't like paying money. He wants us to keep all the salaries low. You know, even though we'll do a bit of market research...he'll say, why aren't you getting anybody for the role, and we'll say, well you're not offering the right money, that's why you're getting this kind of candidate, you've got to offer the right money.
(Case B, Director 1)
This is a problem that appears to be exacerbated further still by the apparent
generational values and beliefs spoken of earlier and held by the chairman of Case B.
Moreover, this represents a further example of how contextual dynamics can influence
HR needs, an added degree of complexity that must be accounted for when considering
HRM development, change and organisational growth (research question 1).
A final thought for contention concerns the role of perceptions of the aerospace
sector among the workers. In comparison to Case A, the engineers employed by Case B
did not think there was anything particularly prestigious about working within the
sector, no more so than the automotive industry for example:
People think it's a glamorous and exotic job, working on aircraft, but I think it's as good as working on cars or anything else personally.
(Case B, Manager 3)
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The nature of work and the sector can frame and assist the view of
professionalisation and bureaucratisation. An understanding of their perceptions is
valuable for a greater understanding of the employees’ responsiveness or openness to
change, particularly as the case study organisations transition through a period of
growth and development and are exposed to the subsequent increase in pressures
placed upon them, both internal and external to the firm, and which seek to install a
heightened degree of formalisation, bureaucratisation and professionalisation.
4.0 Organisational cultures and familial characteristics
4.1 Organisational culture
As noted by Alvesson (2013), definitions of organisational culture are highly variable, and
while the concept of culture is not integral to the thesis, we need to be alert to aspects
of the internal cultural environment of the firm. For the purposes of this research,
organisational culture can be defined as “a pattern of shared basic assumptions that the
group learned as it solved its problems of external adaptation and internal integration,
that has worked well enough to be considered valid and, therefore, to be taught to new
members as the correct way you perceive, think, and feel in relation to those problems”
(Schein, 1985: 491). This definition has been chosen for its explicit recognition of the
need to account for external factors and internal idiosyncrasies, in alignment with the
theorised complexities and contingencies inherent to SMEs.
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Cultures of growth and maturity were apparent within both case organisations,
non-union but ‘regulated’, not arbitrarily, but as an apparent consequence of their
sector of operation: aerospace. Contrast that with the enduring presence of familial
values within both case study firms. Ram and Holliday (1993) suggest that small firms
are saturated with ideology of the family. Accordingly, organisational culture and family
are seen to be inextricably linked; family and local friendships are seen as a defining
characteristic of their organisational framework and identity.
This section will address research question 1 by ascertaining from both cases
what can be learnt from the study of SMEs transitioning through a period of
development and growth, particularly from a cultural standpoint, in addition to the
influence derived from environmental context upon culture. Institutional positioning
(research question 3), is confirmed as having a particularly significant impact upon
cultural idiosyncrasies. It is the intention of this thesis to illustrate subtle contextual
differences between the two cases with a view to discerning a better understanding of
cultural influences upon HRM development.
4.2 Case A and a ‘culture of process’ derived from the sector of operation
Before digressing towards notions of the family and its noteworthy impact upon
organisational culture, it is crucial at this juncture to identify and deliberate over
influences derived from operating in the aerospace sector and the close relationship
between aerospace, safety and quality compliance. Not surprisingly, given the safety-
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critical nature of the work being undertaken, the aerospace sector is highly regulated;
there exists a heavy prescription towards procedural compliance both in terms of quality
and safety, thereby creating a ‘culture of process’. This became particularly apparent
within Case A, as can be inferred from the following respondents’ comments:
Personally, because I've only known really aviation for if you like 37 years, all I know are procedures…aviation…because it's all about procedures…At the end of the day I love working to procedures because we're very, very highly regulated. Aviation is very highly regulated and we're governed by our procedures. That's how we're judged.
(Case A, Director 2)
Because of what we do, we have to be sticking to the rules…Comparatively strict because there’s so many rules and regulations...And certainly, as the years have progressed here, there’s an increased amount of paperwork as a direct result of that…But yes, there are rules and regulations at this as a company, you know, we get frequently audited. Which we have to adhere to.
(Case A, Employee 3)
To what extent these influences, derived from the sector of operation, transpose
themselves upon the HR narrative is a question that will be considered in a recurrent
manner throughout the four empirical chapters. Such a line of enquiry is aligned with
research question 3 and the extent to which institutional positioning coerces, facilitates
or encourages HRM development in the growing SME.
4.3 Case B and intra-organisational cultures
An interesting observation was drawn out of the research that reinforces the above
suggestion that the safety-critical nature of the work being undertaken in the
workshops, and the subsequent degree of regulation that must be adhered to therein,
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directly impacts upon culture. The recruitment arm of the business, and its culture,
appears to operate on a more informal and unprofessional basis in comparison to the
engineering arm of the business:
One day, a customer was walking through [the recruitment office], and they were messing, throwing paperclips about and all that. Well, that’s not good, is it? And the conversations aren’t what you should talk about in an office.
(Case B, Employee 1)
There are definitely two sides, you’ve got the workshops and then you’ve got the offices…It might as well be two companies.
(Case B, Employee 7)
It’s more formalised and professional than you expect for a company [of] maybe a similar size in a different sector, but only if it’s related to the engineering side.
(Case B, Director 3)
Moreover, and as alluded to in the above comments, the physical wall that
separates the office space used by the recruitment arm from the workshop where the
engineers operate could be identified as an analogy to represent what “might as well be
two companies” (Case B, Employee 7). This wall also sees a separation between the
typically experienced, older ex-contracting engineering employees and the younger
office-based recruitment arm. This could be a consequence of the stringent rules and
regulations laid down by the CAA that appear to impact the engineering side of the
organisation to a greater extent. Influence derived from the external environment
(research question 3), will be analysed in greater detail in Chapter 8 – The regulatory
spaces and context of small and medium sized firms: Dynamics and interactions. Thus,
not only does an apparent dual culture between the familial and the professional reside
within both organisations, but within the context of Case B intra-organisational cultures
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can be identified, illustrating how culture can be highly receptive to stimuli.
Comprehending such an association may prove to be a critical and distinctive feature in
understanding the case study organisations’ motives for change. In this instance, it is
particularly interesting to see if the aforementioned “culture of process”, or procedural
formality, is transferred to other areas of the organisation, including the HR function.
4.4 Understanding the role of the family in the SME
The following paragraphs and subsections will seek to expand upon the familial cultures
inherent to the two SMEs. This is with reference principally to the influence derived from
the deep structures conceptual framework presented by Whittington (1988). Notions of
the ‘family’ in this instance can be extended beyond relatives of the owner to include
non-relations, with the term being used to describe the atmosphere of the workplace,
one that provides a sense of community, a common goal or purpose, and feelings of
security. A series of extensive quotes have been utilised here; this being deemed the
most appropriate way to illustrate cultural characteristics.
4.4.1 Case A and the diminishing influence of family
Evident from the following comment, Case A still retains a familial atmosphere, this is
despite the fact that only two members of the workforce are related to the
owner/founder of the organisation (five percent of the workforce):
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This business has always been a family-orientated business. It’s…obviously a very professional business because, you know, being in the industry that we’re in, it’s a very serious industry, there’s potentially people’s lives at stake, but the company is definitely a family-orientated company in terms of all the guys socialise together, even the owners, you know the MD and chairman are very friendly with the staff. I’m good friends with both owners. We have social days, work social days, two or three times a year where we go out and have team bonding sessions…we play bowling and/or whatever it be. Everybody socialises with their friends inside work and outside of work as well, which for me personally is definitely a good thing because it means that when they’re out there on the shop floor, they will definitely give each other that moral support when things are bad and work’s tough and the volume might be high and the guys are needing to stay behind a do a few extra hours and help each other out, they will always do that.
(Case A, Director 3)
However, the diminishing influence of family is expected to occur by senior
management, and in firm alignment with existing research (including Handy (1999) and
the transition from a ‘power’ to a ‘role’ culture), should additional growth continue at
its current rate.
4.4.2 Case B and familial tensions
Within both organisations, a strong sense of familial values can be seen, albeit more so
within Case B, wherein three generations of the family currently work for the
organisation including the owner/chairman, the managing director and other members
of the senior management team. In total, eight of the forty members of staff, twenty
percent of the workforce, are related:
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It is a family in that it's the chairman's son, daughter, his grandchildren, et cetera. But it's also a family in the broader sense in that it does treat its employees as though they are in a family. So it's probably a little bit cooler now in putting these regimes in place, but it's still there.
(Case B, Manager 2)
My daughter works with me, she does the wages now. (Case B, Employee 1)
There’s the dad and the sons and the daughters but I like that element of it. HG has her grandad there, I just think that’s really nice.
(Case B, Employee 3)
Again, in line with organisational growth and as would be expected, there is
evidence of diminishing influence of the family, with the organisation moving forward
“in a corporate way” (Case B, Employee 7) and as one manager of Case B proclaims; “you
can't be a family multinational” (Case B, Manager 2). Other comments made by
respondents of Case B concerning its transition include:
It’s trying to maintain the family-feel but it will change. It might lose a bit of its identity, I think it will last probably for another five years, then I think it will lose its traditional identity, truth be known.
(Case B, Director 4)
Too family-friendly orientated, it's not professional. But we're getting there, hopefully, but it's a battle…it isn’t necessarily a negative, not when you're a small company. But I think when you get bigger, it is…I think when we were smaller, years ago, you know, it was quite a nice, friendly place to work. You know, anything went, it didn't matter if you needed time off, or, you were a bit more flexible with your staff. But now, you can't do that, because there's too many staff.
(Case B, Director 1)
Another interesting finding, as can be concluded from the statements made
below by respondents of Case B, concerns familial tensions that exist there, with
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evidence of preferential treatment for family members and suggestions of ‘negotiated
paternalism’ (Ram and Holliday, 1993):
If you were born into that, then it’s like the monarchy, you’ve got a right to say and do what you want. And I think there’s certainly been examples of that, over the years.
(Case B, Manager 3)
The downside to having family members is they will be given inevitably more leeway than somebody that wasn’t a family member and we had issues with a family member in the workshop…when they’re not being a team player and abusing their position, it just creates a lot of ill feeling and contempt…
(Case B, Supervisor 2)
Such tensions were not apparent within Case A; however, would the researcher
be able to easily identify such aspects given his own family member status within Case
A? This is where researcher reflections in respect of personal biases becomes of
paramount concern as a failure to do so could potentially be to the detriment of this PhD
thesis, as alluded to in the preceding methodology chapter.
Also worthy of further exploration, and as described above, one employee of
Case B referred to family members as being a part of the “monarchy”, an interesting
description that alludes to the patriarchal nature of workplace relations wherein power
dynamics are skewed heavily towards family members as a means to limit control, in
agreement with the aforementioned work of Handy (1999), who found family
organisations typically operate under a ‘power’ culture for reasons of control.
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4.5 A dual culture of professionalism and family: The issue of maintaining a balance
in Case A and B
A dual culture, combining the formal with the informal (and as alluded to by research
question 2) resides within both organisations. Professional, formal or more corporate
ways of operating, as the organisations seek to adhere to the aforementioned
regulations and a ‘culture of process’, can be contrasted with a more familial, informal
and flexible perspective of old, creating a dichotomy, particularly as the organisations
are subject to further growth and enhanced levels of influence, putting strain on a more
flexible means of operating. In application to the broader literature and existing debates,
according to Martin (1992), there are issues in cultural analysis concerning
differentiation and ambiguity inherent to an organisation being valid perspectives on
culture, wherein each perspective holds some form of legitimacy and individuals can
shift cultures frequently within an organisation – including those embedded within
formal or informal practices (Martin, 1992). This means there may be sub-cultures in
different parts of the organisation, or multiples sets of values and norms being enacted
at the same time, which creates ambiguity.
As has already been stated, familial cultures are heavily engrained within both
organisations, which sees family and local friendships as a defining characteristic of their
organisational framework and identity. Observations made by employees of Case A:
It’s a family company, everyone’s very welcoming, they’re friends, it’s a nice place to come in to in the morning.
(Case A, Employee 5)
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Most of the staff are quite young. But sometimes, some of the young ones do come and speak to some of the older ones, sometimes, about issues that they have, whether they’re work-related or non-work-related even, sometimes, you know. Which is good.
(Case A, Employee 3)
There's a lot of friends work here, there's a lot of friends outside of work, work here that see each other. And even above that, if I'm in trouble with my car or someone's car doesn't work, JN will say, you know, you take the work van, use my car. People are straightaway very…you wouldn't be left…CJ or DW will tell me to take the work van home and I have done several times when my car won't start. Yeah, I do believe there's endless help. I don't believe you could pose a problem to DW or to CJ that they couldn't solve for you.
(Case A, Manager 1)
In respect of Case B, meanwhile:
The culture of [Case B] is a pure family-run/built company, so we try and send that through, not a great deal of hierarchy in there. We tend to be hands-on as much as we can with…and be accessible to our fellow directors that we employ and managers, line-managers, so at least, we’re there. The door’s always open, so if they’ve got a problem, they can come and speak to us about it.”
(Case B, Director 2)
It’s very friendly, if you speak to obviously the owners, they see the guys as an extended family, which is growing daily, but, yeah, they do treat people very well, very fair.
(Case B, Supervisor 1)
In both organisations, a culture of informality exists as a consequence of familial
ownership and employment trends, perpetuated further still by the organisations’
favoured method of recruitment: word of mouth, which offers the organisations the
benefit of speed to ensure rapid levels of organisational growth and demand are met.
Contrast that with the requirement to operate in a professional manner, in a way that is
expected of a growing organisation, to conform to the CAA’s standards and to be
perceived as a dependable and quality assured organisation by its customers. Each mode
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of operating offers benefits and drawbacks. Operationally, the optimal position would
be to combine both cultural perspectives; a dual culture that allows for the degree of
flexibility offered by adopting more informal arrangements alongside the benefits to be
accrued from adopting a corporate and professional identity usually associated with
larger firms.
The ability to combine the formal with the informal in this manner, it could be
contended, is only realistically achievable by organisations of a particular size and at a
particular phase in their development. Organisations must be large enough that they
have the resources, both in terms of personnel and capital, to strive towards formality,
whilst also being small enough that they can hold on to their informal, more flexible
roots and alternate between the two, to pick and choose how they tackle problems, with
relative ease. Here the notion of ‘flexible formalisation’ becomes relevant and can be re-
introduced; conceived to account for such a predicament, such a theoretical construct
will be discussed in greater detail in the following chapter, which takes as its focus the
evolving nature of HRM. A comment made by an employee of Case A succinctly
illustrates the presence of ‘flexible formalisation’, although it goes on to question for
how long it will remain applicable with forecasted future growth expected:
I’d say it’s semi-professional, whereas a few years back it was probably more family-run. It’s getting more professional now I think as the company is growing and getting bigger.
(Case A, Manager 2)
An interesting dynamic or tension results, and, as alluded to in research question
2, an identity crisis of sorts, as employees and the organisations alike seek to better
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comprehend how they should act or behave in a given situation – a fascinating
consequence brought about by organisational growth and in these particular instances
exaggerated by external influences as derived from their sector of operation. Such a
tension will be considered in the remaining empirical chapters, particularly Chapter 7,
which takes as its focus the specific HR levers and how they are utilised.
5.0 Summary conclusions
A primary objective of this chapter, in close alignment with research question 1, has
been to analyse themes of growth and change, strategy and structure, culture and
identity. This has been achieved by analysing historical and contextual variables in
relation to both case study organisations. Both organisations have been subjected to a
significant degree of growth and both are presently wrestling with ‘growing pains’ in the
form of enhanced levels of complexity, new forms of management and elongated
hierarchies, in addition to the bureaucratisation and professionalisation of policy and
practice.
There are a number of important findings identified in this chapter which have
been summarised here. First, a particularly noteworthy finding includes the lack of
capacity, or ability, of the line-managers, which appeared to play a significant role in the
challenges faced by both case study organisations. What is interesting and worthy of
additional emphasis is both organisational awareness and manager self-awareness of
the limited knowledge or capacities of the newly established management teams.
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Second, there is further awareness of how their respective SMEs have grown and
matured; how development and growth is understood by management and staff
through the utilisation of language. There appears to be a definite perception, in both
case study firms, that their organisations no longer operate like a “back street garage”
or in a “cottage industry”. This language can illustrate how the organisation’s past and
size is framed through the utilisation of such descriptive terms and provides a real sense
of how the employees and management within both case study firms perceive their
organisation’s respective transitions. Furthermore, it could be suggested there is a
subsequent impact upon the worker and their perceived identity: how they
conceptualise or visualise themselves frames behavioural choices in the employee, what
they do and how they act.
Third, employee profiles differed across the two case studies. A particularly
interesting finding with reference to employee profiles is that employees of Case A
appear to use their sector of operation to enhance their status, upgrading and
representing their work.
Fourth, an apparent dual culture, one that combines the formal with the informal
and resides within both organisations, was introduced in this chapter. Professional,
formal or more corporate ways of operating, as the organisations seek to adhere to
regulatory pressures and a “culture of process”, can be contrasted with a more familial,
informal and flexible perspective in the past, creating a dichotomy. Such a tension,
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relatable to research question 2, will be built upon in succeeding chapters, alongside the
introduced concept of ‘flexible formalisation’.
Fifth, in line with organisational growth and as would be expected, there is
evidence of apparent diminishing influence of the family. More interestingly, though,
Case B aptly demonstrates the importance and relevance of deep social structures
(Whittington, 1988) to this thesis and more broadly to the SME and HRM debates. It
serves to sensitise this thesis to the degree of complexity apparent in respect of the
decision-making abilities of the managing director (son) and owner (father).
Disagreements could conceivably be linked to the relationship between parent and child
and the asymmetrical power relations in favour of the elder as per their respective
positions in the family hierarchy, exaggerated further still by disagreements born out of
differing generational attitudes, beliefs and behaviours. Referencing Whittington (1988),
deep social structures, and the influences derived from generational idiosyncrasies, go
some way towards explaining disagreements apparent between the “old school”
owner/founder and the managing director who is more attuned to current laws and
obligations. Whittington’s (1988) work, adopted as a conceptual underpinning, will be
applied throughout this thesis.
To conclude, this first empirical chapter has sought to more generally examine
attributes of historical, cultural, and contextual derivation and to help situate the
discussions of subsequent chapters. This chapter has provided sufficient evidence to
suggest a complexity to SME growth and development in addition to the fact that
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contingency factors are at play, whether they relate to employee or owner/manager
characteristics, cultural stimuli or sectoral influences, among others. Subsequent
empirical chapters will elucidate the matter of whether institutional positioning can
coerce or encourage HRM development, and the extent to which deep structures are
pervasive, or actors inhabiting the ‘regulatory space’ (research question 3) can influence
proceedings. As indicated at the outset, it is intended to advocate a qualitative case
study based approach towards SME research, by illustrating the significance of
contextual dynamics for their development, alongside their susceptibility to
environmental stimuli being arguably enhanced in comparison to larger organisations,
given the greater impact that deviations from the norm can have. Following that line of
analysis, use of the Greiner model (1972; 1998) was intended as an illustration of how
existing literature is typically ignorant towards contextual factors. Greiner’s growth
model, while useful for understanding general patterns of growth, ignores the highly
idiosyncratic nature of the growth process. It ignores the nature of the workforce (whose
characteristics are deemed to be a mediating factor and important finding in the next
chapter). Moreover, it ignores agency and culture, failing to account for non-linear
dimensions of growth in addition to a much earlier intervention by external bodies, with
the influence imparted by the aerospace sector’s regulatory body an example of such,
alongside the curious roles of the consultant which are referred to in the next chapter.
Thus, the next chapter will analyse SME peculiarities and nuances of how HR evolves to
a more formalised and bureaucratic state, before moving onto a discussion of HR
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practices and tensions experienced by SMEs relating to the informality-formality
dichotomy in the subsequent chapter.
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CHAPTER 6 – The peculiar nature of how the human resource function evolves in the
small and medium sized firm
1.0 Introduction
Progressing from the preceding chapter, which took as its focus organisational
contingencies of people management in the small firm and themes of growth, change
and culture, the main contribution of this chapter is a consideration of SME peculiarities
and nuances in how the HR function evolves to a more formalised and bureaucratic
state. Closely aligned with research question 1, this chapter will attempt to delineate
what can be learnt from the study of SMEs transitioning through a period of
development and growth for a deeper understanding of HRM, formalisation and change.
The first half of the chapter focuses on Case A, and the second half of the chapter
on Case B. Discussions relating to Case A begin by acknowledging the formalisation and
bureaucratisation of HRM and identifying the role played by the introduction of a
functional specialist and the guidance of an employment law consultant, in agreement
with the existing literature (Kotey and Sheridan, 2004; Sullivan and Garcia, 2005).
Additionally, this section will consider problems encountered by the organisation as it
seeks to adopt a bureaucratic organisational design. Issues principally relating to the lack
of a strong “HR culture” are discussed. This is postulated to be a consequence of
numerous factors including the difficulty contended with by the managing director in
relation to the delegation of aspects of the HR function (in agreement with existing
literature, see MacMahon and Murphy, 1999), a lack of training or experience of the
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newly formed management team and the assumption of assimilation, along with a lack
of a systemic narrative. Excessive focus on regulatory burdens imposed by the sector is
another contributory factor identified and considered.
Secondly, understanding how developments to the HR function impact upon the
workforce is another objective of this chapter; this chapter will consequently examine
the role of HR alongside perceptions thereof. Recognition is made of a close alignment
between HRM, disciplinary action and employment law or litigation protection. While
the preceding chapter demonstrated the influences originating from regulatory
pressures in respect of the sector’s regulatory body, the CAA, here the effect derived
from consultants operating within the remit of employment law will be introduced and
analysed, with further evidence to suggest management could accordingly be regarded
as a shared function or one that draws from various other actors. This line of enquiry is
aligned with research question 3 – how influential are the actors and bodies occupying
the external ‘regulatory space’ in which the SMEs are embedded upon the development
of HRM?
Thirdly, communication challenges are identified, with informal mechanisms of
employee involvement and participation (EIP) heavily outweighing their formal
counterparts. The requirement to formalise communications from a regulatory
standpoint conflicts with an informal agenda, providing for an interesting arrangement
that could be described as an ‘empty shell’, to use Hoque and Noon’s (2004) analogy, to
illustrate the lack of substantive worth or value underlying a particular practice.
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Summary conclusions relating to Case A will at this point be drawn, summarising
perceived drivers of change in relation to the formalisation of HR conventions and
protocols in Case A, including the creation of a dedicated HR role and the utilisation of
an employment law consultancy firm, alongside their subsequent influence upon HR
perceptions. Recognition is also made of the importance of aligning such developments
with a positive HR culture.
The second half of this chapter focuses on Case B, beginning with
acknowledgement of the formalisation and bureaucratisation of HRM as a form of
control at a critical time in the organisation’s development and a logical response to
organisational growth with the addition of a second geographically distant site. The
influence attributable to ACAS will also be considered at this time, this being another
actor occupying the ‘regulatory space’, perceived to be acting as a form of the state’s
voice by pursuing an agenda that emphasises the importance of regulatory adherence.
Facing similar difficulties to those encountered by Case A relating to the enactment of a
more formalised HR narrative, an inexperienced management team and culture change
difficulties are perceived to be contributory factors and will be discussed. Secondly, and
relating to perceptions of HR, negative connotations are held by the workforce.
Recognition is again made of a close association between HRM, disciplinary action and
employment law. Discussions around management not deeming HR responsibilities a
part of their role will also be presented in this section. Thirdly, communication
challenges identified and postulated to represent a control issue, a feature firmly aligned
with familial dimensions of Case B, will be considered. Fourthly, employment relations
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themes will also be drawn upon, including the presence of subliminal or implicit conflict
within Case B, which was interestingly found to be attributed to the memories of trade
unionism, a feature which serves to illustrate the impact derived from the micro-level
environment and provides a curious insight into the nuances and peculiarities of HR and
industrial relations in addition to being a further indication of complexity of causation.
Accordingly, this chapter will seek to understand to what extent organisational memory,
or deep-seated organisational cultures and mechanisms, influence perceptions of HR.
Postulated to be more intense than in larger firms, this theme is linked to the work of
Whittington (1988) pertaining to deep social structures in which the SMEs are
entrenched. Fifthly, the impact derived from Case B having a ‘HR champion’ (Ulrich,
1996) who also holds familial status will be considered, in addition to individual
networks, or ‘networks of personal allegiance’ as perceived by Scase (2005), being
identified as a structuration factor for change: a final yet curious insight into how
regulation develops and illustrating the complexities and subtleties inherent within HRM
development.
Summary conclusions will then be drawn encompassing three noteworthy
findings from the chapter. Firstly, the influence of employment law consultants and
ACAS on the employee’s perception of HRM being strongly associated with employment
law. Secondly, what is to be termed the ‘game’ of HRM appears to be far more complex
than broad tranches of the literature would suggest, with HRM development being
perceived as a complex and negotiated process between formal processes and informal
activities and between management, employees and even external actors. Thirdly, the
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presence of subliminal or implicit conflict within Case B, driven by the apparent memory
of trade unionism and voice mechanisms, offers a curious insight into how HRM
develops and the impact attributable to the micro-level environment.
2.0 The evolving nature of HRM
Following on from the introduction, a principal objective of this chapter is to illustrate
the non-static nature of the HR function, complexities in the development of HRM and
its susceptibility to being influenced by contextual dynamics: particularly ACAS and
employment law consultants. Peculiarities will be examined, including how HR is
perceived by the workforce, the influence attributable to the hiring of a functional HR
specialist alongside the role of family, organisational politics, individual networks and
the ‘game’ of HRM. Such peculiarities are deemed to reaffirm research question 1,
relating to the presence of a complexity in the development of HRM, and research
question 3 and the influence derived from the ‘regulatory space’.
2.1 Case A
2.1.1 Difficulties encountered during the formalisation of HRM and its
bureaucratisation
Regarding Case A, consensus emerged between employees interviewed, who observed
a change in HRM procedures to a more formalised and bureaucratic structure
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approximately three years ago, when they began being subject to enhanced written
policies and practices.
HR function, it’s definitely becoming bigger and bigger…it’s probably the binder of a book now.
(Case A, Director 1)
Prior to that, informality appears to have been abundant within Case A:
When we first started I don’t think we had contracts. I think the first contract we got was like a one-page thing, you will start at this time, finish at that time and this is what you get paid…now it’s all formal, written, and understood by everybody. You have handbooks, policy books, health and safety, all that.
(Case A, Manager 4)
It’s all been very organic, up until now...the need [for HR] has grown alongside our requirement. Now, it’s changed completely, and it’s going to be proactive, where HR is going to be very functional in anything that goes on here…It’s very hard to be proactive with HR, because all you’re doing is protecting yourself…it’s very hard, at the minute, to make it, how do I put this, an asset to the business, not a hindrance to the business.
(Case A, Director 1)
In application of organisational design literature referenced in the preceding
chapter, developments have occurred in a manner theorised by Lawrence and Lorsch
(1967) in their research concerning differentiation and integration. As the organisation
grows and encounters a degree of differentiation, increased need arises for integrative
mechanisms that ensure unity of effort. The formulation of rules and procedures
represents the most basic form of coordination that leads to the bureaucratisation of an
organisation. Additionally, with reference to Greiner’s growth model (1972; 1998 –
Figure 2), phase two of the model – growth through direction – incorporates the
formalisation and standardisation of rules and procedures.
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Interestingly, these changes also coincide directly with the company’s decision
to utilise the specialist knowledge of an employment law consultant and to expand the
role of their environmental health and safety officer by providing specialist training to
undertake HR administrative and advisory tasks:
When we got somebody in HR proper, then it went crazy, then we got everything, whatever you need is all written down so you know exactly where you stand.
(Case A, Manager 4)
This is in agreement with existing literature pertaining to HRM and the SME, particularly
Kotey and Sheridan (2004) in relation to the presence of a dedicated HR functional
specialist and Sullivan and Garcia (2005) regarding the influence deriving from
employment law consultants. The involvement of PEO’s in SME activity elicits a line of
analysis where management can be viewed as a shared function, with numerous actors
and bodies impacting upon proceedings within the firm. This line of questioning will be
pursued in greater detail in the final empirical chapter – Chapter 8 – The regulatory
spaces and context of small and medium sized firms: Dynamics and interactions – that
seeks to map the regulatory space and analyse the influences derived from external
bodies on the case study organisations’ respective HR discourses. Prior to such
adjustments, all personnel matters appear to have been routed through the managing
director:
It used to fall solely on the managing director. He would take on all of it. But as the company’s expanded and obviously we’ve gained a hell of a lot more staff, it’s one hundred per cent…it’s too much for one single person to take on on their own.
(Case A, Director 3)
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As is to be expected, the creation of a dedicated HR functional specialist role has
meant a greater presence within the organisation, something employees of Case A have
noticed. Thus, the introduction of both these parties represents a decentralisation of
decision making that can be credited with ensuring greater adherence to procedural
discourse:
So, you know, we brought in a HR manager and obviously we have internal managers for the departments now…The processes that we’ve got in place now, I would say didn’t used to happen.
(Case A, Director 3)
However, the transition does not appear to have occurred in a trouble-free
manner, nor has it happened as promptly as was hoped; with a delegation of control,
the decision-making process appears to have become fragmented:
I just think it's too fragmented here…CJ involves himself and then I'll involve myself and then LC will involve himself, and PS involve himself. And KS and what have you…And it's all emotion.
(Case A, Director 2)
This could be a consequence of several factors, most prominently the managing
director’s inability to let go and place his trust in other members of the workforce, an
organisational structure and associated roles and responsibilities that are lacking in
definition or clarity and no apparent strong HR ‘culture’. The HR system in Case A is
fragmented, not systemic, and fails to deliver a coherent or strong message to the
workforce. Focus is instead directed towards the engineering aspects and quality
dimensions of the operation. Case A have adopted a strategy whereby they have
installed formalised written procedures relating to HR, but have then failed to recognise
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the lack of training or experience of the newly formed management teams, a position
exacerbated by informal cultures and traditions in respect of people management.
Senior management assume assimilation, resulting in no employee ownership and little
understanding. Consequently, senior management, line-managers and employees all
appear to have differing ideas as to what HR is.
2.1.2 The role of HR and how it is perceived
According to Bowen and Ostroff, (2004) and Wright and Nishii (2006), employees’
perceptions of how and why HRM is implemented throughout the organisation are
important in determining attitudinal and behavioural reactions to their implementation.
In respect of Case A, while some employees did not appear to fully comprehend what
the roles and responsibilities of the human resources function of the organisation was:
“I don’t know what HR actually does.” (Case A, Employee 5)
A common feature of the responses of participants in relation to their understanding of
HR was in terms of employment law compliance and disciplinary issues, one of the
apparent consequences of interactions established with external actors (as identified in
research question 3). Particularly in relation to employment law consultants, there
appears to be a heightened sense of fear in respect of any wrongdoing in relation to
disciplinary proceedings, employment law legislation and ultimately being summoned
to an employment tribunal. Again, this apparent perceived influence will be examined
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in the final empirical chapter. Accordingly, within the confines of Case A, HR is perceived
by the workforce almost exclusively as concerning employment law, disciplinary
proceedings and associated processes. HR thus has strong negative connotations
attached to it, and the more positive aspects, such as training and development and the
up-skilling and enhancement of the workforce was rarely thought of as being a part of
the HR function. The following quote made by a respondent of Case A attests as much:
HR is knowledgeable about the law and about regulation…I get the feeling it's there as a back-up if there ever was an issue with maybe someone being dismissed, procedures have been followed properly, there's a log of all the procedures that have been followed properly.
(Case A, Manager 1)
Following this line of analysis, a senior member of the organisation, a director of Case A,
made the following comment in relation to perceptions of HR in the firm:
Here, HR encompasses the negative aspects of personnel management, it’s too reactive and focused on things like disciplinaries.
(Case A, Director 2)
Such a belief about the role of HR and what it pertains is also held by those higher up
the organisation and perhaps goes some way to suggest why the organisation’s HR
function does not encompass the more positive and proactive aspects of HRM: because
they have chosen not to align their strategic HR goals and objectives with such a directive
or, conversely, perhaps HR is not even on the agenda. The latter is suspected and likely
an accurate reflection, with the organisation having grown at an apparently rapid rate,
thereby making the ability of the organisation to reflect and ensure all relevant policies,
practices and processes are in place – in a manner consistent with ‘best practice’ HRM –
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difficult to achieve when focus is directed towards ‘doing’ the business and providing
the product or service they offer (Mayson and Barrett, 2006). The following quote from
an employee succinctly summarises the state of the HR function in Case A:
How would I summarise HR? Growing and learning. (Case A, Director 3)
In application of relevant literature, Wright and Nishii (2006) draw our attention to the
distinction that can be drawn between intended, implemented and perceived HR
practices. Whilst intended HR practices are those developed to attain desired employee
attitudes and behaviours, due to political, institutional and rational influences the actual
HR practices that are implemented rarely match the intended practices. In Case A, the
influences derived from the employment law consultant could constitute an example.
We can further apply of Bowen and Ostroff (2004) and their attempt to understand the
different dimensions that contribute towards the overall ‘strength’ of the HR system:
they cite the need for consistent HRM messages and a communications dimension as
being one such contributory factor in determining how an HR system is conveyed and
received by the workforce, suggesting that if those at the top of the organisation choose
to promote the HR system in a particular way it is likely to be perceived in such a manner
by their employees.
In summary, recognition is made of a close alignment between HRM, disciplinary
action and employment law or litigation protection, resulting in a heightened sense of
fear in respect of any wrongdoing in relation to disciplinary proceedings and ultimately
being summoned to an employment tribunal. The effect derived from consultants could
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also suggest management might be interpreted as a shared function. Furthermore,
proceedings herein provide a curious insight into the nuances and peculiarities of HR
development, including the role of internal dynamics alongside the impact of regulation,
thereby suggesting further indications as to a complexity of causation.
2.1.3 Formalised EIP mechanisms or an ‘empty shell’?
Within the context of Case A, informal mechanisms of employee involvement and
participation (EIP) heavily outweigh their formal counterparts. This is in agreement with
existing literature relating to SMEs and employee involvement (Wilkinson et al., 2007):
favouring more direct, face-to-face communications, an approach achievable within the
confines of the smaller organisation, whereby physical proximity encourages closer
interactions between parties (Forth et al., 2006):
You’ll probably hear about it in word of mouth first, because of how small the company is.
(Case A, Manager 5)
However, that does not mean that more formal methods have not been attempted: at
one-point department managers appear to have been holding regular meetings, only for
them to ultimately fade away, in all probability as the managers directed their time and
attention towards activities directly linked towards the completion of the end product
and meeting service level agreements with the customer:
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Sometimes we’re very active…[the] first six months we are very proactive, we have managers submitting every month, we were talking to each other and then everybody knew what’s going on, and then all of a sudden it fell down, and we haven’t had any meetings since the end of summer, maybe one in [the] last four, five months.
(Case A, Manager 3)
One manager had reservations about another more formal EIP method adopted
by Case A, making the following comment about notices or bulletins issued by senior
management and passed around the workforce:
I generally don't think they work. Every now and then, something changes, TW will print it out and he'll get everyone's name on the back and he'll get everyone to sign it. Everyone signs that and not one single person out there reads what is written on the front, because it’s a full A4 piece of paper and it's full of words that are far too long. We’re not taking on university graduates, we're taking on people that were out of work just looking for temporary labour jobs. I think there's a lot of words in there they don't understand, and they just sign their name. TW’s happy, he's got a sheet full of signed names saying you understand. I don't believe for one minute they understood.
(Case A, Manager 1)
This serves as a further example to illustrate the organisation’s preference towards
maintaining outward appearances, specifically in the eyes of the CAA or their customers,
of professionalism and formalisation for quality assurance purposes. As alluded to in the
quote above, whether the employees have understood what they are reading is
uncertain. Close similarities can be drawn to notions of the ‘empty shell’, an analogy
devised by Hoque and Noon (2004) to illustrate the lack of substantive worth or value
underlying the practice or policy.
One senior manager with vast experience across a number of organisations
suggested gossip or Chinese whispers to be more prevalent at this case study
organisation in comparison to those firms he had worked at previously:
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A lot will find that people will say don't say anything, but…and all of a sudden it gets out. You could say well, doesn't that happen in most organisations? I suggest it does. But I think it happens more so here. And things tend to get a little bit twisted and people can get a little bit frustrated and irate or emotional over things that really…putting it very crudely, are not a big deal.
(Case A, Director 2)
Ironically, one line-manager even spoke of holding meetings – a formal dialogue
– specifically to quash rumours circulating amongst the workforce:
We do have monthly meetings. They're generally just if I've heard Chinese whispers that have been overblown, what they've heard…to quash them.
(Case A, Manager 1)
This informal dimension could be viewed as being a consequence of size,
facilitative of a culture that ensures that informal channels of communication exist and
that gossip can flourish. However, it can also be seen to be a reaction to the growing
levels of formalisation and growing emphasis on procedure.
2.1.4 Case A summary
In summary, there has undoubtedly been a formalisation of HR conventions and
protocols in Case A. Such developments are motivated by two particular drivers of
change: the introduction of a dedicated HR operative and the influence derived from the
organisation utilising an employment law consultancy firm. Pressures and influences
devolved from the latter, coupled with the relative inexperience of the HR Manager and
their consequent reliance upon the employment law consultancy firm, has resulted in a
perceptual understanding of HRM as encompassing employment law legislation
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compliance in its totality among the workforce. This is reinforced by line-manager’s own
inexperience when they are responsible for enacting HR activities, as a consequence
leading to such perceptions amongst members of the general workforce. Furthermore,
and in response to research question 3, the influence imposed by employment law
consultants provides further indications of SME susceptibility towards actors and bodies
occupying the ‘regulatory space’. An insight into Case A’s evolving HR function is helpful
when seeking answers to research question 1. Notions of an ‘empty shell’ were
apparent, to use Hoque and Noon’s (2004) analogy, when reflecting upon how HR
processes develop. This gives an indication that formalising processes and procedures is
only an inter-mediate part of any progression, with alignment with a positive HR culture,
something that was considered to be lacking, also being an integral aspect of the force
driving HR development. Having analysed the evolving nature of HRM within Case A,
attention will now be directed towards the HR function of Case B.
2.2 Case B
2.2.1 The formalisation of HR and its bureaucratisation as a form of control
In comparison to Case A, which began a process of formalisation some three years prior,
the introduction of HRM protocols was very much a presently occurring activity at the
time the interviews were conducted between March and May of 2017, described as only
having been in place “for a couple of months” (Case B, Employee 2) and in its “infancy”
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(Case B, Director 2). The following comment more comprehensively expands upon Case
B’s current position:
[Case B is] new to HR. I say that tongue in cheek. We've always had HR in various forms, but we have now got some bespoke, dedicated HR people. And we have started taking lids off cans of worms in that activity. The more lids you take off the more paperwork, you realise once you've read it, you need some more tins with some more worms. And it's getting bigger and bigger…I think it's in its infancy at the moment, our HR. I think we're scratching the surface. They're trying to teach us - because we've never had this before - how to, or the right way to go about certain functions that we need to do, certain disciplinaries, certain recordkeeping, to teach us the right way to do it, and come up with some rules and regulations that we can read and understand them, and turn to them when we need to, to try and formalise our HR function.
(Case B, Manager 2)
As stated in the previous chapter, the opening of a new site in Scotland only some
months earlier brought with it an opportunity to install a HR administrator at Case B. The
introduction of an individual with a dedicated HR role appears to align perfectly with the
introduction or updating of HR policies and procedures:
Obviously it’s something that [Case B] are proactive with recently, and improving, we’ve employed an HR assistant up at out other facility…we’re doing things, correct procedures, regulations and also internal procedures and policies…It’s been really lackadaisical over the years...However, obviously it’s becoming a bigger, especially with [New Site], it’s becoming a bigger requirement to have something specific, which is why they’ve employed somebody to deal with those, who is more qualified than an engineer picking it up.
(Case B, Manager 1)
As discussed in the preceding section, in the context of Case A, the introduction
of a dedicated HR role some years prior appears to have had the same effect, serving to
demonstrate the influence deriving from having a HR functional specialist in place for
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HRM formalisation, particularly in terms of written policy and practice – in agreement
with Kotey and Sheridan (2004).
Again, organisational growth has made encompassing HR duties and
responsibilities within a senior individual’s primary role something of an impossibility.
Just like the experiences of the managing director within Case A, the company director
of Case B who has been heavily in favour of developing the HR narrative within the
organisation will admit:
I’ve been doing the HR, pushing the HR, pushing training, health and safety, over the recruitment…Too much, now, that my brain won't cope with…I can't seem to get anywhere, a complete task, because I'm doing so many different things. I'm trying to concentrate on the HR, but because you have so many different things happening every day, like people coming in your office, or whatever, you can't seem to complete a task, 'cause you're always dealing with something else.
(Case B, Director 1)
Within Case B, there appears to have been impetus to bring about change in
2017, albeit whilst the HR function is still very much in its infancy, policies and
procedures are in the process of being created or updated and made accessible through
a company intranet system. Prior to these changes, and in the absence of any form of
structure, formalised policy or process, HR held ambiguous connotations within the firm:
In the past we’d have tried and solved it with an awful lot of Google searching and websites, government websites, et cetera. And if you couldn't find the right answer there, then you'd just go with what you felt was right.
(Case B, Manager 2)
Without interrupting the current line of analysis, the importance of “Google
searching” referenced above by a respondent of Case B represents an important and
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significant yet unanticipated finding of this thesis. Regulatory bodies appear to be relying
upon their ability to reach the SME demographic through the utilisation of online
toolkits. This line of analysis will be deferred to Chapter 8 – the fourth and final empirical
chapter relating to context and regulation.
Case B was studied at a critical time in its development as it sought to transition
away from a “cottage industry” (Case B, Manager 4) organisation towards a more
professional form of operating wherein HRM procedures take on a more formalised and
bureaucratic structure:
I think right now it’s poking its head above the parapet a bit and it’s starting to impinge more and more on peoples’ day to day work. It’s not always been seen as a positive because you’ve done these things by the seat of your pants in the past and relied on your own experience to a certain extent.
(Case B, Director 3)
The role of the employment law consultant played an integral role in the
development of HRM, particularly in how HR was perceived in Case A. It was determined
that ACAS is playing a similar and influential role in the second case study site by
providing training to line-managers and advice on employment law and personnel
matters, to the extent that the organisation, particularly the aforementioned company
director or ‘HR champion’ – to utilise a descriptive devised by Ulrich (1996) – has built a
degree of rapport with ACAS staff:
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I've done most, nearly all the ACAS ones, they are one day courses, like the roles and responsibilities, absence managing, and redundancy, and restructuring, change of terms and conditions…I use their support line all the time. And I've now brought ACAS in to train all my managers and supervisors…The guy from ACAS, who's been delivering all the training here, he's been in on three occasions now, just for a one-off chat with me, like for an hour and a half consultation, to discuss any issues.
(Case B, Director 1)
Thus, ACAS represents another actor occupying the ‘regulatory space’ and that
accordingly allows for management to be conceived as a shared function or one that
draws from various other actors. In this instance it could be suggested, taking account
of discussions here, that ACAS are acting as a form of the state’s voice by pursuing an
agenda emphasising the importance of regulatory adherence, in a similar manner to the
role played by the consultant in Case A. The influence of ACAS will be examined in
greater detail in the final empirical chapter, which seeks to discuss the full impact of the
regulatory context on these HRM developments.
When considering motives for change, the aforementioned addition of the site
in Scotland, and consequent increase in the numbers employed, should not be
underestimated as the primary motivation for the introduction of formalised procedure,
a logical response by the management team as it seeks to maintain control over a
workforce operating at two distinct locations, aided further still by the creation of a
specialist HR position within the firm (Kotey and Sheridan, 2004), located at the Scotland
site, with the apparent aim of further enhancing the degree of control over the
workforce.
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Additionally, an apparent health and safety incident occurred that resulted in the
organisation’s engagement with a health and safety consultant. The incident was an ‘eye
opener’ in relation to Case B’s exposure to litigation and risk. It is plausible that this
newfound concern has been transposed on to other areas of the business, including
HRM and employment law activities:
Management are definitely scared, perhaps because they lack the knowledge of how to go about it, and like you say, there is that threat nowadays, of tribunals and being taken to court. It’s definitely driven by mitigation.
(Case B, Manager 3)
I think it’s coming more and more into force and seems to be getting a bit of a higher profile now…in line with the level of complexity of the business…and the need to be compliant with all the legislation around employment law and health and safety.
(Case B, Director 3)
Given past incidents and their role in the instigation of formalised process
coupled with an organisational strategy that sees the development of HR and health and
safety being undertaken concurrently, it is expected that health and safety is
consequently closely associated with a HR function. Comments made by employees
demonstrate associations between both, for example:
We’ve definitely been subject to more policies and procedures…Smoking policy, that’s a big one. Mobile phones, use of the internet access, first aid, you know, things like that. We've got two fire marshals now too.
(Case B, Employee 5)
In drawing similarities with Case A, it appears the creation of formalised, written
documents is the easier part of the formalisation process, with the enactment of policy
and procedure being more challenging:
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Administrating is one thing, enacting it is something else… (Case B, Director 3)
It is postulated to be a consequence of the capacities of the newly established
management teams, their lack of experience in management roles and the difficulties in
bringing about change to deep-seated organisational cultures and mechanisms,
especially when employees and management have a predisposition to informal
operations – ultimately, employees do not like change. However, there were signs that
sophisticated procedures were taking place even if they were achieved informally and
without written policies and procedures, for example:
So he's been on a phased return, we went and did a home visit the other week, because he'd been off for a week, and we've made it really flexible for him…We’re also going to refer him to some CBT, because his GP has not come up with anything yet.
(Case B, Director 1)
The above statement indicates that they utilise phased returns to work and occupational
health systems, activities that are not new to Case B and carried out despite until
recently there not being a sickness absence policy in place, possibly achievable because
of the smaller organisational size.
2.2.2 The role of HR and how it is perceived
Perceptions of HR at Case B are at present ambiguous, with the aforementioned changes
that are in progress having not quite filtered down to the workforce as yet. One
employee made the following remark:
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HR at [Case B]? Unclear…Confusing and unpredictable. There needs to be better definition.
(Case B, Supervisor 2)
Others used the following adjectives; “dysfunctional” (Case B, Director 4), “non-existent”
(Case B, Employee 8) and “neglected” (Case B, Director 3). At this early stage in the
transition towards a more formalised entity, negative connotations are strongly
perceived amongst the workforce:
I just see HR as one person and it is just dealing with disgruntled people. (Case B, Employee 7)
Conceivably this is because developments have so far focused on rules and regulations,
including disciplinary procedures for example, as opposed to other, more positive and
developmental aspects of the HR function. This is not surprising if the company has
adopted a risk-averse strategy considering the aforementioned incident that occurred in
respect of health and safety and the degree of exposure to which the organisation was
subject, coupled with the rapid levels of organisational growth that has seen the
organisation, and the number of staff employed, double within a very short time period.
A degree of formalisation is the logical response from management as they seek to
maintain control, perhaps acknowledging that the current modus operandi is
incompatible with an organisation of greater size.
Furthermore, one concern raised by senior management, something that the
organisation will have to address in earnest, is the fact that line-managers do not see it
as their role to undertake HR duties and responsibilities:
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It's becoming a battle, where they [line-managers] don't see it as their role. They think it's just HR's role. And the words they use is, they haven't got enough time to do that, their end goal is always to get that product right, and get the product out on time.
(Case B, Director 1)
Such a standpoint could be a consequence of not liking change; the transition
they are presently experiencing towards a more formal and professional structure
certainly represents change. Moreover, it could conceivably relate to the line-manager’s
lack of training and subsequent inability to undertake HR related activities. In a similar
process to Case A, as the organisation has grown and new layers of the organisational
hierarchy have been created, time served appears to be the principal criterion in
choosing candidates for promotion, neglecting potential performance indicators such as
prior management experience. A consequence of adopting a promotion policy of this
kind is that it promotes issues such as the one described in the statement above. They
are experienced engineers by trade, not experienced managers. Thus, and as a
consequence of a reluctance to undertake HR duties and responsibilities, roles remain
ambivalent and a reliance on informal methods remains.
2.2.3 Communication challenges, gossip and relations
A company director and non-family member suggested the role of the family inhibited
the flow of communication, involvement and participation to the workforce:
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Board meetings are very few and far between, the ones I get involved with anyway. They tend to be, you know, it’s the family thing, isn’t it, they have meetings whenever they want a bloody meeting, it’s up to them when they get together. Is that a board meeting, well, who’s to say?...NM or LM will come to me if it’s finance things generally speaking, not always, which bugs the life out of you, but it’s just something you’ve got to put up with…but again there’s no formality about it, occasionally we’ll have proper what you might call board meetings and that sort of thing, but it tends to be a family thing which is going back to the double standards again.
(Case B, Director 3)
Moreover, the owner/founder and managing director, father and son
respectively, appear to inhibit a participative environment, possibly because of a
reluctance to delegate:
There’s currently no management meetings. What's actually funny is, I'm the one who pushes for regular meetings, because I get everybody complaining that they don't know what's going on. We used to have management meetings, I think it was the second Tuesday of every month. When we started to open the [New Site], they decided, NM and LM, that that was too much for them, they needed to concentrate on just a [New Site] meeting. So they had a [New Site] meeting. Which is why I would say, all the workforce haven't got a clue what's going on, because there's not been any management meeting, probably for over 12 months.
(Case B, Director 1)
The actions of the two directors are indicative of attempts to maintain control and the
degree of power they were used to holding when the organisation was much smaller,
and potentially retain control within the family (Ram and Holliday, 1993).
Unsurprisingly, a consequence of a lack of formal communication routes is the
prevalence of gossip and informal channels, such as via word of mouth, persisting:
You usually find out about changes through word of mouth or gossip…‘oh that’s happening is it…fancy that!’.
(Case B, Employee 1)
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There’s too much gossip. It's unprofessional that type of behaviour…You should feel confident that you can go and take an issue up, and know that it's not going to make it back to the shop floor.
(Case B, Employee 4)
However, participation appears more complex and developed in respect of Case
B, especially when the additional dynamic of contractors who have been employed to
work alongside those holding ‘employee’ status have been accounted for. Notions of
‘them and us’ – in terms of ‘traditional’ industrial relations cultures – are apparent, albeit
not so much between the management and employees as that tagline would most often
imply, but between the employees and contractors operating within the workshop
instead. With contractors holding management positions there is evidence of employees
within their departments feeling isolated, causing conflict to ensue.
2.2.4 Conflict and employment relations issues
The presence of subliminal or implicit conflict within Case B, of the level of voice
demanded by the workforce, is greater than that of Case A, a feature that can
interestingly be traced back to the memory of the trade union and the voice mechanisms
held by engineers who learned their trade in the 1970s and 1980s at large unionised
aerospace firms such as British Aerospace. This is in agreement with Dundon et al.
(1999), who identify the impact of trade union-derived pressures upon participative
voice mechanisms. Memories of unionism accordingly evoke powerful connotations:
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BAE Systems had - you probably won't remember - but there was in the '80s lots of strikes. They were very, very proactive at striking…The days of Red Robbo are gone…I think it's possibly a little bit like religion, I suppose, people have just moved on. They don't have the power that they used to have. And it's almost a bit of a flea in the ear now rather than a threat of all-out action…I think it's probably the capitalist involvement evolution that we're all in now. It's not the same world as it was in the 1960s and 1970s. And the employee now has got more say and has got more rights, backed up by the whole of society, including the law, the government, than what you would have had in the '50s, '60s and '70s.
(Case B, Manager 2)
This could be a consequence of employee skill level and past experiences, and may
explain why such issues were not as visible in Case A, whilst also serving to illustrate the
impact attributable to the micro-level environment upon HRM development, as alluded
to in research question 3.
2.2.5 The role of ‘HR champions’ and individual networks
Within section 2.2.1 it was stated that one particular director is principally responsible
for driving the HR agenda: ‘Director 1’, or the organisation’s ‘HR champion’ (Ulrich,
1996). It has since been made known that the owner/founder of the firm is not an
advocate of the HR function and is wary of delegating responsibilities to subordinates.
The owner/founder is the HR champion’s father. With the ‘HR champion’ holding familial
membership, it creates an interesting dynamic; ultimately, her efforts to attain a more
formalised HR function are aided by her familial status, allowing her to place pressure
on her father, who does not see the need for a formal HR role within the firm:
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JG was saying that her dad thinks HR is a waste of time, that’s LM. (Case B, Employee 1)
The ‘HR champion’ can thus exert a degree of pressure that likely exceeds what another
employee (or director) could conceivably place upon the owner/manager of a firm.
Furthermore, within Case B, individual networks were identified as being a
fundamental factor for change, with evidence of apparent game playing by ‘Director
1’/’HR champion’ and her ‘generals’, in close alignment with the work conducted by
Scase (2005) relating to ‘networks of personal allegiance’ and also the work of Forth et
al. (2006). ‘Generals’ include an employee who is an ex-trade union convenor, with vast
experience in voice and participation mechanisms. Other members include a new HR
assistant and a receptionist/HR assistant who were both recruited by ‘Director 1’ under
the guise of office admin workers in a bid to justify their hiring to the other directors,
namely her brother (managing director) and father (owner/founder), who appear
vehemently opposed, particularly in the father’s case, to any form of HR presence within
the firm. That being said, ‘Director 1’ appeared to know full well they would be
undertaking HR related activities; she informed the employees of as much upon their
hiring, but to get the ‘green light’ from the other directors she needed to modify their
job roles to appease other members of the senior management team. This example
serves to provide a curious insight into how regulation develops, illustrating the
complexities inherent within HRM development (in response to research question 1),
the importance of family to SME-focused research (Ram and Holliday, 1993; Matlay,
2002; de Kok et al., 2006) and the ‘game’ of HRM.
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2.2.6 Case B summary
HRM formalisation is a much more recent exercise in Case B; motives for change appear
in part to be linked with the aforementioned addition of the site in Scotland, and
consequent increase in the ‘numbers’ employed. Such a move should not be
underestimated as the primary motivation for the introduction of formalised procedure,
a logical response by the management team as it seeks to maintain control over the
workforce operating at two distinct locations, aided further still by the creation of a
specialist HR position within the firm, who is also located at the Scottish site, with the
apparent aim of further enhancing the degree of control over the workforce.
Similarities can be identified with Case A and the difficulties of enacting a more
formalised HR function, a consequence of employees and line-managers not appearing
to support changes towards a more formal and professional structure, in addition to the
line-manager’s lack of training and consequent inability to undertake HR-related
activities.
Familial dimensions appear to inhibit the flow of communication and the degree
of participation permitted to the workforce, indicative of attempts to maintain control
and a degree of power (in alignment with Handy’s (1999) theorising in relation to power
cultures). Moreover, participation appears more complex in respect of Case B: there
appear to be signs of a more critical and conflict-oriented, low-trust employment
relations culture, even in the absence of a trade union. The presence of subliminal or
implicit conflict within Case B and relating to the level of voice demanded by the
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workforce is greater than that of Case A and can interestingly be traced back to
memories or experiences of trade unionism. Such an occurrence is postulated to be a
consequence of employee skill level and past experiences, while also serving to illustrate
the impact attributable to the micro-level environment on HRM development.
With the ‘HR champion’ holding familial membership, it provides an interesting
dynamic. Ultimately, her efforts to attain a more formalised HR function are aided by
her family status, allowing her to place pressure on her brother and father who do not
see the requirement for a formal HR role within the firm – a degree of pressure that
likely exceeds what another employee could conceivably ever place upon the
owner/manager of a firm. This is an example that shows how tensions are ‘played out’
around individuals and informal relations.
3.0 Summary conclusions
This chapter has analysed SME peculiarities and nuances of how the HR function evolves
to a more formalised and bureaucratic position, in doing so demonstrating the complex
and dynamic nature of the HR function. It aimed to illustrate the complex and
contradictory developments in HR by identifying potential structuration factors for
change. It is evident that HR maturity and enactment has occurred within these case
study organisations, with an emerging formalisation of HR-focused conventions and
protocols. The motives for change are numerous and multifaceted. Inherent
complexities observed herein, including: the influence derived from employment law
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consultants or ACAS; combined with line-managers own inexperience; rapid rates of
organisational growth or the addition of geographically distant sites of operation (in Case
B’s circumstances); the creation of HR specialist roles; trade union memories and voice
expectations; and familial dimensions, are but some of the stimuli found to be influential
and impacting upon the formalisation of HRM.
Research question 1 alludes to the implicit assumption that an HRM prescription
is of universal relevance and questions whether existing theory is dislocated from its
environmental context. Findings presented in this chapter can be drawn upon to suggest
that existing theory of a ‘one size fits all’ nature is disconnected from its environmental
context by signifying the importance of influences deriving from contextual
idiosyncrasies. However, there were elements of existing literature with which the
research was in agreement. The influence deriving from HR specialists (Kotey and
Sheridan, 2004) and ‘HR champions’ (Ulrich, 1996) on the formalisation and
development of the HR function has been seen to be accurate, as have the difficulties of
owner/managers in delegating responsibilities in line with organisational growth and
complexity (Hankinson et al., 1997; Gilmore et al., 2004), thought to be aligned with a
degree of control and power that they have become so accustomed to.
Noteworthy findings from this chapter that warrant further discussion are
threefold. Firstly, perceptions of HR and strong associations with employment law, as
heightened in this instance by employment law consultants in Case A and ACAS in Case
B, a feature that signifies the influence derived from different actors and bodies
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occupying the ‘regulatory space’. Consequently, conclusions could be drawn which
suggest management should be regarded as a form of shared function (or one that draws
from various other actors). Moreover, and as will hopefully become more apparent as
we progress through these empirical chapters and identify further instances of
interactions between the SME and external bodies, resulting in complex and potentially
undistinguishable or porous bureaucratic boundaries, it is thus contended herein that
SMEs encounter similar dilemmas and interactions with the external regulatory
environment to those of larger firms and that there are similarly curious developments
and processes of adaption, albeit that such a line of enquiry, which is aligned with
research question 3 and the pressures influencing the development of HRM, will
ultimately be deliberated and analysed in greater depth in Chapter 8, which will seek to
analyse the organisational environment in context and the associated imperatives for
change.
Secondly, what has been termed the ‘game’ of HRM in the SME appears to be far
more complex than the literature would suggest. HRM development is a complex and
negotiated process between formal processes and informal activities and between
management, employees and even external actors. Aligned with research question 3 and
the complexities of causation, this issue of informal relations and their role is illustrated
in Case B by the ‘HR champion’ with familial ties who acts as a catalyst for change
alongside her ‘generals’ within individual networks, providing a curious insight into how
internal bureaucracy develops and responds to regulatory pressures and illustrating a
degree of complexity inherent to HRM development.
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Finally, the presence of subliminal or implicit conflict within Case B, driven by the
apparent memory of trade unionism and voice mechanisms held by engineers who
experienced high levels of union activity during the 1970s and 1980s at large unionised
aerospace firms such as British Aerospace, was not a finding that was expected prior to
conducting the research. However, memories of unionism appear to evoke powerful
connotations, postulated in part to be a consequence of the varying employee skill levels
between the cases, thereby explaining why such factors were not apparent in Case A,
whilst also serving to illustrate the impact attributable to the micro-level environment
on HRM development.
The following chapter will consider HRM practices and strategies with an
evaluation of particular levers (or practices) of HRM, including recruitment and
selection, training and development and performance appraisals. By examining these
levers in isolation, it is hoped to provide a rich and in-depth understanding of the state
of HR at both case study sites, in addition to demonstrating the emergence of a recurring
pattern between the introduction of management led (or externally driven) formal
process and the subsequent desire for informal procedure to remain. This relates to the
living tension alluded to in research question 2, with both organisations battling the
antagonistic dichotomy between the more informal, particularistic and flexible ideals of
HRM discourse: those which are so widely attuned to the smaller firm in existing
literature, contrasted with the uptake of a more formal and professional identity; a state
that can be perceived as both constructive and destructive, as the chapter will seek to
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illustrate by identifying how such questions and choices manifest themselves and
resolve themselves within this body of firms.
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CHAPTER 7 – The mediation and formalisation of human resource management in
the small and medium sized enterprise
1.0 Introduction
The principal objective of this chapter is to identify signs of development and enactment
of the HR function, and to analyse HR practice in the context of the discussions presented
within the preceding two chapters. Specific HR practices, or HR ‘levers’, to use a term
coined by Storey (1989), from the two case study organisations will be compared,
analysed and critiqued to provide a rich and in-depth understanding of the complex
nature of HRM development and its different trajectories. For ease of comparison, both
organisations can be characterised as adhering to similar limits of scale and both operate
within the aerospace sector, so isolating practices in this manner will aid and reinforce
discernment of key findings.
This chapter will consider an apparent tension (research question 2) – how are
the case study organisations balancing and coping with the contradictory pressures of
formalisation? On the one hand, wanting to remain small, focused, flexible and
particularistic with some degree of informality; on the other hand, they show a desire
for the development of ‘high-road’, ‘professional’ and formalised forms of HRM common
to larger corporate firms. This chapter will engage with an enquiry that seeks to
understand how such questions and choices manifest and resolve themselves within
these types of firms.
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The specific HR levers to be analysed here include: 1. recruitment and selection
decisions; 2. training and development initiatives; 3. performance appraisal
mechanisms; and finally, 4. employee involvement and participation schemes. The
different HR levers will form the focus of discussions one at a time, focusing first on their
characteristics in respect of Case A followed by their characteristics within the context
of Case B. Conducting analysis in this manner will allow for ease of comparison; the
differences will be emphasised and elucidated more clearly, providing reasoning in light
of the contextual dynamics that allow for subtle and implicit differences to play out in
the manner they do.
This chapter will illustrate how contradictory pressures play themselves out
across the different dimensions, or levers, of HR practice and, interestingly, the
similarities or differences in how these vary, often in subtle ways, across the two cases
and why. Ostensibly, both case study organisations are similar in terms of scale and
sector of operation, and they have both recently encountered high levels of growth.
Moreover, both cases wish to sustain some degree of informality and balance the
formal-informal divide. Yet, much appears to depend on a variety of factors in terms of
why they are different; after undertaking a deeper level of analysis, how developments
play themselves out differently in each case can begin to be seen. Issues of
organisational memory and path dependency (Pierson, 2000; Teague, 2009) are
apparent and seem influential, including critical junctures – or critical moments in time
– which can trigger a process of pathway departure (Thelen, 2002), suggesting choices
and contexts shape the nature of HRM, even for this scale of firm. Conclusions
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emphasise the apparent need to grapple with the choice of formalisation as being more
deliberate and consciously reflected on within management and the workforce, along
with the influence of external factors and internal traditions and links appearing
important when studying these developments.
The thesis-introduced concept of ‘flexible formalisation’ will be presented in this
chapter in an explanatory capacity to illustrate the dual nature of HRM in the SME, and
in many instances demonstrating the organisation’s decision (and ability) to straddle the
fence between formality and informality. The concept of ‘flexible formalisation’ will be
further deliberated upon in the discussion chapter, but it is in this chapter that it will be
used to identify happenings in relation to the HR narrative and explain such
developments. However, whilst there is evidence to authenticate the presence of
‘flexible formalisation’, it should be understood that some levers of HR may not conform
to the narrative as strictly as other levers.
Finally, and as claimed in these opening paragraphs, much depends on various
factors or pressures influencing development, the origins of which can include those
derived from actors and bodies occupying the regulatory space and the deep structures
in which the SMEs are embedded (aligned to research question 3). The subsequent
chapter, Chapter 8 – The regulatory spaces and context of small and medium sized firms:
Dynamics and interactions, will make such a line of enquiry the primary focus of
discussion.
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2.0 Recruitment and selection: The uneven move away from informal processes
2.1 Recruitment and selection in Case A
Whilst the more formal ‘best practice’ HRM methods of recruitment and selection have
been attempted, often the relative ease, speed and flexibility of using informal methods
of recruitment and selection dominates the agenda, informality typified by the following
instance of recruitment:
My dad sold CJ a hot tub and, at the time, I was looking to get out of college. I went to college just to occupy myself really, I didn’t actually have any intention of taking it further. CJ just said come down for a job…I didn’t have an interview.
(Case A, Employee 5)
Their decision to recruit in this manner is perhaps guided by the longevity of tried and
trusted techniques in addition to the rapid rate of growth experienced within a very
short time period, with informal mechanisms having the advantages of cost
effectiveness and speed (Carroll et al., 1999). One manager summarised the two
differing approaches to recruitment within Case A, stating their preference for
formalised recruitment and selection initiatives, and lambasting informal methods in the
process:
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Two types: there’s one where you go for the interview, and then you get a second interview, then you get told if you have the job or not and done properly; or you know someone that works there. And you don’t really go through those stages as such; which I think is bad, if I’m honest…Because, if you look at the people who’ve got jobs here through their mates, they haven’t been very good…I think they’re just easier to get hold of, because obviously you don’t have to go and list the job on job sites and stuff like that; it’s a lot easier gaining staff through word-of-mouth, like through mates. But the experience will show you that nine times out of ten they aren’t very good; so the people that you go and interview at least you’ve got more than one choice as well, it’s not just you’re stuck with Luke’s mate.
(Case A, Manager 3)
Conversely another manager shared his negative experiences of when he has adopted
more formal and professional approaches to recruitment:
I think you put CVs in Jobcentres. I don't believe any of these people want a job, because too many Friday nights I've had to take home 60 CVs that they've all sent through from these sites. I reply to all of these CVs, copy and paste job, received your CV, read it, really interested to speak to you, please come in, let me know a date when you can come in. I might get three replies out of a thousand emails I've sent.
(Case A, Manager 1)
Furthermore, if the nature of work being undertaken is accounted for; “we’re not line
engineers” remarked one employee (Case A, Supervisor 1), with another commenting
they “only do wheels and brakes” (Case A, Director 2), perhaps justifying management’s
preference for the informal given the lack of prior experience needed, and the minimal
amount of training required. Contextual determinants arguably allow for the
organisation to reap the benefits of informality in the recruitment process. Moreover,
the relative ease with which someone can be trained to fulfil a role at the organisation
perhaps lends itself to attracting people with a lower skillset and who have lower wage
demands than licensed aircraft engineers, who are deemed to be over-qualified for the
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role. The degree of informality in the recruitment process seems to be driven by a lack
of skills or labour market supply and the embedded nature of informal practices, which
means that there is an element of almost distrust towards formal mechanisms.
Through recruitment and selection decisions that favour a word-of-mouth
approach and a tendency towards friends of existing employees, notions of ‘fit’ with the
organisational culture appear more important to those making selection decisions, as
per Curran and Stanworth’s (1979) theorising in respect of SME recruitment and
selection decisions, while Carroll et al. (1999) propose that the added benefit to Case A
of recruiting in such a manner is that the new recruit is a ‘known quantity’. Whilst some
organisations may try to develop a definition of culture which in turn allows them to
more systematically assess fit through techniques such as behavioural event
interviewing, it seems there is not an explicit statement of culture in Case A, which raises
potential issues relating to the assurance of diversity and equality values, a problem
common to the SME population (Edwards et al., 2003).
Recruitment and socialisation appear to be key mechanisms for replicating
culture; a recruitment strategy favouring a word-of-mouth approach is perceived to
reinforce the organisation’s culture, therefore is a familial model or approach to
recruitment the best strategy? Here, the application of Handy (1999) relating to culture
(as referenced in the first empirical chapter when considering organisational culture
more directly) becomes relevant again. With family businesses often possessing ‘power
cultures’, in that it is the ideas and values of the family owners that shape cultural
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practice, by maintaining such an approach to recruitment the family are consequently
maintaining power. Those recruited in this manner may ‘fit’ socially, but will they be
good at their job? Especially when considering the nature of work undertaken and the
degree of growth the organisation has been subjected to, a process that is resulting in
an elongated hierarchy in addition to the devolvement of responsibility to increased
members of the workforce, the current approach appears to be the default position of
the firm in the absence of logic. Arguably an auto-catalytic effect has occurred, whereby
informal recruitment methods further influence the use of informal methods of
recruitment; as more individuals are recruited through word-of-mouth and personal
connections, this process reinforces the organisation’s familial cultural traits, a feature
that could be problematic should the organisation continue to grow and the downside
to informality becomes more prominent, particularly as it seeks to pursue a process of
professionalisation.
A wider objective of more formal recruitment procedures is to seek a
meritocratic system that counters the risk of nepotism, and potential equality and
diversity issues, in informal practices (Kotey and Slade, 2005). In the current case,
perhaps one consequence of such recruitment patterns has been identified by one of
the managers interviewed, who classified a group of employees within the workshop as
the ‘mafia’, suggesting that if you didn’t fit in with them you wouldn’t be working for the
organisation for very long.
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Issues of fit were also apparent within the office areas of Case A, with stories of
new employees not fitting in and leaving at lunch time on their first day never to return.
Perhaps the following comment made by the managing director provides further insight
into the organisation’s recruitment strategy and its predisposition towards recruiting
through informal channels to ensure ‘fit’ over and above other attributes including
qualifications:
We would never want to spend money on recruitment...We don’t use recruitment agencies; I think they’re for a very specific role. But we know what people fit in with us, qualifications are one thing, but there’s far more to it than that.
(Case A, Director 1)
Employee attitude appears to be one of the more highly desirable criteria, with
five managers citing such a trait as being sought. Other behavioural traits spoken of
favourably include a strong work ethic, dedication, willingness to learn and punctuality.
Interestingly, prior experience and existing skills are thought of as being undesirable
characteristics as management hold a preference for employees who are a “clean slate”
whom they can mould and develop. Additionally, qualifications, particularly university
degrees, are deemed equally insignificant.
While it is arguable that the preference for the informal is guided by memory and
custom, it is reinforced by the absence of more formal routes; there is no sectoral
employment list or formal means to recruit this type of semi-skilled worker; informal
routes consequently maintain their ascendance:
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It’s quite difficult to find guys with aviation background because it is a niche market…finding guys with ten years’ experience of working in a wheel shop is difficult.
(Case A, Director 3)
The ability to contrast this finding with other cases, where more skilled forms of labour
are utilised, will make for an interesting comparison. It raises the question how well
organised the aerospace sector is. Is there a lack of co-ordination? Examining the
recruitment patterns of other organisations within the sector will help determine an
answer to that question. As shall be discussed in the following section, Case B may be
able to provide a degree of meaning to such questions. Furthermore, the absence of
formal routes is perhaps an important indication as to the origin of changes and
pressures for formalisation with which the firm must contend: coming from other
sources.
Moreover, in line with the organisation’s strategy to keep costs low and in the
absence of more formal routes, the commencement of the apprenticeship programme
at Case A approximately five years ago appears to be the logical response:
We also have an apprenticeship system through the Manchester College...We bring in a lot of apprentices from there. That’s done quite well. So, we give everyone an opportunity.
(Case A, Director 3)
This was labelled a success by the managing director, who remarked “we can control the
development of our own people from an early age” (Case A, Director 1). Further benefits
attained by the organisation include the ability for “knowledge to be passed on to the
new generation” (Case A, Director 1).
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Focusing on employee turnover rates, the levels of staff turnover experienced by
the organisation are relatively high:
When I started there was a whole different team to what's out there now. (Case A, Employee 5)
As can be ascertained from the following comment, pay levels appear to be a primary
characteristic behind elevated staff turnover rates:
I think everybody is always going to compare [Case A] to bigger companies and maybe what they pay for doing the same sort of job…Yeah, and I wouldn’t even say that they’re leaving Case A to go and work for these companies, sometimes it’s…money does make the world go round…obviously the reason I’ve stayed here is because I know there’s stability here, financially I’m stable, so…
(Case A, Employee 2)
This respondent was one of four individuals who were interviewed to state pay levels
were the main reason for staff leaving. This matches principles of ‘best practice’ HRM, a
tenet of which is to pay above-market rates to attract and retain staff. However, it could
be suggested that small businesses often lack a strategic view on pay and think only in
terms of immediate costs rather than recruitment and retention issues.
2.2 Recruitment and selection in Case B
Similarities can be drawn between the two cases in that when they commenced trading,
they relied heavily upon the more informal channels of recruitment, namely friends,
family and acquaintances. Linking back in to ‘best practice’ HRM debates, the question
could be asked why such organisations do not adopt a universalist approach. Is it a lack
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of knowledge, constraints or lack of applicability to the organisational context, for
example? Alternatively, is it also an awareness of change and fear of losing control or
the adoption of more flexible forms of decision making? An informal approach is
arguably beneficial when faced with uncertainty and rapid growth; there are instances
of friends and family members helping for a few days only to end up working for the
organisation on a full-time basis:
It was his wife that rang me, because she’s my husband’s sister, she rang me to ask me did I want the job. You start Monday. And that was 30 years ago!”
(Case B, Employee 1)
I was working as a hairdresser and I just came as a favour because they were short staffed. I did admin, answering the telephone, I didn't want to be here. And that turned into, probably six months, assisting in the recruitment, and doing a little bit more wages, that kind of stuff, accounts…and that was 18 years ago! And now I’m a director.
(Case B, Director 1)
The following quote gives an indication of the extent of the personal connections
outside of the workplace:
I think there's maybe four people in the office that don’t have a personal connection, out of twenty people…I think it's just how the company started really, bringing in family friends.
(Case B, Employee 8)
Issues pertaining to ‘fit’ within the recruitment and selection process are also
apparent within the context of Case B. When exploring employee ‘fit’ within both the
recruitment office and the workshop at Case B, the following comments were made:
You either fit in, or you’re out. (Case B, Employee 2)
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Fitting in, I’d say, just as important as the skills…especially as we’re still a small company.
(Case B, Manager 1)
The most important facet is how you fit in with the team. It's not how good you are on the tools; how quick you are at making parts. No matter how good you are at that, if you are not at all a team member.
(Case B, Manager 2)
As deduced from these quotations, ‘fit’ also alludes to teamworking skills. This is
interesting as literature on teamwork typically focuses on the skills of individuals (for
example, see Stevens and Campion (1994) and their research relating to knowledge, skill
and ability (KSA) requirements for effective teamworking) rather than the characteristics
of the group. Also, as suggested in one of the comments above, given the relative smaller
size of the organisation, and in agreement with Atkinson and Meager (1994) and Carroll
et al. (1999), a single event of recruitment is likely to have a more pronounced effect on
the workplace. Consequently, similar incidents of new employees going home at lunch
time on their first day and not returning have also occurred at Case B. Drawing
comparisons with Case A, the informal dynamics associated with ‘fit’ are fascinating,
looking particularly at the way the workforce culture is quite strong, with high levels of
social closure.
Staff retention levels at Case B appear better on the engineering side of the
business in comparison to the recruitment arm (office-based role), arguably a
consequence of employee type, with engineers seeing their job as part of their career
within the aviation sector with longer term aspirations, in comparison to the generally
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younger employees who are working in the recruitment office and see their role as
merely a job or a wage.
In respect of the skilled engineers that work for Case B, despite the suggested
influence of skill level upon the recruitment and selection method being adopted by the
organisation (Bacon and Hoque (2005: 1978) suggest more formal and sophisticated
HRM practices are adopted by SME’s when “the recruitment, development and retention
of skilled employees is necessary to achieve business objectives”), the organisation still
relies to a greater extent on word of mouth (Carroll et al., 1999); this is despite the skilled
and particularistic nature of the work being undertaken, and because of the ‘close-knit
community’ of aerospace engineers and making use of contacts already held within the
industry:
There is Aviation Job Search, which in my opinion is, if we’re having to use those methods, we’re scraping the bottom of the barrel…All your good engineers are snapped up from word-of-mouth.
(Case B, Manager 1)
Recruitment and selection decisions still revolve around informal, tried and
tested routes whether they are seeking an engineer or an unskilled office worker.
Engineers also become a ‘known quantity’ (Carroll et al., 1999) in much the same way as
friends or family members could be conceived as a known quantity in Case A, made
possible in this instance by the nature of the sector and the close-knit community.
The impact of cost (Atkinson and Storey, 1994) and attracting the right calibre of
employee was apparent also within the context of Case B, given the wage demands of
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the skilled workers required by the organisation, emphasised further still by shrinking
labour pools, restricted career progression opportunities within the SME and
competition from larger organisations, including airlines, which creates HR related issues
for the firm:
The cost is mostly going increasingly higher and the accessibility to the people with the right skills is becoming reduced, so consequently that is having a higher impact on the value of the product we’re having to buy. It is probably more expensive to the business, in certain positions; more of the special, technical element of the side of the aviation industry that we operate in.
(Case B, Director 2)
Our overall package of what we supply, for example, if you go to British Airways, they can afford big pension schemes, big holiday pay, sick pay, however, we are improving in those areas. We find that if you don’t pay the going salaries, you’re going to get what you pay for.
(Case B, Manager 1)
By comparison, the semi-skilled workforce recruited from a much wider pool of talent
by Case A typically have no prior experience in the sector and, accordingly, the
organisation does not face such problems.
Case B has also looked to install apprenticeships within the organisation to
bypass the abovementioned difficulties including increasing wage demands and a
shrinking talent pool. However, apprentices are not seen as a positive move by all within
Case B:
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The last one that we recruited I wasn’t very happy with because I wanted somebody to do a certain job and there seems to be a trend for employing trainees or apprentices as they call them now. Probably for cost reasons I imagine. That wasn’t what I wanted but that was foisted on me which I didn’t like. It wasn’t a job for an apprentice, an accountancy trainee, it was a bog-standard role and it just wanted somebody who had a bit of experience and who could apply themselves to other things as and when required, not a trainee’s job at all!
(Case B, Director 3)
Differing from Case A and in close alignment with the creation of an
apprenticeship programme, there is evidence to suggest strategic recruitment methods
(Bacon and Hoque, 2005) are being adopted within Case B, as they make plans for
changes such as key individuals retiring:
There's talk about the two older guys who work on the milling machine and lathes at the moment, they're going to be retiring soon. So I think they're looking for somebody to start shadowing them.
(Case B, Employee 4)
Arguably, the business case exists for Case B adopting a more strategic approach
to its recruitment patterns due to the nature of the work itself, but as already
considered, they still have a strong preference for informal routes by also relying on
word-of-mouth and making use of contacts already held within the industry, drawing
similarities with Case A and providing further evidence to suggest that the social sphere
of the smaller company is highly formalised from a social relations standpoint, albeit that
in this instance the two firms are positioned within differing social circles. Again, the
nature of the work carried out in respect of Case A perhaps makes skillsets less
imperative in recruitment and selection decisions, and consequently the need to think
ahead in such a manner is lessened.
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Considering now the influence derived from the owner/manager within Case B
on recruitment and selection decisions, in much the same way as they were not keen on
hiring HR personnel, believing them to be an unnecessary expense, they also appear to
be hesitant in respect of other roles:
I think we can forward plan, and I can see where roles are needed, and want to get them in place before that role is needed. But the higher managers, like LM and NM, more LM, old-school, who doesn't like spending money, doesn't want it 'till it's needed. Can't see that you have to invest in something first, to get it where you want it to be.
(Case B, Director 1)
Finally, also concerning Case B: regulation derived from the Civil Aviation
Authority (CAA), the sectoral regulatory body that will be considered in greater detail in
the following chapter, impacts on flexibility in labour hiring from a quality control
standpoint by limiting the number of contractors it can recruit and have working for the
organisation at any one time. This example illustrates the influence of external actors
and bodies, those inhabiting the ‘regulatory space’, on an organisation’s HR function.
3.0 Training and development: How regulatory forces are seen to be impinging on
this dimension of HR
3.1 Training and development in Case A
Accounting for the semi-skilled nature of the job, training within Case A is undertaken
almost exclusively as an on-the-job exercise, of which work shadowing is a prominent
feature:
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Generally, I use what's called a buddy system. So, I've got someone like MB at the moment who we're keeping on, took on as a labourer. I'll pair him up with NS who's a level three. So, he'll just work side by side now with NS who's a level three, every day, whether NS’s on bearings or disassembly or stripping or overhaul…Basically, that's his training.
(Case A, Manager 1)
On-the-job training of the nature undertaken at the organisation was perceived
by the workforce to be a consequence of their focus on aircraft wheel and braking
systems, the relative simplicity of the tasks and ease of learning by work shadowing. This
is in comparison to the perceived complexities associated with being a ‘line engineer’
who must undertake courses at specialist external training providers, as one supervisor
attests:
The difference is we’re a maintenance, repair and overall shop which only specialises in landing gear…we are not line engineers who have to go to college which is totally different.
(Case A, Supervisor 1)
This point is with the exception of the NDT department, where employees are typically
recruited through formal channels. There, employees are required to hold additional
qualifications gained outside the organisation to work within the department. Such
qualifications are attained through “an approved NDT training institute” (Case A,
Manager 3).
Furthermore, it appears to be the Compliance Team/Quality Department
(descriptive terms used interchangeably) who are wholly responsible for deciding what
forms of training are undertaken, along with remaining compliant with the regulations
laid down by the Civil Aviation Authority (CAA) and proving competency:
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Legislation in civil aviation determines a lot of what training we undertake…I organise human factors and continuation training, because it's a requirement.
(Case A, Director 2)
The most important finding, in relation to training and development, relates to
the standardisation of training in the face of remaining compliant with the CAA. Albeit
that no specific training procedure is supplied by the regulatory body, they expect
regulated organisations to remain compliant by having their own formalised training and
development procedures and systems, or a “training programme” in place. The Quality
Department have accordingly standardised training procedures; the process is succinctly
laid out in the response from the operations manager recounted below:
There is a procedure in place that when we feel a certain person is up to a certain standard, they can apply for a position, let’s say for instance that it was somebody making a transition from a labourer to a mechanical fitter level 1, he would have to submit a document to myself that I would have a read through and sign. I would then hand that in to the Quality Department and the Quality Department would then set out the tests for the guy to then sit. He would sit a written test and he would have a physical examination on building wheels and then he’d move up. That happens for every single level you want to move up.
(Case A, Director 3)
As is to be expected, the degree of training undertaken typically increases with
seniority: as employees are promoted they are tasked with additional responsibilities,
including repairs for example, which in turn allows the employee to “adequately fulfil
the role” (Case A, Manager 4). The safety-critical nature of the work validates the
existence of such stringent regulations and procedures. The CAA are not the only actor
or body with an interest in an SME’s training habits. Customers have an interest too, and
they subject the SME to quality audits that are centred largely around their training
systems, in line with Bacon and Hoque’s (2005) findings and the concerns of customers
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in respect of quality assurance. Likewise, it is not uncommon for customers to insist upon
suppliers, or the OEMs (original equipment manufacturers) as they may be termed,
providing theory-based classroom training, followed by a practical element, before
finally observing employees of the SME in practice, usually consisting of them “strip[ing]
and rebuild[ing] the component” to prove competency.
As a consequence, external bodies such as those identified appear to be acting
as a key influencer – positive acknowledgement for the ideas and questions
hypothesised in research questions 3, relating to actors inhabiting the regulatory space
and institutional positioning within the sector. The internal formalisation that results
from such external pressures represents a sign of growth and maturity. Accordingly, the
degree of formality in the training and development of the SME’s employees is deemed
to be more advanced than that of an organisation of a comparable size but operating in
a different sector of the economy.
To that end, while training is more of a prominent feature now, timing appears
to be a determining factor given the seasonality of the workload that must be contended
with:
Unfortunately, because the industry we’re in, we’re always limited to December and January to get people in…In summer when you’re busy and you’re working weekends, it’s a bit awkward to suddenly stop and get 15 guys out of a department for some training for a few days.
(Case A, Director 2)
Thus, the organisation appears to undertake a planned and deliberate approach to its
training programme, as the above two examples in relation to timing and workload
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indicate, representing further indication of maturity, driven by an apparent all-
consuming need to adhere to regulatory standards that must be observed to operate in
the sector, and suggesting external factors are crucial.
The degree of training undertaken beyond that which is required for regulatory
compliance requirements appears to be minimal. Thus, the organisation’s training
activity could be considered mere ‘table stakes’ from a contingency perspective, in that
all companies operating in this line of work have to meet the minimum regulatory
requirements just to ‘be in the game’ (Boxall and Purcell, 2008; Boselie et al., 2009). It
could accordingly be suggested, in application of Porter’s (1985) three generic strategies
that are aimed at achieving competitive advantage, that Case A has adopted a strategy
of cost leadership: a low-cost, low-skill model of competitive advantage. The firm would
have to question whether it sees value in going beyond the regulatory minimum to try
to compete on quality and innovation rather than cost (the other two generic strategies
put forward by Porter). Finally, in application of Schuler and Jackson (1987), continuation
of the current strategy would see employees be realised as more of a cost than a human
resource.
3.2 Training and development in Case B
In the past, Case B’s management of training provision has been described as a “run
before you can walk” (Case B, Manager 1) approach, with training undertaken in a
reactive manner, as per Hill and Stewart’s (2000) findings wherein they suggest that
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training is an ad-hoc process in the small firm, in a reactive manner in response to an
immediate work-related problem. Such instances have occurred when Case B has sought
to expand the list of capabilities or the services offered. However, at present, training
appears to have acquired strategic connotations:
Now there’s more of a forward planning approach, to identify what we want to do. We’ve started putting these in place; the employees, the training, the tooling, et cetera, et cetera, the facilities.
(Case B, Manager 1)
What we try to do here now is give people multi-hats. (Case B, Manager 2)
I think for the first time, with our new engine bay, we’ve been more strategic, looking for the right people with the correct training et cetera, or...instead of having to wing it a bit…I think it’s changing, the past couple of years. Well I think a lot of the health and safety stuff kicked it off. We started taking health and safety seriously, and all sorts…I think there might have been an incident with one of the engineers…I don’t think it was dead serious, but I think someone might have done something.
(Case B, Employee 2)
The health and safety incident alluded to in the above response by an employee perhaps
indicates the influence derived from such an occurrence and, by association, the
influence derived from regulatory frameworks to which they must subscribe. Moreover,
the suggestion that management are trying to give employees “multi-hats” is
conceivably an indication that management are ensuring provisions are made by
undertaking contingency planning, a task that evokes strategic associations.
In a similar manner to Case A, the pressures cascading down from the CAA, the
sector’s regulatory body, again appear to have “quite a big input” (Case B, Employee 2)
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in terms of training and development, a task which is again overseen and administered
by the case’s Quality Department:
If some of the personnel are subject to, from the regulatory authority, certain criteria for training over a period of 12 months. It has to be done. It’s mandatory.
(Case B, Director 2)
Furthermore, customers also appear to bear influence, but to varying degrees
dependent upon “the level of liaison with that customer and our incorporation into their
process” (Case B, Manager 4).
As already stated, the skilled nature of the work undertaken means less of a
reliance upon on-the-job training, although a small amount of training is conducted in
that way, with more emphasis placed upon external training outlets:
Licensed engineers are licensed on a particular aircraft type. So, they have to sit an exam. We don’t set that exam, that is set by the regulator and they have to go to approved schools to do that.
(Case B, Manager 4)
Gaining the accreditation ‘licensed engineer’ from an external training provider is
something that sets this organisation apart from Case A, where training is almost wholly
undertaken on-the-job. Case B appears proactive in its training regime, with training also
undertaken by office-based employees:
I can't remember all the courses, some have just finished business level three, some of them have done customer services, or warehousing. They have all been through the Manchester College, or Macclesfield College.
(Case B, Director 1)
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Showing further similarities to Case A, health and safety also appears high on the
agenda:
I've done two or three NVQ level threes, there’s one in customer services, and one in business and administration...And then I've done health and safety training, forklift licence, hazardous goods, human factors, fuel tank safety.
(Case B, Employee 8)
The introduction of an apprenticeship scheme approximately five years ago, seen
as a solution to rising wage demands and shrinking labour pools, was in conjunction with
a local city council grant:
There was one instance where the local MP came in, it was when we won the grant for the apprenticeship scheme. And he came in wanting us to go into local schools and talk about careers, try and create interest in apprentices, but that never materialised.
(Case B, Director 1)
Despite access to a grant, the indirect costs associated with training apprentices are
something the organisation appears to be wary of:
We’re quite a small company and training is expensive at the level you need. But we have, over the years, taken on quite a few…I think five apprentices over ten years. But, it’s a three or four-year process, so it takes a while… there’s a limit to what a company of our size and resources can do…because they cost money and it’s not just paying their wages, you’ve got to mentor them.
(Case B, Director 3)
Further evidence of the influence of cost on what training and development
activities are undertaken was put forward by a manager based in the offices:
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I felt the level three ILM was, well, I didn’t think it was advanced enough. But the problem was that level five cost £2,000 and the level three was free. So, I got chucked on the level three, even though I didn’t want to do it…and I think that the fact was that sometimes we get pushed down training routes, because it’s free, and that goes against what self-development is.
(Case B, Manager 4)
Admittedly, the training in question was not seen as mandatory by the regulatory body;
if it was, it is likely the costs would have been met by the organisation.
4.0 Performance appraisals
4.1 Performance appraisals in Case A: The practice of formalisation with tactical
motivations
A key question regarding performance appraisals concerns their purpose: are they to
allocate reward, are they for remedial purposes, or are they for developmental
purposes? Alternatively, are performance appraisals purely seen as something you do
when you get into ‘formal HRM’? In the context of Case A, performance appraisals are
an activity that the organisation has attempted to introduce on several occasions. The
most recent introduction coincides with the introduction of specialist HR services in the
organisation, further evidence of the influence derived from having onsite HR personnel:
It was something that was never in place. I would say it’s only been in place over the last few years because it’s something that the HR manager brought in.
(Case A, Director 3)
Since then the task, that was, according to management, supposed to have been
conducted on an annual basis, does not appear to have materialised:
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I think I’ve had one in my 20 years of being here now…about two or three years ago.
(Case A, Employee 2)
Consequently, performance appraisals within the context of this SME appear to be a box
ticking exercise or an ‘empty shell’, a term originally coined by Hoque and Noon (2004)
to describe instances where the current procedures and processes in place appear to
exist for merely presentational purposes. To that end, while some of those interviewed
had never been subjected to appraisals, others had completed a document that was a
precursor to the appraisal meeting with their manager, only for the review never to
materialise:
I’ve completed the forms but it was never followed up, this was the case for two or three years running. This year I didn’t even bother filling it in, it’s a waste of time.
(Case A, Manager 2)
I conducted them once when I was manager of ‘small bay’, I think it was the year before last. Last year, I took them all in, and then Flybe kicked off that month and I never actually got around to calling all the guys in.
(Case A, Manager 1)
An example drawn from one of the statements above illustrates the extent to which line
management are under pressure to meet customer needs: in this instance the
commencement of work from a new customer, Flybe, meant line-managers were pre-
occupied with ensuring the service provided by the SME satisfied the customer.
Activities not seen to be directly contributing to that end-result, inclusive of ancillary
management tasks such as performance appraisals, appear to fall down the pecking
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order as a consequence. On the occasions the appraisals were undertaken, benefits have
been accrued:
When they did my original appraisal something that happened for me at work is I got put on a management course; and that’s what I asked for in my appraisal, for more college and more training so I could progress further in the company; and that happened.
(Case A, Manager 5)
Employee perceptions towards performance appraisals and the benefits to be
accrued appear mixed; some of the respondents appeared to be responsive and engaged
towards the idea of partaking in a performance appraisal, including one line-manager:
I think they're a good chance to give some guys a pat on the back. I think they're a good chance to tell some people you need to smarten up. And also, I think some guys out there have got some good ideas…
(Case A, Manager 1)
There is evidence, based on the preceding quote, of informal reward and
management by exception, but not of formal rewards such as bonuses or performance
related pay, and an apparent lesser focus on developmental issues also appeared to be
present. There is a sense in which this fits a perceived need to do performance appraisals
because that it is ‘what you do as you grow’; could this perhaps be linked to the issues
of management ‘fads’ and ‘fashions’ (see Thrift, 2005) or quality audit expectations?
Perhaps unsurprisingly, other respondents saw the performance appraisal
exercise as being somewhat futile:
Yeah, it’s more of a tick box thing. Although I think because you’re doing the same thing day after day I think once you’ve answered it, unless your job role actually changes, what you answer 12 months ago would probably be the same.
(Case A, Manager 2)
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This is perhaps further exacerbated by the fact line-manager training to undertake such
an activity apparently being non-existent, with one manager stating:
It’s something that I’ve just learned to do as I’ve gone along. (Case A, Director 3)
It is arguable that another reason for the lack of follow through in respect of the
appraisals is the inability of the line-managers (Redman, 2001): their lack of experience
or know-how, coupled with a lack of training, could conceivably lead to their apparent
trepidation or anxiety towards conducting such an activity; and accordingly, they shy
away from the task.
Performance appraisals represent a further example of a preference for the
informal, guided by memory, customs and the embedded nature of informality, which
has resulted in formalised mechanisms being greeted with an air of cynicism and
worthlessness, a culture at odds with a prevailing aerospace culture which is profoundly
in favour of continuously improving and enhancing the quality of the workforce.
Consequently, the ability of Case A to portray as much to its customers, suppliers and
the CAA could be crucial in the creation of future partnerships and maintaining
compliance. By having the formalised processes and associated paperwork in place, from
a presentational standpoint the organisation is complying with certain expectations by
allowing itself to be perceived as a professional and competent entity, albeit that upon
a more thorough examination as conducted herein by talking to management and
employees, use of the ‘empty shell’ analogy (Hoque and Noon, 2004) becomes highly
relevant to events within Case A – an interesting insight into how the formalisation of
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procedures responds to a different set of external demands or expectations. This is an
illustration also of ‘flexible formalisation’ at work, with the organisation able to
transition between formalised practice and informal preferences, an example of the
dualistic nature of HRM and employment relations practices in small firms alongside
their susceptibility to and intimacy with environmental stimuli.
4.2 Case B on performance appraisals: The influence derived from ACAS?
Performance appraisal mechanisms link the HR function with aerospace regulations, as
is succinctly summarised by one employee of Case B:
It’s in place more for regulations…the CAA, more for training and continuation training purposes, it’s merging that quality aspect with people management.
(Case B, Manager 1)
Thus, Case B takes a more strategic approach to performance appraisals by making this
link. The merging of quality aspects with people management in this manner is
undertaken primarily to assess training needs, rather than informal recognition or
management by exception as in Case A, there is more of a developmental focus.
Furthermore, a key feature of performance appraisals as recognised by Huselid (1995)
and Forth et al. (2006). The influence derived from the CAA was also apparent during
the interviews:
If they didn't have to, then they wouldn't do them. They only do what they have to do.
(Case B, Director 1)
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However, the type of appraisal utilised for compliance purposes appears to be
nothing more than a box ticking exercise:
The workshop do them, but they do a bog-standard tick list which doesn’t tell us anything.
(Case B, Director 1)
Similarities can again be drawn with Case A: management have attempted to introduce
performance appraisals numerous times over the years, but with little success.
Depending upon who was spoken to, some were aware of attempts to introduce an
appraisal scheme in the past and others were not, whilst those claiming there were
performance appraisal systems in place admitted they were out of date:
They've been in place for years, it's just that it tends to be one of those things that it's nice to have, forgotten about.
(Case B, Manager 2)
Speculation as to the reason behind their failing suggested a combination of various
factors including the aforementioned inabilities of the line-manager and the negative
response from employees, with some feeling they were not necessary:
No. We did get asked years back, but we said we didn’t want one. (Case B, Employee 1)
Just as line-managers of Case A struggled to prioritise the undertaking of performance
appraisals in favour of ‘doing’ the business, so too did managers of Case B:
I started it again just before Christmas last year but then I had to go and run a job in Scotland for three months, so it got left. So they need, now I'm back, starting again.
(Case B, Manager 2)
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Furthermore, perhaps the fact that a performance appraisal system was at odds
with the culture of informality that presided over the organisation at the time was
another factor in its downfall. Conceivably, then, with the most recent attempt to
introduce performance appraisals being part of Case B’s on-going strategy to adopt a
formalised HR function, driven by the newly appointed HR administrator within the
organisation, it may prove more successful for the reason that, if the central premise of
HR ‘best practice’ principles is applied, the introduction of groups of HR policies and
practices are seen to achieve normative goals of high commitment by promoting a
specific culture (Pfeffer, 1998). A consequence of several practices being put in place
could be construed as being supportive of and mutually reinforcing each other; it is the
combination of a coherent package of HR practices that matters, and individual practices
cannot be implemented in isolation; the whole is greater than the sum of the parts,
especially when such a state of affairs is coupled with an ACAS-led training course that
line-managers are having to partake in:
I think there’s a proposal for the next ACAS course to be on appraisals. (Case B, Director 3)
Whether in this instance performance appraisals become administered in a
timely and repetitive manner remains to be seen, but what is apparent is the repeated
influence of ACAS on Case B, representing the role of a different HR-influencing body
compared to Case A. The external influence will assist Case B in its attempts to embed a
performance appraisal system whilst serving to further illustrate the influence derived
from ACAS on this organisation’s HR function, something already spoken about on
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numerous occasions within the confines of the preceding chapter in relation to Case B
and something that will form the focus of discussions in the following chapter in its
examination of the regulatory space and the impact of those within it. What has been
identified once more, furthermore, is that the SMEs’ boundary with the external sphere
is being very important and bodies like ACAS are impinging on the space of the firm. Such
influence is seen to vary across the different HR dimensions; in this instance it is in
relation to ACAS and their performance appraisal systems, just as the CAA bear influence
over training and development mechanisms. In such a manner, that could accordingly
allow management to be perceived as a shared function, with potentially
indistinguishable or porous bureaucratic boundaries.
5.0 Participation and voice mechanisms
5.1 Case A on participation and voice mechanisms: Organisational growth and a
continuity of expectations
Marchington and Suter (2013: 285) define employee involvement and participation (EIP)
as the “day-to-day interactions that can influence and shape workplace decisions.” EIP
can be broken down into a number of characteristics: degree; level; and scope
(Marchington and Wilkinson, 2005). The ‘degree’ of EIP assesses the extent to which
workers and/or their representatives influence management decisions, ‘level’ refers to
the point in the organization at which EIP takes place and ‘scope’ relates to the range of
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decisions over which the non-managerial staff has some input (Marchington and
Wilkinson, 2005).
In Case A, informal mechanisms of EIP heavily outweigh their formal
counterparts, favouring more direct, face-to-face communications, an approach
achievable within the confines of the smaller organisation, whereby physical proximity
encourages closer interactions between management and employees, which is
conducive in the creation of discussions between parties across an informal medium, as
outlined by Forth et al. (2006).
This position is historically tenable given the ‘family’ and close-knit culture
present. However, in line with organisational growth, rapid expansion and the resulting
increase in employee numbers, notions of ‘family’ have waned. Management appear to
have logically sought to counter a deterioration in communication, participation and
voice outlets through the adoption of formalised departmental and management
meetings and a type of suggestion box.
A deterioration in and changes to the manner in which employee participation
occurs did not appear so profound to the vast majority of employees, those who had
only recently started working for Case A. However, those with a longer employment
tenure prior to enhanced levels of growth observed a significant difference, there
existed continuity of expectations, they being accustomed to a more informal approach,
particularly the informal dialogue and chats with senior management, albeit that these
individuals were now described as being more ‘reclusive’, particularly over the last
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couple of years. Notions of ‘them and us’ are apparent and, with them, opportunities for
upward participation becoming constrained. Further still, the following example
illustrates that there are occasions where the degree of participation and consultation
is not satisfactory in the eyes of the workforce:
Not as much as I’d like to be. On things that obviously concern my department decisions are made where I’m not consulted about it beforehand. The prime example of that was the initial move from this unit down to D2. I came in on the Monday morning and there were people putting the cupboards on pallets and wheeling them down.
(Case A, Manager 2)
In contrast to the managing director’s remarks relating to participation in the
workplace, he uses the following analogy to describe the degree of employee
involvement within Case A:
The captain of the ship should always know where it’s going. And again, how we get there, that’s when they get involved. But I think, our objective is set by us.
(Case A, Director 1)
Additionally, in an attempt to involve employees across a more formal medium,
Case A has introduced a ‘Company Reporting Scheme’ (CoRS) whereby employees are
given the opportunity to put forward any problems, comments or suggestions in a formal
manner. This suggestion box is aligned with CAA regulations and expectations, albeit,
and quite importantly, the system is not mandatory. Accordingly, employees have found
the CoRS system, which is supposed to guarantee a response from management within
forty-eight hours, unsatisfactory, with one employee claiming he waited ‘a month’ for a
response and other respondents never received a response. Drawing similarities with
the role of performance appraisals within the organisation, this suggestion box system
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is another ‘empty shell’ and is in place for purely presentational purposes – to be
perceived, in the eyes of the CAA and their customers (probably the most coercive or
demanding of actors) as a professional and progressive entity.
One further interesting finding: praise and feedback are given through informal
channels, including Facebook. However, there are suggestions that praise is lacking from
senior management:
I think they'd respond a lot better to praise from higher than me. Even though a thank you's a thank you, but I think they would rather hear it from CJ or from DS or from JN…I don't think it carries a lot of weight from me, it's just a mate saying cheers, in their eyes.
(Case A, Manager 1)
The line-manager referring to himself as merely a ‘mate’ and any praise coming from
him is consequently insufficient, perhaps provides insight into the informality of the
relationship between line-managers (who were promoted primarily upon time-served
criteria) and their staff.
Finally, and as is to be expected, the degree of involvement and participation is
positively associated with seniority:
More so now, yes…[since they] promoted me to supervisor…how I'd like to run my shop, that sort of thing.
(Case A, Supervisor 2)
In agreement with Goss (1991), one factor that could impact the degree to which
employees would be invited to participate and are privy to knowledge-sharing activities
is associated with worker skill and consequent bargaining power. However, while they
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do get asked their opinion, this does appear to be limited to matters strictly technical.
Employee skill is therefore a variable in determining which employees can participate,
although the degree of such participation is limited in contrast to previous opportunities.
5.2 Case B on participation and voice mechanisms: Heightened expectations derived
from the memory of trade unionism?
In comparison to Case A, there appears to be greater development and complexity of
participation and voice mechanisms within Case B, something that could be attributable
to the overall increase in skill level, as theorised by Goss (1991), and the subsequent
demands of the workforce to be kept abreast of developments, given a voice and see
their knowledge or expertise fully utilised. At the time the interviews were conducted,
there had been a recent introduction of ‘morning prayers’ whereby all departments had
brief daily meetings to discuss pressing issues and workload, provide updates and
communicate up and down the organisational hierarchy:
The guys on the shop floor felt it was management and shop floor personnel, it was them and us, they felt like they weren’t being kept in the loop.
(Case B, Supervisor 1)
Perhaps a development of this nature has coincided with, and was motivated by, the
recent expansion into Scotland. Moreover, one line-manager appears to have astutely
recognised the need to adapt how communication occurs in line with organisational
growth:
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A smaller business, you’re just all-round the same coffee table, discussing what you’re doing. The next thing you know, well it can’t be like that anymore because we’ve got to disseminate the information in a different way and extract the information back again in different ways. We’re doing more and more classrooms, more and more group sessions, and that kind of stuff. We have a group meeting every day now, so we’re feeding back to a bigger group and giving them a chance to speak.
(Case B, Manager 4)
Despite the apparent recent introduction of more regimented and formalised channels
for communication within the firm, there were widespread and historic forms of
dissatisfaction from members of the workforce, believing communication or
participation had not as yet improved:
Sometimes I do feel that we don’t get told information in terms of projects, ongoing projects and things like that, a lack of communication you know? You're kind of finding things out second hand or it's too late…
(Case B, Employee 5)
Others were critical of who would be chosen to participate, suggesting it might not be
associated with tenure, position within the organisation or skill level, but simply if one is
“flavour of the month” (Case B, Supervisor 2). One further interesting observation was
made by a supervisor who believed the poor participation opportunities, a state of
affairs which favour bigger personalities, to be a by-product of scale and a consequent
lack of structure:
I do think the downside to a small company is that whoever is deemed most relevant, and it’s almost, big fish in little pond syndrome, you’re always going to have big attitudes wherever you go, but I do think in the bigger places, you tend to get a bit less of that, because of how it’s a bigger place, and you need to be doing your role and it’s more structured as a result. So that lack of structure allows people to maybe take it upon themselves to decide who receives what.
(Case B, Supervisor 2)
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Participation ultimately appears more complex in respect of Case B; this is
determined to be influenced by, in part, the dynamic of contractors who have been
employed to work alongside those holding ‘employee’ status, with contractors in
positions of authority appearing to stifle opportunities for employee participation.
Moreover, continuing with this line of analysis, with reference to the nature of the
workforce, and breaking it down further, Case B’s current position, and influences, in
respect of participation and voice conditions, are something we can attempt to better
understand.
In addition to skill level, referenced at the start of this section, and its associated
influences on one’s ability to participate, a distinguishing feature of Case B’s
participatory agenda, and a reason for dissatisfaction with current mechanisms, is linked
to a semblance of collectivism with unionism held by employees, which accordingly
heightens expectations in relation to participation and voice opportunities. The
presence of implicit conflict and employment relations issues of this nature and relating
to Case B were considered in the preceding chapter (Chapter 6).
Such expectations or pressures on management appear to influence proceedings
in a manner that is not apparent in Case A, borne out of the workforce composition of
those employed by Case B, who hold deep-seated memories and a penchant for trade
unionism and accordingly a degree of expectation in relation to participation and voice
mechanisms, an illustration of the impact attributable to the workplace-level
environment on HRM development.
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6.0 Summary conclusions
This chapter analysed and compared four different HR levers within the case study
organisations to better understand how the SMEs are balancing and coping with the
contradictory pressures of formalisation (research question 2). The findings suggest that
both cases wish to sustain some degree of informality – with the continuity of informal
cultures, systems and norms that have become heavily engrained within the
organisations – and balance the formal-informal divide, yet much also depends on
various factors as to why they have followed different trajectories in their development.
It appears that the cases show how growth, the role of memory and the need to grapple
with the choice of formalisation is more deliberate and consciously reflected on within
management and the workforce. The thesis represents an in-depth qualitative study of
how growth has its reflections and hard choices and of responses that try to salvage
aspects of how things were done. What is emerging in this chapter in terms of the
mediation of HR levers is influence by external regulatory factors, albeit conforming to
them in a game-playing sense to sustain some informal internal control, and the role of
worker memory and characteristics in that process.
Summarising the different HR levers now: recruitment and selection decisions
still revolve around tried and trusted informal methods through professional and
personal social networks. This is true regardless of whether the organisations are seeking
an engineer or an unskilled worker. Engineers of Case B are a ‘known quantity’ (Carroll
et al., 1999), in much the same way as friends or family members are conceived as a
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known quantity in Case A, made possible in this instance by the nature of the sector and
the close-knit community therein. This example serves to illustrate how HRM is impacted
by contextual determinants including sector effects in this instance. The degree of
informality in the recruitment and selection process appears to be driven partly by a lack
of HR skills amongst management, inadequate labour market supply and the embedded
nature of informal practices which means that there is an element of almost distrust in
formal mechanisms. Management practices focused around recruitment and selection
may be informal but are conceivably highly formalised from a social relations standpoint,
succinctly illustrated by the importance of ‘fit’ within both cases; where ‘fit’ is deemed
to be concerned with whether people ‘fit’ with the workplace culture (even though no
formal process of defining culture had been undertaken). Both workforce cultures are
quite strong, with high levels of social closure, suggesting the role played by group
dynamics is influential, particularly in Case B, where teamworking skills were closely
associated with ‘fit’ with the characteristics of the group. Moreover, this is despite
neither case study having a trade union presence, indicating there to be some curious
internal organisational political relations that are apparent even in these smaller
companies and even if the work is less skilled in Case A’s circumstances.
Findings presented in relation to the training and development systems of both
case study organisations succinctly illustrate the influence derived from a sectoral effect
and institutional positioning (research question 3); ‘table stakes’ to meet the minimum
regulatory requirements just to ‘be in the game’ (Boxall and Purcell, 2008; Boselie et al.,
2009). In both instances, a much tighter, controlled and formalised approach to training
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due to the importance of the regulatory body, the CAA, can be identified, with the key
issue of safety and the profile of the aerospace sector as a mediating factor. Accordingly,
it could be conceived that the organisation’s boundary with the external sphere is very
important and how those bodies, such as the CAA, impinge on the space of the firm
varies across different HR dimensions. Consequently, it is hypothesised that training and
development practices within the case study firms are more advanced than SMEs of
comparable size operating in different sectors because of such regulatory pressures. Key
actors inhabiting the ‘regulatory space’ (research question 3) and bearing influence upon
HRM decisions, including the CAA, will be considered in the following chapter.
Manager and employee response to performance appraisals in Case A represents
a further example of a preference for the informal guided by memory, customs and the
embedded nature of informality which has resulted in formalised mechanisms being
greeted by an air of cynicism, a culture at odds with prevailing aerospace culture and
one that is profoundly in favour of continuously improving and enhancing the quality of
the workforce. Consequently, the organisation is complying with certain expectations by
allowing itself to be perceived as a professional and competent entity, an illustration
also of ‘flexible formalisation’ and the dualistic nature of HRM and employment relations
practices in small firms, alongside their susceptibility and intimacy to environmental
stimuli. In respect of Case B, past failures could also be aligned with the fact that previous
attempts to introduce appraisals appear to be at odds with the closed nature of the
workforce and the culture of informality that presided over the organisation. The
inability of line-managers is also thought to be a contributory factor. The critical role
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played by ACAS in Case B represents a further example of how the SME’s boundary with
the external sphere is important and how bodies like ACAS (and the CAA with their
training and development agenda) are impinging on the space of the firm.
Finally, when examining participation and voice mechanisms, another interesting
finding presented itself, one that illustrates the complexity inherent to HRM
development and the impact attributable to the workplace-level environment. With
both organisations having typically encouraged communication and participation via
informal mechanisms, particularly via word-of-mouth, achievable because physical
proximity encourages closer interactions between parties, organisational growth has
made such an approach unfeasible, providing us with a curious and interesting insight
into how that has played out across both cases, most noticeably, the heightened levels
of expectations of engineers of Case B, derived again from memories and customs
aligned with a collectivist approach to industrial relations, proving there are curious and
subtle differences between the case study organisations and a complexity to
proceedings apparent, evidence perhaps confirming the presence of deep structures as
theorised by Whittington (1988).
Having summarised key findings in relation to each HR lever, what should have
become apparent is a high degree of context dependency: that different internal and
external factors shape growth and development, including variety within and between
the cases, inclusive of culture, social relations, memory and structure of management as
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internal factors then regulation, labour markets and the nature of the sector as external
factors, among others.
Ostensibly, both case study organisations are similar; in terms of scale, sector of
operation, and they have both recently encountered high levels of growth. However,
after undertaking a deeper level of analysis, how developments play out differently in
each case is becoming elucidated, assertion of a complexity to causation as referenced
in research question 3. Memory and path dependency are apparent and influential,
shaped in such a way that the tension varies between the cases and there is a sense of
elements of HR practice being the source of contention and difference in each case such
that as they develop their structures it is apparent that there are choices and contexts
shaping the nature of HRM even for this scale of firm (aligned with research question 2).
The influence of external factors and internal traditions and links seems to be important
when studying these developments.
Furthermore, a duality thus presents itself: a dichotomy between formalised
processes and informal desires; this theme will be picked up within the confines of the
discussion chapter as this apparent live tension termed ‘flexible formalisation’ is further
analysed. Such a tension was identified within research question 2: the apparent tension
between wanting to remain small, focused, flexible and particularistic and the
development of ‘high-road’, ‘professional’ forms of HRM common to larger corporate
firms. Viewing HRM development, within the context of SMEs, through an
understanding of their histories and structures of power will allow for the dualistic
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nature of HRM and employment relations practices in small firms, examples of which
have been encountered within both case study organisations and illustrated within the
confines of this chapter, to be accounted for and consequently SME behaviour to be
adequately explained.
Whilst there appears to be evidence of HR maturity and enactment within the
case study organisations, it is perhaps important to also recognise the advantages to
informal mechanisms within the context of the SME, as evidenced in both case study
organisations in respect of their recruitment and selection decisions, for example, or as
highlighted by the Employment Law Consultant used by Case A, who noted that when
the organisation was confronted with challenges, they could be handled efficiently and
with a degree of flexibility and pragmatism in the absence of bureaucracy. It could be
said that HR thus assumes an ambivalent role, across the divide; the ‘dual picture of
HRM’, combining the formal with the informal, the family and the professional, thereby
presenting a noteworthy and unique cultural identity.
Moreover, it could be suggested, taking account of discussions herein, that the
adoption of informal mechanisms in the context of the SME could also be the result of
informed, deliberate and thought out intentions in light of formalised structures. For
example, as observed in the case studies, when it came to recruiting potential
employees, a lack of formalised channels (such as via recognised employment sector
lists) resulted in the use of heavily informal recruitment methods, namely via word of
mouth. Strategic choices appear to be taken with a clear understanding that while they
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need to grow as an organisation, they need to hold on to some of the benefits associated
with being small. There is a tension and duality between the formal and informal and
organisations have a clear understanding of these poles and differences, even if they are
ideal types and not all that clear as opposing points with clear differences. The firms
grow and develop and are conscious of these decisions and problems of antagonisms
and balance; there is a certain amount of agency here, even with the external structural
constraints and influences at play.
Although such flexibility, and their ability to shift from formal processes to more
informal mechanisms, and vice-versa, can arguably be achieved because of their size,
the larger the organisation gets, more than likely this will serve to further increase
pressures to formalise, with demands from external stakeholders and those occupying
the ‘regulatory space’ consequently rising, the result of which being a shift in the
aforementioned balance between formalised structure and the desire to remain flexible
having to be re-plotted in favour of a more formal standpoint. When that point in time
is reached, what may seem an apparent pressure and hindrance in the form of CAA
regulations now may in fact assist the organisation in their attainment of more
formalised processes with greater ease because of their insistence of working towards a
“culture of process” from a quality standpoint. With continued levels of growth that may
ultimately not suffice, with both organisations ultimately having to pursue a strategy of
professionalisation which includes recruiting externally and seeking experienced
individuals who can ‘slot in’ to management positions further up the hierarchy.
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HRM must ultimately be observed through a lens sensitive to context
(affirmation of the question posed within research question 3 – how influential are the
actors and bodies occupying the ‘regulatory space’ in which the SMEs are embedded
upon the development of HRM?), to better comprehend the perceived complex
interplay of structural factors and internal dynamics, and perhaps most significantly the
SMEs’ proximity to environmental stimuli, achieved by mapping the ‘regulatory space’
and accounting for the complex array of actors, sites and spaces as a precondition to
understanding HRM and change.
This is where the next chapter will begin, with an exploration of the regulatory
space, external boundaries and relations across them. There are already indications of
how institutional structures, including regulatory and market pressures, are inhabiting
the regulatory space to influence the development of HRM within the case study firms,
at odds with the informal ideals conveyed by existing literature that tends to be heavily
characterised by elements of size determinism and perpetuated by ‘fuzzy concepts’
(Markusen, 1999; Marlow, 2006) and a lack of existing theoretical frameworks that
better understand and prioritise contextual influences, thereby simplistically labelling
HRM in the SME.
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CHAPTER 8 – The regulatory spaces and context of small and medium sized
firms: Dynamics and interactions
1.0 Introduction
An overriding objective of this thesis has been the demystification of assumptions
concerning the SME so as to attain a greater understanding of HRM development in the
small firm (research question 1), more specifically, to better comprehend the more
complex dynamics of change, and the extent to which theoretical assumptions and
frameworks must be attuned to environmental stimuli (research question 3). Existing
literature has in the main chosen to study the small firm in relative isolation, leaving
conclusions drawn for the main part devoid of context. By contrast, this thesis argues
that SMEs encounter similar dilemmas and interactions with the external regulatory
environment to those of larger firms and there are similarly curious developments and
complex processes of adaption. Consequently, this thesis has attempted to identify and
understand dynamics of change in HRM in a given context – aerospace sector SMEs
based in the North-West – and the extent to which there are clear learning and change
imperatives or causal factors at play.
Many factors that influence the formalisation of HR practices and organisational
structures are apparent and were identified within the preceding three empirical
chapters. HR development and the formalisation of the organisation has been driven by
the organisational, sectoral and regulatory environments. For example, new forms of
regulation in British employment relations, the intermediate role of agencies such as
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ACAS, particularly in Case B as considered in previous chapters, or the influence of
pressures originating from the more ‘coercive networks’ (Bacon and Hoque, 2005), such
as the Civil Aviation Authority (CAA).
Consequently, this chapter will seek to elucidate the origins of the questions and
choices that manifest themselves and with which the SME must contend and must
respond to. How they resolve or manage the pressures placed upon them by often
competing regulatory forces (research question 2) has been discussed, but now focus
must be directed to the external environment with a view to understanding whether its
contours and ‘landscape’ as a regulatory space explains the more flexible developments
the thesis has uncovered.
Both case study organisations are ostensibly similar: they operate in the same
sector of the economy, the aerospace sector; they are similarly sized organisations that
are both apparently going through comparable phases of growth and development,
albeit that closer inspection, for example in respect of the differing cultures therein, as
focused upon in the previous chapters, or the differing actors with whom they interact,
as will be the focus here, highlights a complexity to proceedings. This thesis has
attempted to demonstrate a complexity in the development of HRM by comparing two
cases and isolating the differences by allowing them to be ‘teased out’ through an in-
depth examination.
Moreover, and to reaffirm: while previous chapters have focused on internal
boundaries of the firm – the first empirical chapter exploring themes of growth and
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development, the second empirical chapter focusing on issues of bureaucracy and
structure and the third focusing upon strategies and practice in relation to HRM – and
how it has accommodated external pressures, this chapter will explore the external
boundaries and relations across them in relation to the firm. The positioning of this
empirical chapter, the final of four empirical chapters, is a conscious decision in light of
the findings presented in the aforementioned previous three chapters. It is an attempt
to provide a more nuanced and complete narrative, substantiated by undertaking a
series of expert interviews with relevant actors and bodies, to elucidate greater meaning
and understanding.
This chapter will therefore seek to address the role played by external actors and
bodies in SME HRM development, an exploration of organisational learning processes,
the degree of cross-fertilisation between actors and bodies occupying the ‘regulatory
space’ (research question 3) with whom the cases interact with, and the extent to which
institutional positioning impacts on HRM development and organisational learning.
This chapter is arranged as follows: prior to analysing the specific actors, the
concept of ‘regulatory space’ will be considered, to provide recognition and show the
relevance of the concept and the fact that it is a more complex notion than it may be
perceived at first glance. An understanding of regulatory space is deemed a prerequisite
to understanding how the various bodies and actors exert influence upon the SME. To
this end, the actors to be discussed in this chapter will be split into the following
subsections:
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a. Public and private sector-related bodies: regulatory body the CAA (the Civil
Aviation Authority – also a part of the state), regional aerospace alliances (RAAs),
customers and the Aerospace, Marine and Defence division of BEIS (Department
for Business, Energy and Industrial Strategy).
b. General state advisory bodies: specifically, through agencies such as ACAS
(Advisory, Conciliation and Arbitration Service) who operate in a largely advisory
capacity and the HSE (Health and Safety Executive) who are deemed to be
somewhat interventionist in approach.
c. Non-state advisory bodies: CIPD (Chartered Institute of Personnel and
Development), individual consultants and consultancies, and the Greater
Manchester Chambers of Commerce (which is also a representative body for
employers to some extent).
d. Trade unions: a notable absence in this instance from a sector with strong
historical associations with the labour movement.
Comparable actors have been grouped together in such a manner as to aid
understanding and to allow the narrative to succeed. Summary conclusions will be
drawn at the close; key findings presented will comprise recognition of a fragmented
external environment, with porous boundaries being very much a live characteristic and
a recognition that a complexity is inherent internally to the SME, but such internal
dynamics are contingent upon external bodies, complexities of causation and deep
structures. In light of such influences originating from outside the firm, one further
proposition relates to management being perceived as a function shared with such
external actors, along with the way the firm is more dynamic in its interactions with such
bodies and not always a clear ‘recipient’ of external pressure.
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2.0 Mapping the ‘regulatory space’: Unearthing the real dynamics of context and
regulation
A first important consideration is to recognise and expand upon the relevance of
‘regulatory space’ as an analytical construct (as devised by Hancher and Moran (1989)
and firmly aligned with research question 3), in its application to this thesis. To reaffirm
one of the topics of discussion within the literature review, the central tenets of
‘regulatory space’, conceived to be a more broad and complex notion than at first glance,
there exists a requirement to move away from a view based simply on the ‘command-
based’ view of regulation (i.e. as being limited to government regulations), and think in
terms of a dispersed and fragmented environment extending beyond legal systems to
include various intersecting and potentially conflicting value systems. There exist a
multiplicity of sites, spaces and actors all seeking to locate themselves and colonise the
space. Such spaces and actors do not operate in isolation, but on the basis of a diversity
of linkages between them. Only after accounting for, and with a comprehensive
understanding of, the complexities of these relations, of the multiple roles and diverse
spaces in which the SME operates, can the role and impact of regulation truly be
understood. Contextual factors may further vary over space and time, with boundaries
between these spaces being constantly renegotiated and, where regulatory jurisdictions
may overlap, thus requiring a degree of flexibility and pragmatism – a negotiated
process, iterative and pragmatic, that is also missing from the majority of existing
literature concerning the SME (MacKenzie and Martinez-Lucio, 2005).
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Finally, the question must be posed: to what extent are organisations contending
with a more complex and dispersed form of regulation whereby the state, due to various
economic factors, develops a more indirect and differentiated set of roles (Martinez-
Lucio and Stuart, 2011; Martinez-Lucio and MacKenzie, 2018)? With regulation being re-
shaped and now originating from an ever-expanding list of indirect actors, or ‘new actors
in industrial relations’ (Heery and Frege, 2006), a transition is observed by the ‘phases
of the state’ model also (Morissette et al., 2018), as the state redirects attention from
forms of partnership towards entrepreneurship and investment in regional ecosystems.
Such new actors include conciliation bodies and learning agencies; examples include the
Arbitration and Conciliation Advisory Service (ACAS), the Health and Safety Executive
(HSE) or the Low Pay Commission. Such institutions have been developed by the state
to help ensure regulatory compliance as the state itself withdraws from a more direct
role to some extent in the face of changing employment relations needs at the
workplace level (Martinez-Lucio and Stuart, 2011). A consequence of increased numbers
is an added degree of complexity as more institutions colonise and locate themselves
within the ‘regulatory space’; they are to some extent dispersed and fragmented, all with
intersecting objectives and bearing influence on the current status of HRM.
As the examples indicate, the influences and pressures placed upon the SME are
derived to a large extent from the unique position they hold within the intricate web of
actors and ‘regulatory spaces’. Therefore, Table 9 lists a selection of the actors or bodies
occupying the ‘regulatory space’ within which the case study organisations reside (those
who were interviewed for the purposes of this research project are highlighted in bold
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italics), all of which have their own objectives and interests in the case study firms and
the current status of HRM therein.
Table 9: The actors and bodies occupying the ‘regulatory space’
Actor/Body type Actor/Body breakdown
Public and private sector related bodies Civil Aviation Authority (CAA), Customers
(Airlines), Suppliers (OEMS), Regional
Aerospace Alliances, BEIS (Aerospace
division)
General state advisory bodies ACAS, HSE, HMRC, UKBA, BEIS (Research
division)
Non state advisory bodies Management consultants, HR
services/consultants, Health and Safety
consultants, solicitors, accountants, CIPD,
Greater Manchester Chambers of Commerce
Other Trade unions
An organisation’s behaviours must be considered in conjunction with external
influences of this kind, and accordingly the questions and choices that manifest
themselves for the SME, and how they resolve or manage living tensions placed upon
them by these competing regulatory forces, particularly as they mature and interact with
an increasing number of actors, in respect of the subsequent paths they follow and their
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reliance upon the external environment. Perhaps most noticeably for the two SMEs
under study is the tension between the desire to maintain informal processes and
desires for reasons of flexibility and the adoption of more formal, professional systems
in line with regulatory pressures: hence, notions of ‘flexible formalisation’ introduced in
the preceding chapter will be considered and analysed in greater depth in the discussion
chapter.
3.0 Public and private sector related bodies
The following section considers the actors and bodies specific to aerospace, and in the
process accounts for the influences derived from the specific institutional positioning
(research question 3). Particular attention will be directed towards the Civil Aviation
Authority – the regulatory body and statutory corporation accountable to the
Department for Transport (the state) – who have a noticeable influence over
proceedings within both SMEs, particularly from a quality, training and development and
cultural perspective. Also considered herein will be customers; with reference to the
case study organisations, customers are typically airlines – large multi-national
corporate organisations, with asymmetrical power relations in their favour. Regional
aerospace alliances (who also have a relationship with the state) and the Aerospace,
Marine and Defence sector of BEIS (Department for Business, Energy and Industrial
Strategy) are the third and fourth of the bodies discussed in this section; their focus on
research and development is heavily apparent for reasons of worldwide sector growth,
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maintaining the UK’s current market share, but to the apparent neglect of other areas
of operation within the sector, including the maintenance organisations who are the
focus of this thesis.
3.1 The Civil Aviation Authority, regulation and a ‘culture of process’
Organisations operating in the aerospace sector are licensed to operate and heavily
regulated from a compliance and quality control standpoint by the Civil Aviation
Authority (CAA). Thus, relating this back to discussions in preceding chapters on culture,
one factor challenging a ‘power culture’ (Handy, 1999) is the external regulations.
Several respondents spoke of those rules and regulations including:
More rules, more regulations…everything is to the letter, [if] you didn’t you’d have bodies like the CAA and the FAA on your case.
(Case A, Manager 4)
Accordingly, aerospace SME owners must adopt a strategy of up-market formalisation,
as opposed to a contrasting approach of down-market illegitimacy:
You can’t afford not to be [professional in aerospace]…there are regulations that we have to adhere to and they require us to do things in certain ways.
(Case B, Manager 4)
Here we can see that formalisation can be driven externally through the need for
regulatory compliance. This is in contrast to life-cycle models and associated literature,
such as Greiner’s growth model (1972; 1998) that was critiqued in previous chapters.
Such models implicitly imply that formalisation might be conceived as predominantly
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driven by the internal dynamics of growth and size increases. Furthermore, in industries
under strong regulatory compliance regimes, such as the aerospace sector, the process
of formalisation is likely to be more rapid, meaning a faster shift between life-cycle
stages occurs due to the immediate need for compliance.
Alongside professionalism and regulation, policy, procedures and bureaucracy
feature heavily on the agenda, described by one respondent as it being “just the nature
of the business” (Case A, Director 2). In application of Handy’s (1999) model of culture,
bureaucracy is often related to a ‘role culture’: it is reasoned that the need for
compliance and accountability increases in a ‘role culture’. Additionally, it also instigates
the internal need for roles and ‘readers’ of the external environment and a greater
degree of internal complexity and interaction with the external.
Moreover, whilst standards required by the CAA are not directly stated in terms
of HRM, a by-product of maintaining compliance sees employers needing to recruit and
train their workforce, with sufficient records kept reflecting as much. HR plays an
important role in that process, for example considering recruitment:
The business needs to be able to recruit people who can do the work to a certain level that a quality regime demands, and that quality regime is driven by the CAA.
(Case B, Director 3)
The CAA’s interest in training and development is best illustrated through the following
statement made by a director from Case B, and the difference in interest shown towards
the desk-based members of the recruitment team and the workforce on the shop floor
undertaking engineering work:
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With our internal staff? Not within the office, no...But within the workshop, there probably is a lot more, because they have the CAA guidelines.
(Case B, Director 1)
The following response in relation to training and competence demonstrates the
importance of training from the standpoint of the CAA:
The CAA have found that aeroplanes don't break down because they're aeroplanes. They break down because of people…show me the training that he's had that tells me why you have given him that authority to certify work. So I'll say: this is the classroom training he's had, these are the examinations he's had, this is the experience he's had, this is his on the job training leading up to that approval process he's had.
(Case A, Director 2)
Following this line of analysis, HR could accordingly be conceived as a space for
intervention; a space the HR function can organise within to assist the SME in its
attainment and preservation of regulatory approvals. Ensuring procedural compliance
from a quality perspective appears to take precedence over all other business
operations; quality improvement appears the driving force that is simultaneously
bringing through advancements in the HR discourse. Furthermore, the very notion of
procedural discourse for quality control purposes appears to influence other areas of
organisational activity, including HR and employment relations. Described by the
employment law advisor to Case A as a “culture of process”, a mind-set that exists
amongst both workforces that is preconditioned towards following written systems. The
following comments made by respondents of Case B reaffirm as much:
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We’ve always had procedures and policies because of the regulations so we know why we have to follow them…it’s made adhering to business procedures easier… they’ll understand eventually why we’re doing these things [introducing formalised HR protocols]. We’re doing it for the benefit of the company and ultimately to protect the company. But, it’s to protect them as well.
(Case B, Manager 1)
Regulations matter…I think one set of regulations does help the next set. The fact we operate in a regulated environment like aerospace can only be beneficial when we look to adhere to other forms of regulation.
(Case B, Manager 4)
This could be interpreted as aerospace-derived forms of regulation assisting the SMEs in
the development of more sophisticated and formalised HRM protocols, perhaps similar
to those more widely associated with the larger corporate entity than with an
organisation of a comparable size but operating within a different sector of the
economy, rejecting the impact of size in preference to contextual dynamics (research
question 1).
Finally, the “culture of process” identified by the Employment Law Consultant of
Case A that is a consequence of formalisation and bureaucratisation for reasons of audit
and accountability represents further evidence that the organisation is located within
Handy’s (1999) ‘role culture’ segment of the typology wherein following rules and
processes are central to a bureaucratic ‘role culture’.
3.2 The influence of customers originating from ‘coercive networks’ on HRM
In an industry dominated by airlines and original equipment manufacturers (OEMs),
their relationships with the SME population are worthy of closer inspection. Such airlines
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constitute a significant proportion of the considered organisations’ customer bases.
Conceivably described as ‘consummate professionals’, it appears highly improbable that
an entity of such high calibre would want to commence trading and open up a
relationship with a “back street garage” type of organisation, as they will want to further
that professional image wherever possible. Associations with ‘amateur’ organisations
could bring about negative publicity in an industry so heavily attentive towards the
safety of the passenger:
Because I guess if you’re bidding to do work for a big airline…they don’t want to see, you know, a company that looks like a backstreet garage.
(Case B, Employee 2)
Your customers will look at you and if you’re not acting in a professional way, they’ve got to consider their own risk.
(Case B, Manager 4)
Accordingly, and as testified by the SMEs under study, customer organisations will
invariably ask potential suppliers to make a declaration confirming adherence to a
supplier code of conduct:
I've signed a non-disclosure…I'm bidding for work, for their wheels and brakes, and there's three elements of the bidding process. One to sign off code of conduct, business ethics. And it's basically a huge document asking do we treat our people right? And it's all about equality, orientation and what have you. And we've got to sign all that off…
(Case A, Director 2)
The code of conduct includes aspects relating to the HR processes and personnel of the
organisation supplying the product or services, typically in relation to labour standards
and employee rights: inclusive of equal opportunities and diversity, the existence of
contracts of employment, remuneration, health and safety and working hours. Notions
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of ‘mimic opportunism’ (Wilkinson et al., 2007) come to the fore at this juncture, as the
SME seeks to implement schemes or practices that have proven successful in their larger
counterparts and in doing so attain ‘preferred supplier status’ (Downing-Burn and Cox,
1999):
They ask you to mirror their working practices. (Case A, Director 1)
The ideas put forward by DiMaggio and Powell (1983) relating to ‘institutional
isomorphism’ are also relevant (see Chapter 3, section 4.3 for definitions): they identify
the presence of mimetic pressures (alongside normative and coercive pressures) to
conform to the institutionalised expectations of the local environment. Furthermore, a
senior member of staff at Case A did speculate that the document is merely in place for
presentational purposes: a box ticking exercise, or an ‘empty shell’, to adopt the analogy
of Hoque and Noon (2004) described in the literature review (see Chapter 2, section 4.4
for definitions):
I think it’s just the signature they’re after to be honest, they can apportion blame then and avert a PR disaster if one of their suppliers isn’t found to be operating ethically.
(Case A, Director 2)
It is arguably important that the relationship between the SME and their customers be
deliberated over in terms of the apparent asymmetrical power relations between the
two parties.
To summarise, the customer represents a significant influence upon the HRM
narrative, serving to illustrate, alongside the influences derived from the CAA, a “culture
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of process” and a formalisation of the HRM function, particularly in relation to their
training and development protocols, as witnessed in the preceding chapter in relation
to the levers of HRM and in affirmation of research question 3 and the influence derived
from other actors and bodies in the aerospace sector.
3.3 Regional aerospace alliances (RAA)
RAAs in the North-West (North-West Aerospace Alliance, NWAA), South-West (West of
England Aerospace Forum, WEAF) and the Midlands (Midlands Aerospace Alliance,
MAA) were interviewed in a bid to understand their role within aerospace. Prior to
conducting the research, and in alignment with research question 3, which takes as its
focus institutional positioning, it was hypothesised that being situated within a regional
cluster and having RAA membership would facilitate the development of organisational
processes, including the HRM function. However, in the context of this thesis, such a
prediction appears to be incorrect. Whilst both SMEs are members of the North-West
Aerospace Alliance, their interactions with the alliance are limited to receiving monthly
newsletters and attendance at the NWAA annual conference, albeit that this is not to
say other organisations within the North-West, or indeed organisations that are
members of RAAs in other parts of the United Kingdom, do not have a higher level of
interaction with this stakeholder and consequently that their influence over the SME
would be greater. For example, membership benefits afforded to members of WEAF
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include discounted access to an employment law portal or their IHL (in-house lawyer)
service. A comparable a service was not offered by the NWAA.
It is argued that aerospace SMEs that are significantly smaller, perhaps in the
start-up phase, and particularly those whose focus is very much directed towards
research and development, utilise the services of their local RAA and the networking
links they have with academic institutions, government, aircraft manufacturers/OEMs,
funding bodies and finance sources far more than already established organisations or
their maintenance and engineering (MRO) counterparts; this is a classification both case
study organisations would sit under. Given the nature of the work, MRO functioning
relies predominantly on interactions with airlines (the customer) and OEMs (parts
supplier), which does not rely on the RAA to act as the ‘middle-man’ as it may do when
supporting SMEs by helping them gain funding for research and development purposes.
As the representative of the Midlands Aerospace Alliance alludes:
Difficult to get SMEs to interact with Universities or Primes, they’re intimidated so we act as middle-man.
(MAA Representative)
After interviewing three of the five principal aerospace alliances who operate in the
United Kingdom, a pre-disposition of services directed towards R&D outfits was
apparent, consequently furthering the development of UK aerospace on the global stage
and the attainment of a market share that is presently second only to the United States
of America (AGP, 2013). Accordingly, the RAAs act as an agent of the state (or BEIS)
through disseminating state-led goals. Such a relationship was clarified when the
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representative of BEIS was interviewed. Further analysis relating to interviews
undertaken with the Aerospace, Marine and Defence division of BEIS is focused upon in
Appendix L.
3.4 Summary and discussion
This section has highlighted how the regulatory authorities, in the form of the CAA,
represent a dominant influence over SME proceedings, particularly from a training and
quality adherence standpoint. Customer relations inhabit the boundaries of the
‘coercive network’ to reinforce the CAA’s mantra and strengthen a “culture of process”.
HR could accordingly be characterised as a space for intervention; a space the HR
function can organise within and assist the SME in its attainment and preservation of
regulatory approvals. Attention has also been drawn to the apparent lack of
coordination in the sector, particularly when it concerns training and upskilling in the
SME: where are the colleges or formal training structures? What are the regional
aerospace alliances or BEIS doing? There appears to be excessive focus on R&D
opportunities to the neglect of other challenges and vulnerabilities faced by the sector,
particularly those related to training and upskilling of engineering roles in the SME.
Latent risk persists that could lead to skill shortages should the state and these regional
alliances not intervene.
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4.0 The role of the state in HRM development in the SME
The role of state is a curious one: no uniform regulatory pressure appears to be
emanating from there or from institutions to whom power and responsibility has been
devolved. For example, ACAS adopts an advisory approach to proceedings in contrast to
the HSE and its interventionist operating strategies. Before these actors form the focus
of discussions, employment law legislation and the role of the HR consultant will be
examined.
4.1 Employment law and the difficulties attributed to HR outsourcing
At the heart of the state – regardless of the subtle regulatory shifts outlined above –
remains the legal dimension. As alluded to in previous chapters, notions of HR are
primarily associated with employment law, with HR having recently been formalised in
respect of policies and procedures in both organisations.
A greater focus upon employment law is not surprising if the following comments
put forward by an ACAS representative who was interviewed for this thesis are
considered: they suggested SMEs are now “more professional than they were” given
increased ‘red tape’ and a “growth in employment rights”. The presence of ‘restrictive’
legislation had not gone unnoticed within the two cases, particularly from senior
management who were typically older members of staff and who held vivid recollections
of historical employment laws:
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I think it's a little bit more restrictive certainly…It's almost as though you've got…it's like political correctness...Maybe I'm a little bit cynical because I'm older that it's not as easy as it used to be.
(Case A, Director 2)
I think people are starting to realise now that some of the rules that have been created are very restrictive.
(Case B, Director 4)
However, as already considered, there is a difference between having written
procedures and enacting them, with line-managers shying away from such
responsibilities because they “lack confidence” (Case B, Director 3), the skills and
knowledge to carry out such duties effectively.
HR is essential, we have this one employee who I am convinced has a trick up their sleeve and is trying to get sacked, he’s waiting to get dismissed, I’m not going to be the one to do that, I think he’s waiting to bring a claim, that’s why you need HR, to ensure we follow the correct procedure.
(Case A, Manager 1)
Additional factors of organisational growth, associated complexity and an
increase in numbers employed, amount to a series of events whereby senior
management fear it is only a matter of time before they will be summoned to an
employment tribunal:
In line with the level of complexity of the business…and the need to be compliant with all the legislation.
(Case B, Director 3)
Remaining compliant in the area of employment law appears to be a critical determinant
in Case A’s decision to outsource employment law activities to an HR consultancy
service. The HR consultant fills knowledge gaps and offers the organisation a degree of
cushioning and the ability to apportion blame in the event of any wrong doing; it was
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described by one member of the senior management team as a “comfort blanket” (Case
A, Director 3), another director made the following comment along similar lines: “it
reassures you…It’s a safety net” (Case A, Director 1). Moreover, it indicates that fear
makes SMEs take HRM seriously, appeasing their conscience when scared of making
incorrect decisions; this appears to be the case even in the absence of unions.
Understandably, but perhaps less so, the fast-paced environment and changes in
respect of employment legislation appears as an additional motive for outsourcing the
HR specialism:
Just the constant changing of employment law…one minute you think you know something and it’s changed…it’s pressure because you don’t want to get it wrong.
(Case A, Director 3)
Outsourcing HR related activities has not been without criticism from within Case
A, who deem consultants to be over cautious in their approach:
I find it frustrating sometimes that it’s not as straightforward to deal with some things. There is a procedure that you have to follow…and sometimes it is a very, very lengthy process to deal with an individual.
(Case A, Director 3)
The researcher also interviewed the external employment law advisor assigned
to the Case A; she provided the following interesting observations:
As a business overall, [Case A] has processes and systems in place for HR that are more formal, controlled and documented than many comparable size SMEs. This I believe to have been developed as a result of the nature of the business, the focus on compliance with safety and quality and thus a culture of process, similar to what you would expect in larger organisations.
(Case A, Employment Law Consultant)
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However, despite recognising a formality to proceedings, a consequence in part of
operating within the aerospace sector, she also noticed the presence of a familial
undertone to operations when it concerned people:
There remains, not critically, a less corporate business mentality when dealing with employees and more immediacy in dealing with situations or people in comparison with organisations who are bigger, more corporate and structured. This has the advantage of having process and procedures in place to follow but also the ability to be more pragmatic and flexible and quick in dealing with situations.
(Case A, Employment Law Consultant)
The degree of involvement of consultants could accordingly see them be labelled as
agents who are key to interpreting the demands of the state in terms of legislation.
Furthermore, it allows us to perceive management as a shared function, with more
porous bureaucratic boundaries as a consequence of the linking role of these actors.
4.2 Case B and ACAS as state voice?
Whilst consultants act as an intermediary or interpreters of state-defined rules, ACAS
have closer links to the state, being a non-departmental Government body, and play a
consultative role on behalf of the state through various activities. Case A sought counsel
predominantly from the employment law consultant, Case B chose to utilise the
resources of ACAS. However, that does not mean that Case A are ignorant of utilising
ACAS as a knowledge source: two of the line-managers and two of the company directors
listed ACAS as a source of advice, with one director making the following statement,
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suggesting consistent and regular use, a consequence perhaps of their lack of
satisfaction with consultants:
ACAS…I’ve got that chapter and verse at the minute inside my office. (Case A, Director 3)
Interestingly, the representative of ACAS who was interviewed for this thesis had
similar experiences of consultancy services, in that they felt the employment law
consultant made organisations “jump through hoops” (ACAS Representative) as a
consequence of it being an insurance-based system, and from their experience they “ask
you to do more than a Tribunal would need you to do” (ACAS Representative). Such
experiences were mirrored by the Midlands Aerospace Alliance representative who was
also interviewed for this thesis (Regional Aerospace Alliances are the focus of discussion
in section 3.3 of this chapter). He had determined that employment law consultants
were typically overly conservative or cautious in their approach, stating there to be:
A bit more ‘red tape’ than what the law actually requires of them to do. (MAA Representative)
According to the ACAS representative, SME issues typically centred around
conduct and unfair dismissal, with most SMEs “trying their best” as they “focus on
running the business”, often in a state “blissful ignorance” (ACAS Representative) to their
legal responsibilities, as the following comments from a director of Case B suggests:
We’re becoming more and more aware that as certain employment legislation changes…and implementing that sooner than we have in the past, and that’s from a legal point and also from a HM Revenue point of view, so tax, national insurance, customs, et cetera, all of those elements you do seem to become more aware of those as you get bigger.
(Case B, Director 2)
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Similarities suggested by the director between HMRC (and tax) and employment law
systems allow comparisons to be drawn that construe employment law as being another
one of those ‘bogeymen’, a description so often associated with the ‘taxman’.
Case B have built a relationship with ACAS that has seen the advisory body
become their principal source of HR knowledge, as one of the director’s attests:
I find them very, very good. And I use their support line all the time. And I've now brought ACAS in to train all my managers and supervisors.
(Case B, Director 1)
I've done most, nearly all the ACAS ones, they are one day courses, like the roles and responsibilities, absence managing, and redundancy, and restructuring, change of terms and conditions.
(Case B, Director 1)
ACAS appear to be utilised by Case B to fill knowledge gaps, to act as a form of
safety net and apportion blame in a similar manner to how Case A utilises an
employment law consultant. However, the extent of the relationship between ACAS and
Case B appears greater, and it represents an important and significant finding of this
thesis, with the degree of rapport between the two parties going beyond a mere advice
arrangement.
The relationship between ACAS and Case B is evidently more interactive in nature
in comparison to other actors or bodies with whom they interact. Moreover, ACAS’s
influence could accordingly be perceived as the state voice in Case B. One further feature
worthy of consideration before the HSE are focused upon: ACAS representatives felt one
of the foremost difficulties they encountered was a challenging of the perception that
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they “only want to work with large firms who recognise trade unions”. To that end the
ACAS representative made the following statement:
We are here, we’re free, we want to do more, have struggled to show what we can do.
(ACAS Representative)
Accordingly, ACAS have deliberated over various strategies to reach a larger
demographic of UK SME businesses, including “buddying up” with the HMRC, particularly
from a training perspective, which is something of a revenue generator, a buzzword
within ACAS since the Government implemented funding cuts. As the next section will
illustrate, similar troubles have been experienced by the HSE in the face of Government
funding cutbacks.
4.3 The HSE and associations between HR and health and safety
The realm of human resources is, in the eyes of the employees of both organisations,
closely aligned with health and safety:
HR? You mean like health and safety? (Case A, Manager 1)
Our initiatives have recently changed in that direction, so we’re becoming increasingly switched on for both of those areas [HR and health and safety]...As mentioned earlier, with our health and safety consultant, there’s been various courses and…we’re developing our consciousness towards those things. A lot of those things are kind of cultural, and this is where education comes into play I think, and trying to lead by example.
(Case B, Manager 4)
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However, such associations are particularly strong within the context of Case B, where
health and safety and human resources were discussed jointly on five occasions by five
different members of staff, including three directors, one supervisor and one employee,
signifying an understanding and indicating developments in the areas of HR and health
and safety across the hierarchy. Additionally, the term ‘health and safety’ was spoken a
total of 33 times by interview participants, suggesting it to be firmly on the Case B’s
agenda. Perhaps this is a consequence of their enlisting the help of an external health
and safety consultant. A health and safety-conscious workforce could also be linked to
the industrial relations experience held by members of the Case B workforce, as
discussed in previous chapters. Moreover, associations drawn between HR and health
and safety are perhaps a consequence of their similar focus; namely the employee, and
as alluded to in the quote above from ‘Manager 4’ of Case B, with a growing awareness
of the legislation that should be adhered to by the organisation comes the realisation
that legislation is not merely isolated to the expanse of human resources by way of
employment legislation but extends to other expanses also including the area of health
and safety. Tying this finding back in to the research questions, specifically research
question 3: it is illustrative of the potentially indirect and complex nature of the
interactions taking place between the SME and the external regulatory environment.
The HSE was also interviewed for the study, when looking at which actors inhabit
the regulatory space and could interact with the SME. Similarities between the HSE and
ACAS can be drawn in as much as they have both been subjected to budget cuts, in their
reliance upon online or virtual platforms to disseminate guidance and advice in the form
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of webinars and toolkits, particularly when attempting to reach the SME demographic,
and finally in that in their experience they have both found SME owners have typically
placed their “focus upon running the business; health and safety takes a back seat and
is down their list of priorities” (HSE Representative).
4.4 Summary and discussion
This section has focused on two different actors of the state: ACAS and the HSE – the
HSE with a much narrower yet deeper scope of focus in comparison to ACAS, and with
an interventionist outlook to operating in comparison to ACAS with its advisory
approach. Interestingly, despite differing objectives, there are similarities that can be
drawn between the challenges and experiences faced by ACAS and the HSE, including
their reliance on online toolkits to disseminate information, and their experiences of
operating within a space also occupied by consultants, litigation and insurance actors
and bodies and the consequently increased “burden” (HSE Representative) placed upon
the SME to comply.
There are perhaps consequent issues regarding ‘short-termism’ in small
businesses that often originally existed ‘hand-to-mouth’, and that culture endures. So,
things that don’t have apparent immediate returns, such as some aspects of regulation
or HRM, are looked at dimly for such reasons.
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Additionally, the findings suggest online toolkits provided by ACAS and the HSE
are an important source of knowledge, illustrating the importance of such resources
when these actors are trying to distribute information to SMEs, who are typically
understood to be a hard to reach demographic. The role played by online toolkits is
greater than that anticipated prior to conducting the research. Extrapolation of this
particular finding could suggest reliance upon such resources is widespread throughout
the SME community; the relative ease of access creates isomorphic information systems
(aligned with research question 3) whereby SMEs start to look increasingly similar in
their approach to HRM and, more specifically, employment law activities.
5.0 The role of non-state advisory bodies
5.1 The Chartered Institute of Personnel and Development (CIPD)
Case B’s experience of the CIPD was not wholly positive, as a company director attests:
From my experience, people who have done CIPD are great with the theory but have no practical knowledge of how to manage people.
(Case B, Director 1)
Suggesting a lack of application, or a disconnect between theory and practice. This
problem was something that the CIPD themselves were aware of, confirming practical
guidance was missing, particularly for the “lone HR practitioner” (CIPD Representative)
in the small firm who is “out of touch” (CIPD Representative) with fellow professionals
in the field. In response, the CIPD have created an online ‘HR Inform’ toolkit, allowing
the CIPD to interact with SMEs on a scale that is otherwise unachievable with the
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resources at their disposal. More importantly, this is a further example of the use of
toolkits in reaching the SME demographic.
A recent finding published by the CIPD (2015) advises; “the overall regulatory
burden associated with employment has increased since the mid-1980’s.” This could be
aligned with the theme running through this chapter that relates to a dispersed and ever
more complex external regulatory environment, believed in part to be a consequence of
a re-regulation narrative and the fragmentation of state-derived forms of regulation
with the introduction of numerous public bodies, but with no unified consistent
pressure, resulting in added complexity (MacKenzie and Martinez-Lucio, 2005; Martinez-
Lucio and MacKenzie, 2018)
From their experience, widespread forms of HR practice were apparent in SMEs,
with many utilising accountants or solicitors as a source of expert advice prior to the
introduction of a specialist HR function. Furthermore, they determined the importance
of the owner/manager and his/her perception of HR can have an impact on the extent
to which HR is implemented, in close alignment with the postulations put forward by
Gunnigle and Brady (1984) and Bacon et al. (1996). To that end, the CIPD concluded
there to be three principal reasons why the SME would adopt a more formalised and
professional HR stance:
To keep them out of court…recognition that people are the best asset and worthy of investment and for administration purposes.
(CIPD Representative)
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The importance of adherence to employment law and the apparent fear of litigation
discussed at the outset of this chapter is echoed here.
Furthermore, challenges of ‘fit’ expressed by the case study organisations in
respect of recruitment and selection decisions (Chapter 7, section 2.0) were identified
as a particularly troublesome challenge encountered by the generic SME according to
the CIPD. Moreover, it was also their understanding that the owner/manager would
typically screen new employees for cultural fit, albeit that recruitment in this manner
becomes a challenge if there is a “big step change” (CIPD Representative) which sees
recruitment “ramp up” (CIPD Representative) as they suddenly need a lot more staff.
Referring back to Chapter 5 and the excessive levels of growth experienced by the case
study organisations provides comparable experiences.
Training and development must be undertaken in “creative and innovative ways”
according to the CIPD Representative interviewed for this thesis, a consequence of a lack
of resources on the SME’s part. In contrast to the findings from the case study sites, the
CIPD has found evidence of apprenticeships working well in smaller high-tech firms,
principally because they are aligned with college courses. The same cannot be said for
the aerospace sector, referring to the lack of organisation in the sector, as discussed in
section 3.0 of this chapter. Finally, and in relation to the CIPD’s experience of trade union
activity in SMEs, they also found unions to be largely absent: a pattern is emerging and
will be considered in section 6.0 of this chapter.
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5.2 The influence of management consultants on Case A
For a period that coincided with organisational growth in Case A, the organisation did
bring in a management consultant to work with the senior management team and the
line-managers, for the majority of whom it was their first experience in a management
role. The consultant’s objectives were to assist and guide line-managers in overcoming
the obstacles they confronted during the day-to-day running of their respective
departments and to support the organisation in its attempts to adopt a more all-round
professional means of operating alongside a culture reflecting the same. This was in
addition to offering advice to the senior management team on more strategic elements
of the business.
The consultant sought to bring about a more professional and formalised
approach to business activities. This encroached upon people management initiatives
and they were influential in their bid to enact various polices and processes. One area
where he was particularly influential was communication; the consultant sought to
introduce departmental and management meetings.
I think [the management consultant] played a big role, I think he's a loss…he directed me in the right direction…I know a lot of people didn't like him, but actually I responded very well to my meetings.
(Case A, Manager 1)
However, as alluded to in the quote above, the management consultant’s tenure came
to an end in 2016; line-managers became increasingly cautious over what they said to
him, with an apparent fear that he would then voice those opinions or statements to
other members of staff, leading to conflict amongst the management team. This is
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arguably the result of utilising a consultant within the close quarters of an SME
environment: managers can easily decipher who said what and they become defensive
and territorial over their own department’s wrongdoings or inadequacies.
The presence of a management consultant and his influence upon proceedings,
including the HRM narrative, represents a further example of how management can be
perceived as a shared function, complex and with undistinguishable bureaucratic
boundaries. As alluded to throughout, boundaries are deemed important to the thesis;
consultants appear to straddle that boundary, with such boundaries being created and
or modified by the process of formalisation.
For comparative purposes, Case B did not interact with a management
consultant. This could be because of the level of interactions with ACAS and/or the
influential role played by their ‘HR champion’ who also held family ties, as considered in
the previous empirical chapter.
5.3 Summary and discussion
Key findings from this section include further evidence of the importance derived from
online toolkits, with the CIPD also recognising their value in the dissemination of
information to the SME demographic: further indications that consultants are traversing
the boundary of the firm, immersing themselves into organisational processes and
influencing procedure, including the HR narrative. This viewpoint aligns with theories of
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re-regulation, or the ‘death and rebirth of the state’ in a new guise, although how
effective such regulation is seems to be questionable (Martinez-Lucio and MacKenzie,
2018). It is further argued the transfer of regulation fragments the state and leads to
problems of coordination and the possibility of capture (MacKenzie and Martinez-Lucio,
2005).
Finally, and in a continuation of the pattern emerging from the previous sections
that considered state bodies and aerospace related actors, the non-state bodies
interviewed also had little or no interactions with trade unions. It is here that the focus
is directed in the following section: where are the trade unions?
6.0 Where are the trade unions?
Only two members of staff employed by Case A, approximately five per cent of the
workforce, are members of a trade union. Their reason for joining was principally to
secure the protection it afforded with respect of disciplinaries:
I am a member of a trade union now, purely to protect me for disciplinary purposes.
(Case A, Employee 2)
Moreover, that was the overall perception of trade unions in the eyes of the workforce.
Accordingly, the reason why employees of Case A made the decision that the services
provided by a trade union were not of relevance to them was that Case A was deemed
to be a “fair employer”, as the following statements attest:
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There has never been a trade union presence here, but [Case A] is fair, trade unions aren’t needed.
(Case A, Manager 4)
I don’t need to be [a member of a trade union], I feel like LC has got my back… he's had my back on a few occasions already where accusations have been made about poor management or poor decisions.
(Case A, Manager 1)
Similarly, “trust”, according to one employee of Case B, was deemed a determinant in
why unions weren’t necessary in their organisation:
I think it comes down to trust. I think we all trust each other, we all look out for each other…we've all got a good rapport between everybody, even management, they are very fair. We don’t need a union here.
(Case B, Manager 3)
The close personal connections maintained between staff at all levels of the hierarchy
creates a familial atmosphere that fosters cultures of “trust” and “fairness”, in
agreement with a ‘small is beautiful’ narrative (Schumacher, 1973). Notions of size and
its incompatibility with the services a trade union had to offer were expressed by
members of Case B in particular:
I don’t think we’re big enough. (Case B, Employee 6)
It’s something that I’ve always associated with much larger companies. (Case B, Supervisor 2)
One of the top bosses at [Airline], he runs the hangar on the line…and he has lots of trouble with the trade union…he’s a manger, he wants to implement something, but then the workforce, they go to the trade union and they say, ‘oh I don’t want to do that.’ And then the trade union will interject, they’ll get in-between them…oh thank God we don’t have a trade union. That’s one of the cultural differences, between a small and a large company…we can just make that decision, whereas he has to go through the trade unions, and so, it’s laborious.
(Case B, Manager 3)
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Additionally, workforce consensus appears to be a decisive factor in determining
trade union uptake, as the following comments made by employees of Case A suggest:
I used to be...I stopped paying it…as I was a lad and we jumped on it because it was the norm, everybody else…
(Case A, Supervisor 1)
If I was working in a company where it was run by a union, then I would probably join a union.
(Case A, Supervisor 2)
This line of analysis raises further questions, and aligns coherently with wider debates
pertaining to why trade unions are so disengaged from the SME demographic.
Statements made by representatives of two of the regional aerospace alliances who
were interviewed for this thesis reinforce such curiosities:
Trade unions? That’s the first time I’ve heard that word mentioned in seven years working here.
(WEAF Representative)
Unions don’t understand, are too far removed and as a whole SMEs don’t engage with Unions.
(MAA Representative)
This suggests the lack of trade union presence in SMEs is not isolated to the case study
organisations. However, such a line of questioning is not the focus of this research
project. As elucidated in Chapter 6, Case B offers an interesting insight into the memory
of the trade union:
I used to be [a trade union member] at British Aerospace. (Case B, Employee 6)
I used to be a convenor; I’ve seen both sides of the fence…at Dan-Air. (Case B, Director 4)
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The days of ‘Red-Robbo’ are gone…I think it's possibly a little bit like religion, I suppose, people have just moved on…they don't have the power that they used to have.
(Case B, Manager 2)
The presence of such individuals in the workplace provided for an undercurrent of
discontentment in light of their heightened expectations that was lacking within Case A
given the typically younger workforce who have no prior experience of operating in
aerospace, an environment that has historically been highly unionised.
7.0 Summary conclusions
This chapter has attempted to examine external boundaries of the SME and relations
across them, to account for contextual idiosyncrasies, the vast array of market
conditions with which small firms must contend, structural forces that cement their
unique position within a multifaceted web of actors and regulatory spaces (not
forgetting the various internal dynamics considered in previous chapters) which all
combine and bear influence and shape HRM in a unique way.
SMEs are having to evolve their HRM strategies, regardless of commercialisation
or marketisation, with emergent regulatory pressures leading to the development of
HRM within these types of firms through a process of complex interaction. A broad and
diverse number of external actors originate from the state and civil society that are of
interventionist (such as the CAA or the HSE), informational (including ACAS) and
intermediary (such as consultants or the CIPD) origin, which, together with their complex
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roles, leads to a more complex interaction between them and the SME, with the firm
consequently being subject to various influences, and are not always a clear ‘recipient’
of external pressure; but also, recognition of the existence of greater levels of agency in
the SME as the firm and its leadership interact with and respond to different external
regulatory actors and bodies, often in different ways and through different
intermediates, as different internal individuals act as mediators and filtration
mechanisms of the external. This particular finding is deemed to be a key finding of the
thesis and will accordingly be considered in the discussion chapter that directly follows
this chapter.
Admittedly, some actors were not interviewed who could have potentially
offered valuable contributions to this project, trade union representation for example,
albeit that a lack of access meant it was not possible. However, despite not interviewing
such bodies it was still possible to learn a lot about them from other sources, including
the cases and other actors occupying the regulatory space. Furthermore, the inability to
interview every actor with whom either case could potentially interact is not deemed a
disadvantage because enough actors or bodies were interviewed to allow conclusions to
be drawn in line with hypotheses and research questions, including a demonstration of
how existing debates relating to HRM and the SME are typically dislocated from their
environmental context and how influential the institutional positioning of the actors and
bodies occupying the external ‘regulatory space’ is upon HR protocol (research question
3). However, this thesis has still managed to identify and compile a diverse set of actors,
and provide clear indications of external organisation dependency, or imperatives for
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change: the uneven impact of the external environment upon the workplace, ranging
from the authoritative influences of actors who assert formalisation to proceedings,
most noticeably the CAA in relation to training activities, to the more indirect influencers
who accentuate informality.
The peculiarities of British trade unions are worthy of further comment: the
absence of IR mechanisms is believed in part to be aligned with the voice opportunities
and informal relations afforded to SME employees as a consequence of close personal
interactions between all members of staff. Despite the SMEs under study operating
beyond the reach of conventional industrial relations pressures, they appear to be
regulated without a trade union or strong state presence, by a functional equivalent, of
sorts, to collective worker representation and collective regulation: with the presence
of employment law advisors, the introduction of an in-house HR professional and the
use of ACAS and the CIPD and directGOV online toolkits, all serving to ensure that the
SME operates within the boundaries of what would be considered appropriate conduct
on the part of the employer. Furthermore, the line-managers’ apparent fear of being
summoned to an employment tribunal also strongly influences how SMEs manage
employment relations. It could accordingly be concluded that an organisation is not
necessarily neo-liberal in its approach if a trade union is not active or present.
Employers’ associations, particularly the regional aerospace alliances (RAAs)
appear weak, suggesting influence on the HR narrative to be falling principally on
consultants and the state. The North-West Aerospace Alliance (NWAA), the regional
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aerospace alliance and the local organising body which represents and supports the
cluster of aerospace firms located in the North-West of England, had no identifiable
impact on HRM and employment relations for the case study organisation. While the
degree of influence departed by other RAAs could be greater in other regions, the
acquisition of an answer to such a question is beyond the remit of this thesis.
The influence derived from ACAS, particularly in Case B, represents an important
example of the consultative arm of the state, it offers training also, and accordingly
provides reasoning for why budgetary cuts should not be made in this area. The role of
the state is a curious one: no uniform consistent regulatory pressures exist from this
actor; the advisory strategies deployed by ACAS compared with the interventionist role
of the HSE is the foremost example of such.
For quite understandable reasons – namely quality and safety – the influence of
the CAA is obvious in both cases, providing further affirmation of research question 3
and the extent to which institutional positioning of aerospace sector SMEs coerces,
facilitates and encourages HRM development and organisational learning in relation to
people management and employee relations, particularly upon both cases’ training and
development initiatives. Consequently, can HR be envisaged as a space for intervention?
In terms of the drivers of formalisation, whereas life-cycle models emphasise implicit
coordination issues for growth, regulatory context can be a source of formalisation. In
industries under strong regulatory compliance regimes – such as the aerospace industry
– this process is likely to be more rapid, meaning a faster shift between life-cycle stages
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occurs due to the immediate need for compliance. Although the initial ‘power culture’
(Handy, 1999) may reflect owner/manager norms and values, external compliance may
progress to a “culture of process” that requires a formalisation and bureaucratisation for
reasons of auditing and accountability. A “culture of process” is aligned with Handy’s
(1999) ‘role culture’ wherein following rules and processes are central to a bureaucratic
‘role culture’. It also instigates internally to the firm a need for roles and ‘readers’ of the
external environment and a greater degree of internal complexity and interaction with
the external.
The presence of the consultant, in their various forms, and their influence upon
the HRM narrative, represents a further example whereby management can be
perceived as a shared function, complex and with undistinguishable bureaucratic
boundaries. As alluded to throughout, boundaries are deemed important to the present
thesis; consultants appear to straddle that boundary, and in fact boundaries become
invoked within internal processes and become external to the firm, created and or
modified by the process of formalisation. Notions of the ‘boundaryless organisation’
(Ashkenas et al., 1995) are not new; however, given the SME’s enhanced susceptibility
to environmental stimuli, there is an argument that this concept may be more applicable
to SME-sized organisations and worthy of further exploration.
Prior to undertaking the research, notions of organisational clusters and shared
spaces of development were strongly theorised as being responsible for facilitating
organisational processes and learning in aerospace sector SMEs, particularly in relation
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to people management, skills acquisition and personal development, potentially by way
of institutional isomorphic effects. However, it appears such postulations were
inaccurate: there was negligible impact on either case study organisation from being
sited within an organisational cluster of aerospace SMEs; their interactions with other
SMEs or bodies in the sector were limited apart from those with the customer and their
suppliers. It is hypothesised that this may be the result of the nature of the product or
service being offered by the cases, given that their roles within the sector were solely
maintenance and repair and, in respect of Case A, of a semi-skilled nature, and that other
SMEs operating within research and development areas of the sector, or in more highly
skilled spaces, may have different experiences that include much more interaction with
neighbouring SMEs.
As has become apparent from the preceding chapters, a complexity is inherent
internally, with differing cultures, labour processes, employee characteristics, and
familial dynamics, alongside path dependency, agency and memory in addition, but as
this chapter indicates, internal dynamics are contingent upon external bodies as well;
this is further affirmation of research question 3 in relation to complexities of causation
and the presence of deep structures (as theorised by Whittington, 1988). Ultimately,
context influences culture.
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CHAPTER 9 – Discussion and conclusions: Bridging the gap between the human
resource management, small and medium sized firms and regulation debates
1.0 Introduction
In concluding, it is necessary to begin by revisiting the aims and objectives of the thesis
and presenting the research questions. This chapter will be organised in such a way that
the main findings of this thesis will be presented in relation to the research questions.
This will be followed by a consideration of the thesis’ contributions to the literature.
As attested to in the introductory chapter, a principal objective of this PhD thesis
is the achievement of a greater understanding and explanation of HRM development in
the small firm. The aim has been to comprehend the subtleties and complex dynamics
of change and to explore the influence of the external regulatory environment and
contingent forces that act on the SME. This has been done with a consideration for
organisational factors and internal agency dynamics that can influence the form of HRM
and that illustrate complex interactions and mediations between what are often two
competing agendas.
Much of the existing literature has chosen to study the small firm in relative
isolation, leading to conclusions devoid of context. HRM in the broad SME literature is
typically considered from a deficit position (Wapshott et al., 2014): it identifies what
small firms are not doing or do not have in place when compared against a formal set of
HRM practices and policies that would typically align with normative best practice
models of HRM. The succinct notion of ‘little big business syndrome’ (Welsh and White,
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1981) and the implicit assumption of an HRM prescription being of universal relevance
to all seems to be the current status-quo. This thesis has sought to redress the balance
and move away from the prevailing dichotomies of formal vs. informal or the ‘small is
beautiful’ (Schumacher, 1973) vs. ‘bleak house’ (Sisson, 1993) orientations of
employment relations in the small firm, as they are seen to encourage simplification in
the debate. Hence, we need to challenge stereotypical belief systems that persistently
‘denounce’ SME’s for their informal agenda and a lack of uptake of universalistic best
practice HRM principles, and also move away from the habitually recited explanation of
the changing scale of the firm as the overarching driver for HR formalisation and
bureaucratisation in the SME.
This research has, therefore, sought to portray the real and dynamic contexts of
small firms by affording them the same intellectual attention currently paid to MNCs and
larger organisations, but, more importantly, supplemented by greater attention to the
complex internal and external institutional and political dynamics of SMEs and the
multifaceted and often contradictory pressures they face. The thesis is therefore seeking
to build upon existing literature that has critiqued HRM and SME debates for their lack
of contextual awareness, and where applicable their associated frameworks that
typically recognise the requirement to account for external and internal variables. Such
frameworks are considered useful but are generally descriptive. This thesis has
attempted to progress understanding of HRM development in the SME by illustrating
the need to appreciate the presence of a dynamic and nuanced perspective in how
formalisation occurs. This has been achieved through the utilisation of an in-depth
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qualitative form of enquiry that studied the SME in a particular context – the aerospace
sector. It has accounted for factors that illustrate the presence of a complexity in how
developments are played out. This has been realised by analysing the deep social
structures (Whittington, 1988) inherent within internal characteristics, including
owner/manager influence alongside other political effects; and in doing so providing an
insight into the lived experiences of SMEs and an attempt to bring the voice of the SME
and its workers and managers into the story. Further aided by mapping and
deconstructing the external institutional regulatory environment by utilising the
‘regulatory space’ (Hancher and Moran, 1989) analytical construct, the thesis conceives
of the existence of a more nuanced approach to HRM development in the small firm,
alongside an awareness of the dynamic links or interactions between the internal and
external environments which serves to further heighten complexities.
In line with the aims and objectives of this thesis, it is helpful to be reminded of
the research questions that this thesis is seeking to answer:
1. How complex are aspects of growth and the development of HRM in the
SME?
2. How are SMEs contending with the contradictory pressures of
formalisation and what organisational contextual determinants frame
these choices?
3. How influential are the actors and bodies occupying the external
‘regulatory space’ in which the SMEs are embedded upon the
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development of HRM in the firm? How do firms respond to and interact
with external pressures?
This concluding chapter will be ordered in a manner consistent with the numbering of
the research questions. The following section will therefore deliberate on research
question 1, before moving onto research question 2 in the next section, which is
followed by discussions relating to research question 3.
2.0 A complexity inherent to HRM development in the SME: Accounting for dynamic
and nuanced characteristics
Research question 1:
How complex are aspects of growth and the development of HRM in the SME?
One of the principal contributions of this thesis has been to illustrate the presence of a
complexity inherent to the growth process and HRM developments within the small
firm. This is a complexity that is not typically accounted for by broad tranches of the
existing literature, which are less concerned with the more intricate dynamics at play,
the complexity of environmental factors or the highly idiosyncratic nature of the growth
process. In moving beyond stereotypical belief systems that persistently criticise SMEs
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for their informal agenda – the aforementioned ‘deficit position’ – and a lack of uptake
of universalistic best practice HRM principles, the thesis has offered a critique of
teleological approaches to modelling development in the SME given their inability to
capture such complexities.
Ostensibly, the two case study organisations were similar in terms of scale and
sector of operation, and they have both recently encountered high levels of growth.
However, after undertaking a deeper level of analysis – achievable only through a
qualitative in-depth study – an understanding of how developments play themselves out
differently in each of the cases has become clear, asserting of a complexity to causation.
Chapter 6 – The peculiar nature of how the human resource function evolves in the small
and medium sized firm – sought to illustrate the complex and contradictory nature of
developments in HRM by identifying potential factors for change. It became evident that
HR maturity and enactment had occurred within these case study organisations, with an
emerging formalisation of HR-focused conventions and protocols. A high degree of
context dependency was apparent in both cases, with the motives for change being
numerous and multifaceted. Different internal and external factors were shaping growth
and development, allowing for variety within and between the cases. Organisational
culture and memory, social relations and the structure of management as internal
factors, along with the nature of regulation, labour markets and the sector as external
factors, were identified to be influential in the shaping of HRM. More specifically, the
inherent complexities observed included the influence derived from consultants
combined with line-managers’ own inexperience, the rate of organisational growth and
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the addition of geographically distant sites of operation (the latter in Case B’s
circumstances only). In addition to the creation of HR specialist roles, trade union
memories and voice expectations (again, noticeable in Case B only) and familial
dimensions were the main stimuli identified in the chapter as influential and impactful
upon the formalisation of HRM.
‘Best practice’ HRM approaches, which are prevalent in existing literature
concerned with HRM and the SME, were critiqued in Chapter 2 – Understanding HRM
within the small and medium sized firm: a review of the literature – for their inability to
account for contingent influences, which the findings of this thesis confirmed. For
example, the case studies clearly presented the difficulties faced by the newly formed
management teams, which are indicative of the transitional peculiarities encountered
by the SME that are not accounted for by normative, universalistic models of HRM which
in turn encourage notions of ‘little big business syndrome’ (Welsh and White, 1981). The
findings presented in this thesis can therefore be drawn upon to suggest that existing
theory of a ‘one size fits all’ nature is disconnected from its environmental context by
signifying the importance of influences derived from contextual idiosyncrasies.
Furthermore, taking into account of the degree of complexity and multifaceted nature
of the influences encountered by SMEs, which encounter similar dilemmas and
interactions with the external regulatory environment to those of larger firms and are
exposed to similarly curious and complex processes of adaption, it is also contended that
the ‘best fit’ paradigm, with its simplistic understanding of contingency, is also unable to
accurately convey such complexities.
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Whittington’s (1988) deep structures analogy was adopted as an important
conceptual underpinning of this thesis. In Chapter 5 – Organisational contingencies and
people management in the small firm: Life-cycle stage, change and culture – Case B
demonstrated the importance and relevance of deep social structures to this thesis and
more broadly to the SME and HRM debates. It served to sensitise this thesis to the
degree of complexity apparent in respect of the decision-making abilities of the
managing director (son) and owner (father). Their disagreements were linked to the
relationship between parent and child and the asymmetrical power relations in favour
of the elder as per their respective positions in the familial hierarchy. These were
exaggerated further still by disagreements born out of differing generational attitudes,
beliefs and behaviours. Whittington’s deep structures analogy allowed for the influences
derived from generational attitudes to be accounted for, and was able to explain
disagreements apparent between the “old school” (Case B, Director 1) owner/founder
and the managing director who was more attuned to current laws and obligations. A
further example of the usefulness of the deep structures concept in understanding HRM
development in the small firm is the presence of subliminal or implicit forms of conflict
within Case B, driven by the apparent memory of previous experiences of trade unionism
and collective voice mechanisms held by engineers during the 1970s and 1980s at large
unionised aerospace firms such as British Aerospace. Consequently, memories of
unionism appear to evoke powerful connotations and serve to illustrate the impact
attributable to the micro-level environment on HRM development.
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It is further contended that such complexity or nuances mean processes of
growth cannot be accurately mapped by adopting a teleological approach to
understanding aspects of change, as the succeeding paragraphs will now consider. The
internal development of HRM and growth does not follow a teleological prescribed
approach, as instead a complexity of interactions exists. This thesis therefore offers a
critical appraisal of the teleological models which typically recognise social reality as
being more orderly and uniform than it actually is, which often offer theories denoting
sequential stages. The thesis utilised Greiner’s growth model (1972), which was
intended as an illustration of how existing literature can downplay environmental
factors. The model ignores the highly idiosyncratic nature of the growth process and is
considered to be descriptive in nature, with growth theorised to occur in a stable and
linear manner, alongside deterministic assumptions of homogeneity in relation to
organisational growth (Storey, 1997).
More specifically, looking at internal dimensions of the firm, Greiner’s model
ignores the nature of the workforce and ignores characteristics such as the capacity for
agency or culture, failing to account for non-linear dimensions of growth. This is further
demonstrated in Chapter 6 – The peculiar nature of how the human resource function
evolves in the small and medium sized firm – and the influence attributable to the
internal micro-politics and dynamics in how HR functions evolve. Within such a context,
these dynamics need to be appreciated. For example, perceptions of HR and
employment law derive from the interaction with the external space – specifically
consultants in Case A and ACAS in Case B – by specific internal individuals, something
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that is key to the micro-politics and positioning that needs to be appreciated when
studying SMEs. Similar dynamics were illustrated in Case B by the HR champion with
familial ties who acted as a catalyst for change alongside her ‘generals’ within individual
networks. This provided a curious insight into how internal bureaucracy develops and
responds to regulatory pressures and illustrates the complexities inherent to HRM
development. Alongside the importance of roles and how they become defined, it
generates a need to re-think how, internally, different actors develop as well as experts
and ‘readers’ – or responders to – the external environment. A further example, also
from Case B, concerns aspects of memory and trade unionism and the voice mechanisms
of employees resulting in enhanced levels of expectations and implicit conflict. Thus,
models like Greiner’s would struggle to convey such happenings.
Furthermore, the idea of growth models suggests a rational response by
companies and adaptation to changing contingencies. Another possibility is that of
maladaptation or irrational behaviour, as through normative path dependencies the
owners continue to replicate old worn-out methods of working beyond their useful
expiry date. Yet, this may be rational behaviour on the part of the beneficiaries of a
power culture such as the owners. In this sense, different stakeholders may have
different interests within a firm which are not necessarily aligned with the overall
‘strategic’ objective. Drawing on Whittington’s (1988) deep structures analogy, such
strategies should be considered pluralistic and emergent rather than unitarist,
deliberate and rationale, as something negotiated.
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Externally, issues are apparent relating to the possible drivers of formalisation,
whereas life-cycle models emphasise implicit coordination issues related to growth, it is
contended that the regulatory context can be a source of formalisation – albeit in
discreet ways. In industries under strong regulatory compliance regimes – such as is the
case in aerospace – this process is likely to be more rapid, meaning a faster shift between
life-cycle stages occurs due to the immediate need for compliance. A much earlier
intervention was apparent by external bodies in the two case studies – particularly the
influence imparted by the aerospace sector’s regulatory body (and the curious roles of
the consultant in Case A and ACAS in Case B) identified in Chapter 6. There may be
different responses to challenges and change may be driven from the outside – acting
as a basis for more complex micro-level politics and interaction. There exist a complex
engagement and influence with external spheres, a situation teleological models such as
Greiner’s (1972) growth model (amongst others) tend not to appreciate, in terms of the
external arena and the complex interactions across the organisational boundary. The
findings of this thesis are therefore in agreement with those of O’Farrell and Hitchens
(1988: 1372) who state: “the model neglects the spatial context in which these
organisations grow”. The external regulatory environment, and SME interactions with
it, are aligned with research question 3 and consequently considered in section 4.0 of
this chapter.
Greiner’s growth model, while simplistic, is useful for understanding general
patterns of growth, it helps as a sensitising framework for specific aspects of growth in
terms of issues of differentiation and integration in organisational structures as they
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expand in size or diversify in product, customer or service lines. However, the ‘game’ of
HRM in the SME appears to be far more complex than the literature would suggest. HRM
development is a complex and negotiated process between formal processes and
informal activities and between management, employees and external actors.
Considering the idiosyncratic nature of organisational growth experienced by both
cases, there appears to be a similarly individualistic and contextualised nature to the
development of HRM protocols. Ultimately, organisations need to be approached from
a dynamic rather than a static perspective, necessitating an understanding of the
processes of change. This illustrates the fact that we need to account for internal and
external institutional and political dynamics of SMEs, and complex interactions or
mediations across the organisational boundary.
3.0 Questions of balance and choice: ‘Flexible formalisation’?
Research question 2:
How are SMEs contending with the contradictory pressures of formalisation and what
organisational contextual determinants frame these choices?
This thesis attempts to appreciate elements of HRM and the curious processes by which
they develop. There exists an apparent living tension that sees both organisations
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battling the antagonistic dichotomy between the more informal, particularistic and
flexible ideals of the HRM discourse – those which are widely discussed in the smaller
firm literature – and the uptake of a more formal and professional identity. This is a state
of affairs that can be perceived as both constructive and destructive, as this section will
seek to illustrate, by identifying how such questions and choices manifest themselves
and resolve themselves within this body of firms.
In contrast to the large portion of the existing literature that states HRM and
SMEs are not adhering to the prescribed form of ‘best practice’ and normative HRM
principles, and as was considered in the first literature review (Chapter 2), Katz et al.
(2000) suggest there is an inherent assumption in the existing literature that formal
policies must prevail. Consequently, investigations in SMEs present dilemmas for
contributors attempting to locate traditional HRM paradigms as informality is seen to be
an aberration or transitory stage of SME development. However, and as this thesis has
shown, there appear to be deliberate and conscious debates about bureaucracy and the
degree of formalisation coming from within the firm. The SMEs were in these two cases
seen to be attempting to balance the formal-informal divide – manifested as a
consequence of growth and the desire to sustain some degree of informality – with the
continuity of informal cultures, systems and norms that have become heavily engrained
within their organisations. Yet, much also depends on various factors as to why they
have followed different trajectories in their development and growth; the role of
memory and the need to grapple with the choice of formalisation appears to be more
deliberate and consciously reflected on within management and the workforce. The
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thesis thus represented an in-depth qualitative study of how growth consists of
deliberate reflections, choices and responses that attempt to salvage aspects of how
things ‘were done’. What has emerged in the findings of the thesis, particularly Chapter
7 – The mediation and formalisation of human resource management in the small and
medium sized enterprise – is how the mediation of HR levers is influenced by external
regulatory factors, and more interesting still is how at times the SME appears to be
constructing them in a more dynamic manner, to use the ‘empty-shell’ analogy
contributed by Hoque and Noon (2004) in order to sustain some informal internal
control, aided further still by the role of worker memory and characteristics in that
process.
It is important to also recognise the advantages to informal mechanisms within
the context of the SME, as seen, for example, and as summarised by Case A’s
Employment Law Consultant: “when the organisations were confronted with challenges
that could be handled efficiently and with a degree of flexibility and pragmatism in the
absence of bureaucracy.” It could also be suggested that the intention to adopt informal
mechanisms of HRM is a consequence of informed and deliberate intentions in the light
of formalised structures. For example, and as discussed in Chapter 7, when it came to
recruiting potential employees, a lack of formalised channels (such as via recognised
employment sector lists) resulted in the use of heavily informal recruitment methods,
namely word-of-mouth. Thus, strategic choices appear to be taken with a clear
understanding that whilst they need to grow as an organisation, they need to hold on to
some of the benefits associated with being small. There is a tension and duality between
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the formal and informal, and organisations that appear to sustain a clear understanding
of these poles and differences, even if they are ideal types as opposing points with clear
differences, these firms grow and develop – and are conscious of these decisions and
problems of antagonisms and balance. There is a certain amount of agency here, even
with regards to the external structural constraints and influences at play. The thesis
outlines the relevance of what can be termed ‘flexible formalisation’ in recognition of
the deliberate and conscious adoption of, and ongoing engagement with, informal
mechanisms. Also, within the SME there were clear signs of responses and debates from
the workforce as well; even with no trade union presence, reflections took place on the
way such levers were used and appear.
It could be suggested that HRM thus assumes an ambivalent role, across the
divide: the ‘dual picture of HRM’ that combines the formal with the informal, the family
and the professional, presenting a noteworthy and unique cultural identity. Moreover,
viewing HRM development within the context of the SME through an understanding of
organisations’ histories and structures of power allows for the dualistic nature of HRM
and employment relations practices in small firms to be better understood and SME
behaviour more adequately explained. Also, memory and path dependency are
apparent and influential, shaped in such a way that the tension varies between the cases
and there is a sense of elements of HR practice being the source of contention and
difference in each case so that as they develop their structures it is apparent that there
are choices and contexts shaping the nature of HRM even for this scale of firm. The
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influence of external factors and internal traditions and relations seem to be important
when studying these developments.
Finally, it remains unclear whether ‘flexible formalisation’ reflects a long-term
equilibrium in terms of arrangement or a transitory phase wherein the process of moving
from an informal to a formal system consists of a hybrid of both; or whether
contradictions between the two will lead to one dominating over the other. However,
from the cases, the concept of ‘flexible formalisation’ was quite stable and constantly
observable in these contexts. A lack of any conclusive answer could be posed as a
limitation of the research. The degree of flexibility that the case study organisations are
afforded in the present, and their ability to shift from formal processes to more informal
mechanisms and vice-versa with relative ease, can arguably be achieved because of their
size. However, as the organisation grows in scale (and complexity), pressures to
formalise are likely to increase, as demands from external stakeholders and those
occupying the ‘regulatory space’ also increase – the outcome of a more complex
interplay of factors, the result of which being a shift in the aforementioned balance
between formalised structure and process and the desire to remain flexible through
forms of informal practice having to be ‘re-plotted’ in favour of a more formal standpoint
– making any future transitions back to a more flexible, and informal, means of operating
more difficult to achieve. When that level of growth is realised, what may seem an
apparent pressure in the form of CAA regulations now may in fact assist the organisation
in its attainment of a more formalised structure, adopting formalised processes and
cultures with greater ease because of the CAA’s prior insistence on working towards a
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“culture of process” (Case A, Employment Law Consultant) from a quality control
standpoint. However, with continued levels of growth in advance, adherence to a
“culture of process” may ultimately not be sufficient, with both organisations ultimately
having to pursue a strategy of the ‘professionalisation’ of HRM which includes recruiting
externally and seeking experienced individuals who can ‘slot in’ to management
positions further up the hierarchy.
4.0 Accounting for regulatory provisions: how SMEs respond to yet interact with
external pressures
Research question 3:
How influential are the actors and bodies occupying the external ‘regulatory space’ in
which the SMEs are embedded upon the development of HRM in the firm? How do firms
respond to and interact with external pressures?
The response to this research question will be split in to two sub-sections. It begins with
a consideration of how SMEs are influenced by a diverse set of institutional structures
inhabiting the ‘regulatory space’, and then discusses the complex and dynamic
interactions and relations across the external organisational boundary in the second sub-
section.
365
4.1 SMEs as being influenced by a diverse set of institutional structures inhabiting the
‘regulatory space’
The findings of this thesis suggest that the complexity of external agencies must be
included in any discussion of SMEs in terms of HRM and organisation. There is evidence
that SMEs are having to evolve their HRM strategies, regardless of commercialisation or
marketisation, in relation to current and emergent regulatory pressures that are leading
to the development of HRM forms and practices within these types of firms. The thesis
accordingly stresses the relevance of the ‘regulatory space’ analogy as an analytical
framework for understanding the uneven and complex impact of the external
environment upon the workplace. SMEs are often uniquely positioned within an
intricate web of actors and ‘regulatory spaces’ (Hancher and Moran, 1989) that are more
intricate and multifaceted than is presently recognised or understood in much of the
SME literature and not insignificant parts of the mainstream HRM literature. The
processes inhabiting these regulatory spaces are not just legislation but consist of an
array of actors – and it is this increasing ‘overpopulation’ of regulatory actors – in the
case of this thesis – and complexity that needs to be better understood, as well as the
fact that SMEs have to literally navigate these spaces and organisations. Furthermore,
Chapter 8 – The regulatory spaces and context of small and medium sized firms:
Dynamics and interactions – identifies a broad and diverse set of external actors that
originated from both the state and civil society, and that are of interventionist (such as
the CAA or the HSE), informational (including ACAS) or intermediary (such as consultants
or the CIPD) origin. These actors often have conflicting ideals and value systems; they
366
occupy a space where there are porous and often overlapping boundaries between then:
thus, what we see is the reality of complex regulatory actors having a range of effects
(sometimes even contradictory) on the firm in terms of its development of HRM
structures and strategies.
The perceptions of HR and the strong associations drawn with employment law
was heightened by employment law consultants in Case A and ACAS in Case B, and
signify one noticeable influence derived from the different actors and bodies occupying
the regulatory space. Moreover, for reasons of quality and safety assurance, the
influence imparted by the CAA is obvious in both cases also, evidence of the extent to
which institutional positioning can coerce, facilitate or encourage HRM development
and organisational learning in relation to people management activities. This is with
particular emphasis upon both cases’ training and development initiatives when
considering aerospace sector SMEs.
Subsequently, there is greater need for recognition of the role of a more nuanced
perspective, which sees HRM development, change and learning as a negotiated process
that requires a degree of pragmatism. Few previous commentators have recognised the
multifaceted influence upon small firm operations; the few that have include Harney and
Dundon (2006), who theorise an ‘open systems’ framework to assist in the
understanding of HRM in the context of the small firm. An ‘open systems’ framework
sensitises us to the influences of environmental and particularistic factors. However, it
is contended in this thesis that the ‘open systems’ framework should be built upon to
367
account for further dynamism and the nuances apparent in respect of processes of
interaction, which is the next key finding and the topic of discussion of the next section.
The external dimension especially consists of complex and contradictory agencies; how
they interact with the firm is more dynamic and complex, as we will now turn to.
4.2 The complex interactions and relations with actors in regulatory spaces and
across organisational boundaries
The SMEs in this study exhibited a significant level of interaction across the internal-
external organisational boundary. The relationship between the SME and the regulatory
environment is much more interactive and richer as the firm and its leadership engage
with these pressures and different external regulatory bodies (e.g. the HSE; the CAA),
often in different ways and through different intermediaries (e.g. consultants).
Internally, different individuals can act as mediators and filtration mechanisms of the
external, creating the need internally for roles and ‘readers’ of the external
environment. Thus, a degree of agency reflective of deeper internal organisational
structures is therefore influential and noticeable.
Furthermore, influences may not be as direct as they first appear – there could
be a complex layering of influences, which can be construed in different ways – as the
SME can be more active and diverse in its interactions with actors and bodies, not always
being a clear ‘recipient’ of external pressures through what could be seen as ‘porous’
organisational boundaries. Hence, what has been outlined in the thesis is the reality of
368
complex regulatory actors and how they have a range of effects (sometimes even
contradictory) on the firm in terms of its development of HRM structures and strategies.
As scientists would remind us, lifeforms overlap, no deterministic situation exists, there
are no singular paths, but potentially numerous, multifaceted and to a degree
unpredictable ones. Accordingly, contributors must be wary of the way SMEs and their
structures are viewed – even in SMEs there is a greater complexity and how we draw the
internal and external lines in terms of functions and roles is never clear.
The presence of the consultant, in their various forms, and their influence upon
the HRM narrative, represents another example of where management can be perceived
as a shared function (or one that draws from various other actors), complex and with
potentially undistinguishable bureaucratic boundaries. The concept of boundaries is
consequently deemed important to the thesis, as consultants appear to ‘straddle’ that
boundary, with boundaries appearing to become invoked within internal processes and
become external to the firm, created and/or modified by the process of formalisation.
This seems to prompt another question – best left for future stages of my work – which
is what is a firm? Where is the actual boundary of the firm? This is not a new debate; it
can be tied into debates on subcontracting, outsourcing and supply chain literature (see
most prominently Ashkenas et al. (1995) relating to the ‘boundaryless organisation’).
Finally, as organisations grow and mature it is theorised that their reliance upon
the external environment will increase consistent with a growing number of interactions
across the organisational boundary with those inhabiting the regulatory space. In line
369
with such developments, perhaps the process of formalisation can be understood as a
way of managing such newly encountered complexities.
5.0 Conclusion and contributions
The contributions of this thesis rest in an attempt to advance the literature beyond a
reliance on the contrasting undertones of employment relations in SMEs: specifically,
‘small is beautiful’ (Schumacher, 1973) and ‘bleak house’ (Sisson, 1993). To have
challenged stereotypical belief systems that persistently denounce SME’s for their
informal agenda and to move away from the habitually recited explanation of ‘numbers’
employed or scale of the firm as the overarching motive for HR formalisation in the SME
is important. To move also beyond abstract empiricism and to portray the real and
dynamic contexts of small firms is additionally essential; including an attempt to provide
an insight into the lived experiences of SMEs by utilising ‘thick descriptions’ (Geertz,
1973) to bring the voice of the SME and its workers and managers into the story and in
doing so reanimate a closer academic engagement with labour-in-work and collective
worker narratives (Stewart and Martinez-Lucio, 2011).
The attainment of a greater understanding, accommodation and explanation of
HRM development in the small firm and to comprehend the more complex dynamics of
change and explore the influence of external actors and contextual forces that act on
the SME needs an approach that focuses on the diverse set of institutional structures
inhabiting the ‘regulatory space’. The need to draw attention to the interactions
370
between SMEs and the external environment and the subsequent processes of adaption
must be at the heart of the discussion on SMEs and HRM – and not a quaint final point
in any analysis. This would provide a more nuanced appreciation of the debate on HRM
and regulation which is becoming ever more important (see Martinez-Lucio and Stuart,
2011), as is the recognition of the need to account for plural systems of authority. An
awareness of continual flux and renegotiation should also be at the heart of those
approaches that acknowledge the ‘external environment’ as in the ‘open systems’
framework as expounded by Harney and Dundon (2006). The ‘open systems’ approach
which sensitises the researcher to particularistic factors needs to be more sensitive to
the dynamic and contradictory features and relations inherent to that process. In
addition, we need to engage with a clearer understanding of the fact that the notion of
de-regulation is of little use in explaining the pressures facing SMEs which have been
closer to re-regulation – regulation still exists but in a more nuanced manner.
Finally, the thesis represents a broader re-examination of HRM and
organisational growth in the SME – of the need to juxtapose, or bridge the gaps, between
regulation and governance debates and HRM and organisational debates on SMEs. Thus,
bringing together a variety of perspectives that highlight the conceptual and theoretical
limitations of each approach. Policy implications, limitations of the study and future
research recommendations can be found in Appendices M and N.
371
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Appendices – List of contents
Page No.
A The historical and economic importance of the SME 402
B Understanding the aerospace sector: Increasing levels of sector fragmentation and the position of SMEs
406
C Interview schedule: Employee 426
D Interview schedule: Line manager 430
E Interview schedule: Owner/manager 436
F Participant information sheet 445
G Respondent profiles and characteristics 449
H Interview schedule: Institutional actors 450
I Analysing the data: Coding template 454
J Analysing the data: Summarising the key findings 456
K The language of growth 457
L BEIS (Business, Energy and Industrial Strategy): Aerospace, marine and defence sector
460
M Policy implications 462
N Limitations of the study and future research recommendations
464
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APPENDIX A – The historical and economic importance of the SME
In order to highlight the growing importance of SMEs the following section considers the
growth and development of SMEs within the UK labour market: and the question of how
SMEs are seen as the vehicle of change at different periods of time and in different
political discourses. The latter half of the 20th century has seen the deindustrialisation of
industry and the subsequent growth of service sector activities (CIPD, 2012). Such
changes are understood to have contributed towards the growth and revival of the SME.
More specific causal factors include: an increase in subcontracting, the rise of the digital
economy, and fragmentation by larger firms, flexible specialisation driven by consumer
preferences and public sector reorganisation by way of privatisation (Storey, 2004).
Business Population Estimates released by BEIS (2018) for the UK provide an up-
to-date account of the SME’s economic importance (see the following table), particularly
in terms of their role as a major employer (60% of total) and their combined overall
contribution to the private sector turnover (52% of total).
The traditional viewpoint held SMEs as superfluous to economic growth: global
marketing trends of the 1950s and 1960s handed the key to economic prosperity to the
multinational corporation and Fordist mass-production ideals, including the much
sought after economies of scale, thereby confining smaller firms to a mere peripheral
role (Stokes and Wilson, 2006). By contrast, in the 1980s SMEs were hailed as the
saviours of western economies, most noticeably because they played a key role in the
assurance of fuller employment and were believed to lead the way from an innovation
standpoint (Stokes and Wilson, 2006). Piore and Sabel’s (1984) contribution, wherein
they put forward the notion of the ‘second industrial divide’, was perhaps one of the
main vehicles for the promotion and acceptance of SMEs by the wider economic
community. Piore and Sabel (1984) used such an example as a means to justify the ideals
of flexible specialisation, industrial spaces and networks between smaller firms, in direct
opposition to the historically placed, Fordist mass-production ideals of old. A well-known
example of industrial spaces and networks of smaller firms is Silicon Valley in California,
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an industrial district renowned for the presence of small high-tech start-up firms.
Ultimately, success resulted from the degree of flexibility and dynamism afforded to
these smaller networked organisations, allowed to prosper in a post-bureaucratic
decentralised age, and the subsequent ability of smaller firms to better cater for newer
patterns of variable consumer demand.
The estimated number of businesses in the UK private sector and their associated employment and turnover, by size of business, start of 2018
Businesses Employment (thousands)
Turnover (£ millions)
All businesses 5,667,510 27,027 3,861,613
SMEs
(0-249 employees)
5,660,000 16,284 (60%) 1,993,507 (52%)
Small businesses
(0-49 employees)
5,625,165 12,885 1,398,503
With no employees 4,278,225 4,643 274,917
All employers 1,389,285 22,384 3,586,696
of which
1-9 employees 1,137,290 4,159 533,323
10-49 employees 209,650 4,083 590,263
50-249 employees 34,835 3,399 595,004
250 or more employees
7,510 10,743 1,868,106
(Adapted from BEIS, 2018)
The rise to prominence of the SME in the UK has been strongly associated with
Thatcherism: signified by the pursuit of an enterprise culture and a non-unionism
ideology that fully took hold following the culmination of British industrial relations
unrest in 1979 and the ‘winter of discontent’ (Wilkinson, 1999). Perhaps the watershed
moment, inducing such a shift in perception and ideology, resulted from the highly
influential government commissioned 1971 Bolton Committee Report that took as its
focus SMEs in Britain and sought to promote the potential economic significance of
SMEs. Therein eight key roles for smaller firms were identified:
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Eight key roles for smaller firms according to the Bolton Committee Report
1. A productive outlet for enterprising and independent individuals;
2. the most efficient form of business organisation in some industries or markets where the optimum size of the production unit or sales outlet is small;
3. specialist supplier, or subcontractors, to larger companies;
4. contributors to the variety of products and services made available to customers in specialised markets, too small for larger companies to consider worthwhile;
5. competition to the monopolistic tendencies of large companies;
6. innovators of new products, services and processes;
7. the breeding ground for new industries; and
8. the seedbed from which tomorrows larger companies will grow, providing entry points for entrepreneurial talent who will become the industrial leaders of the future.
Adapted from Stokes and Wilson (2006)
The Committee accordingly recommended the need for government policy that
supports and encourages small firm ambition principally through the removal of unfair
barriers to trade: citing the burden of regulation, paperwork and taxes as the principal
reason for small firm decline and their inability to gain a lasting foothold in the UK
economy. Such changes would allow smaller organisations to grow, prosper and
ultimately challenge and supplant the existing leaders of industry. To that end, the
report concluded the following:
We believe that the health of the economy requires the birth of new enterprises in substantial numbers and the growth of some to a position from which they are able to challenge and supplant the existing leaders of industry. We fear that an economy totally dominated by large firms could not for long avoid ossification and decay…This ‘seedbed’ function, therefore, appears to be a vital contribution of the small firm sector to the long-run health of the economy. We cannot assume that the ordinary working of market forces will necessarily preserve a small firm sector large enough to perform this function in the future.
(Bolton Report, 1971: 85)
A major theme running thorough the Bolton Report was the recognised
economic value of innovation and enterprise that the SME sector could contribute. In
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agreement with Piore and Sabel’s (1984) hypothesis, the report offered the ideal of
flexibility as a key characteristic relating to innovation, particularly in industries reliant
upon rapid technological change. However, it is to be contended in this thesis that such
an outlook needs to be supplemented with a greater attention to the complex internal
and external institutional and political dynamics of SMEs and the complex and often
contradictory pressures faced by them, for reasons considered in the second literature
review (chapter 3) which introduces a key analytical construct to be utilised in this thesis:
‘regulatory space’ (Hancher and Moran, 1989).
Focus and interest in the SME tends to mutate having different dimensions over
time in line with changing social and economic conditions. The publication of the Bolton
Committee Report in the 1970s is testament to that: illustrating a renewed interest in
the small firm in line with their newfound perceived importance in a growing “network
society” (Castells, 1996), a post-industrialised era with economic growth and expansions
now firmly directed towards information exchange and a service society. For a period of
time during the 1990s, research interest directed towards the SME was focused on from
a migration standpoint, in particular their role in social inclusion and entrepreneurship.
Of relevance is the work of Kotkin (1992) titled ‘Tribes’ which offers valuable insights
into ethnically orientated, geographically located micro-business networks seen to
provide a source of competitive advantage. Such advancements draw attention to how
receptive SMEs are to the wider external environment, an aspect this thesis is seeking
to analyse from an HRM, employment relations and labour management practices
standpoint.
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APPENDIX B – Understanding the aerospace sector: Increasing levels of sector
fragmentation and the position of SMEs
1.0 Introduction
The main objective of Appendix B is to consider the historic and changing structure of
the aerospace industry in the UK. Themes of disorganisation and fragmentation have
become prevalent; with the transition from a relatively centralised structure such as that
of British Aerospace in the 1950s – 1970s, towards a culture of subcontracting,
outsourcing and more complex relations across the supply chain in the present. The
inclusion of this appendix is deemed necessary because of the complexities inherent to
how the sector is arranged, and a firm understanding of which will aid understanding of
the arguments and discussions presented in the empirical chapters. The aims of this
appendix should not be confused with those of chapter 8 – ‘The SME and its dynamic
interactions with the regulatory space’ – the empirical chapter which considers the
regulatory environment more broadly and its influence on HRM in SMEs. Consequently,
Appendix A will seek to understand the sector’s identity and where SMEs ‘fit’ into the
aerospace sector, with the aim of beginning to articulately ‘map’ the SMEs’ position
within an intricate web of actors, sites and spaces. To identify the main stakeholders
operating in the sector and to attain a better understanding of the support frameworks
and coercive networks within which these SMEs are embedded. The locality of supply
chain SMEs to organisational primes is of considerable interest to this thesis, picking up
on the notion of clusters, industrial districts and the potential devolvement of HRM
practice.
Appendix B will be structured as follows: initial concentration will be directed
towards the history of the UK aerospace sector, beginning with the emergence and
growth of the civil aerospace market subsequent to the conclusion of the second world
war. Increased fragmentation is a more recent and defining characteristic of the sector;
an increase in the amount of outsourcing and subcontracting has brought with it a
growing influence and role for SME, principally as innovators and supply chain operators.
407
Particular attention will be attuned to the support mechanisms available to the SME,
including those enacted by the British government, who accordingly deem the sector
important enough to warrant its own institutional policy space, and have a strong desire
to maintain a lasting foothold and market share in the sector; second only to the United
States, and subsequently take full advantage of expected market growth. Accordingly,
support mechanisms by way of the Aerospace Growth Partnership (AGP) and associated
trade membership bodies, at both a national and regional level, will also be considered
to understand their role in assisting the SME. Potential difficulties encountered by SMEs,
including from a lack of funding and their inability to meet quality control targets and
forecasted increases in demand resulting from the growth of the global aerospace
market are considered. Alongside workforce demographics, including a consideration of
an aging workforce, the importance of the apprentice and the use of bursary schemes
to entice potential candidates into the sector. Summary conclusions will be drawn at the
close: focusing on themes of developing disorganisation and fragmentation in the sector,
how that impacts the SME and how that frames the research undertaken for this thesis.
Worker identity is also considered in light of such structural changes. Overall this
appendix highlights the changing economic structures of the sector in terms of
divergence but the way institutional and regulatory processes attempt – not quite
successfully – to create some convergence and commonality around various
organisational practices.
2.0 The history of the aerospace sector: The post-war decline of British ‘ingenuity’
In the 1940s, the United Kingdom was the largest aircraft producer in the world, albeit
these aircraft were predominantly manufactured for military and defence purposes,
with the civil aircraft market at that moment somewhat non-existent. At this time
however, and throughout the 1950s and early 1960s in particular, Edgerton (1991)
perceives the United Kingdom’s competence in aircraft production to signify much more;
a powerful symbol of post-austerity, manufacturing England and the encapsulation of
the nation’s technological prowess; a commitment to modernity.
408
Edgerton (1991) goes on to note the difficulties faced by the United Kingdom
trying to gain a similar foothold in the growing civil aircraft market in the 1950s, who in
the main surrendered their position of ‘world leader’ to the Americans and in particular
Lockheed, Boeing and Douglas and their respective aircraft the Constellation,
Stratocruiser and DC4. Transatlantic airliners that could not be matched by their UK
counterparts; principally because there were none. Edgerton (1991) places responsibility
for this shift principally on the UK government for their decision to remove funding and
support for civil aircraft programmes, believing aircraft firms should finance the
development of civil aircraft themselves. To illustrate the American’s dominance in the
civil aircraft market, in the 1970s, with the exception of the Concorde, British Airways
operated an all-American fleet for their long-haul service (1991).
During the war, it was felt that British science and technological advancements
had been highly innovative, Edgerton (1991: 90) succinctly summarises the state of
affairs; “the public and private sectors had collaborated, so had management and
unions, and businessmen, scientists and engineers, all for the sake of the nation.”
However, shortly thereafter it was felt that Britain had yielded its technological
supremacy to the American colossus; penicillin, jet engines, radar and atomic energy had
all been developed during that time period (Edgerton, 1991).
The aircraft industry of the 1950s differed considerably from the 1930s and the
inter-war years: the technological challenges faced were much greater as the developed
world sought the produce aircraft that were larger, faster and could travel further
distances. Aircraft were becoming much more expensive and complicated to design and
build. Such advancements in the technological expertise required to undertake such
endeavours saw the introduction of subcontracting as the different aircraft systems, be
it the electrical, fuselage or engine components required specialist knowledge
(Edgerton, 1991). However, despite the surrendering of technological patrimony to the
Americans, the British aircraft industry, and specifically the large amount of subcontract
and networked firms throughout the British Isles, gained an enormous amount of praise
for their role in the developing of Concorde: “the Americans were felt to be
409
unimaginative and unsubtle, the English had daring and unconventional boffins”
(Edgerton, 1991: 90). This project arguably served to demonstrate the importance of
specialisation and the role smaller firms could play from an innovation, research and
development standpoint.
3.0 The aerospace sector: The politics of fragmentation during the latter half of the
Twentieth Century and the influence of Thatcherism
The then British prime minister Margaret Thatcher came to power in 1979 after seeing
successive Labour governments extend state ownership. This included the
nationalisation of the aerospace industry in 1977 as a result of the Aircraft and
Shipbuilding Industries Act and the subsequent creation of British Aerospace. A change
motivated in part by their perceived importance of defence and as a way to compete
with their American counterparts who as has already been stated taken significant
strides forward to dominate the aircraft manufacturing sector. Consequently, the British
government felt the situation could be best countered through the consolidation and
amalgamation of the sector’s resources (Hartley, 2014). To that end, a single aircraft
manufacturer was created; British Aerospace was the consequence of a merger between
British Aircraft Corporation, Hawker Siddeley Aviation, Hawker Siddeley Dynamics and
Scottish Aviation.
Following the recommendations of the 1977 Ridley Report, Thatcher’s
Conservative party, learning perhaps from the downfall of Heath’s 1974 Conservative-
led government, resulting primarily from the 1974 coal strike and their underestimations
of trade union strength, sought to adopt a strategy of privatisation to break up the public
sector, weaken trade unions, raise revenues and reduce public sector borrowing
(Seymour, 2012). Furthermore, amid the early 1980’s recession, the Conservative
government proposed privatisation as a potential panacea; with the ‘discipline’ of the
marketplace foreseen, in agreement with a Hayekian economic school of thought, to
bring about more efficient and productive utilities and in turn making British capitalism
competitive relative to its continental rivals (Seymour, 2012). Ownership and
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productivity analysis have illustrated, in line with conventional thinking, that
productivity levels declined in line with British Aerospace’s nationalisation coupled with
a resurgence in productivity levels subsequent to its privatisation in 1981 (Dunsire et al.,
1988). Thus, consequent to the conception of the British Aerospace Act in 1980, British
Aerospace became a plc. A year later, the government sold 51.57% of its shares, keeping
the rest until 1985 when it sold all but a £1 golden share, allowing it to veto foreign
control of the board (Smith, 2003).
Fast forward to 1997, the merger between American companies Boeing and
McDonnell Douglas, which followed the 1995 merger of American giants Lockheed
Corporation and Martin Marietta to form Lockheed Martin, increased pressure on its
European counterparts to consolidate as a means to compete (Heisig and Vorbeck,
2003). At that point in time British Aerospace plc. employed approximately 50,000
employees and had amassed global sales of £8.6 billion, making it the fourth largest
manufacturer of aerospace and defence systems in the world (Heisig and Vorbeck,
2003). In 1999, British Aerospace merged with Marconi Electronic Systems in a deal
worth £7.7 billion to form BAE Systems. Now employing 100,000 employees across nine
home markets and with sales reaching £12 billion, the merger ensured BAE Systems
became the world’s second largest aerospace and defence company (Heisig and
Vorbeck, 2003).
4.0 Aerospace market growth in the 21st century
This section will seek to analyse the aerospace market in the 21st century; wherein
globalisation and the emergence of developing economies have contributed to
increased levels of demand and a highly competitive global market place demanding
cutting edge technology, exceptional quality standards and high differentiation in the
market albeit with a focus on continual improvement in productivity levels and a
reduction in manufacturing costs (AGP, 2012). Just as the smaller networked firm played
an invaluable role in the development of Concorde, it is now being recognised the
important role of the small firm for the United Kingdom in the continued attainment of
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their leading market share, particularly from an innovation standpoint, and
consequently an increased level of fragmentation in the market, with larger aerospace
organisations outsourcing or subcontracting elements of their work to the highly
specialised and innovative SME. Accompanied by increasing levels of intervention from
various actors, most noticeably the British government, who are looking to capitalise on
these forecasted monumental growth figures over the next two decades.
4.1 Fragmentation and the role of the supply chain SME
The aerospace market has undergone significant changes in the 21st century: shrinking
defence budgets (most noticeably in the United States), in line with austerity approaches
to public spending, have led many suppliers to shift their interests to the civil aerospace
market (Antill et al., 2001). As alluded to in the previous section, mergers, acquisitions
and joint ventures have become commonplace as larger organisations seek to
consolidate their resources, broaden their skill base and compete in an ever-growing
competitive environment (Kaps et al., 2012). Such competitiveness is centred around
technological advancements, particularly those offering greater levels of fuel efficiency,
are seen as highly enticing by aircraft operators, especially with fuel costs rising at such
a rapid rate; in 2001 fuel costs accounted for thirteen per cent of an airlines operating
costs in comparison to twenty-nine per cent in 2014 (Deloitte, 2015). Rising operating
costs are thus a principal driver behind aircraft replacement and serving to advance
obsolescence of previous generation aircraft. It is to this end that SMEs have taken on a
more active and essential role in the sector; as supply chain innovators. The
technological expertise now required to design and manufacture leading edge aircraft
makes it no longer possible for one company to focus on the whole aircraft in isolation,
instead aircraft manufacturers now rely on outsourcing to smaller specialist subsidiary
organisations who direct their efforts and attention towards a particular niche, process
or component, including engines, landing gear, fuselage, wings or electronics etcetera.
(Kaps et al., 2012). Thus, it is determined to be more economically viable for larger
organisations (or primes) to outsource or subcontract aspects of their work to the
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smaller firm and focus on their core business activities. Especially when the degree of
regulation and licensing apparent in the sector are accounted for.
To that end, BAE Systems stated, “SMEs play an important role across the
complete aerospace supply chain, providing valuable contribution in terms of intellect,
technologies and products.” While the Thales Group praised the innovative nature and
flexibility of SMEs stating that those qualities were “significant factors in our ability to
offer tender-winning proposals to our customers” (BIS, 2010: 29). Furthermore, ADS are
quoted as saying; “SME’s in particular play an important role in supporting
manufacturing operations and provide a degree of flexibility, responsiveness and agility
that is rarely found in larger corporations.” While also stating; “manufacturing SMEs who
are local to the main production facility provide a valuable source for one-off
manufacture or re-work of small components which may be required to keep the
production line flowing” (BIS, 2010: 156).
Decisions to subcontract and outsource in such a manner has fragmented the
sector: within the context of the UK, whilst headlines are dominated by a few key actors
including Airbus, Rolls-Royce plc. and BAE Systems, within this rapidly evolving
aerospace landscape supply chain SMEs are not without opportunity. The UK aerospace
sector has the largest number of SMEs in Europe, more than 3,000 companies are
actively operating in the sector (and over 9000 supply chain SMEs operate in the sector
indirectly) (AGP, 2012); a vibrant ecosystem of SMEs thrive alongside global aircraft
manufacturers offering services ranging from the manufacture and repair of aircraft
component parts, to suppliers, design firms and aerospace consultants (Poole, 2016).
Whilst the industry appears as a whole to be highly complementary and
appreciative of the contributions made by the SMEs in the aerospace sector, one
potential issue was raised by Airbus: “a disconnected and fragmented supply base
operating with non-standardised processes with high levels of waste and duplication”
(BIS, 2010: 29). An example of fragmentation and disorganisation in the market can be
illustrated through the number of composite manufacturers operating in the sector,
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while there are in excess of 1,500 organisations who supply the sector, 90% of
production comes from 38 organisations, with the rest operating in niches (Watt, 2013).
One further problem to be contended with concerning the SME: in line with the
unprecedented increase in the demand for air travel, on a global scale, driven largely by
the growth of developing nations which forecasts passenger travel to increase by five
per cent every year over the next twenty years (Deloitte, 2015). This has resulted in the
demand for aircraft intensifying as airlines look to increase the size of their fleet to take
advantage of such newfound demands. Consequently, placing an increased amount of
pressure on aircraft manufacturers, and by association also on their supply chain
partners (typically SMEs), to increase their output levels and to up efficiency all the
whilst ensuring quality standards and innovative developments do not suffer. This could
place additional strain on SMEs who are typically without the financial assets,
tooling/equipment/automation or human resources to increase productivity levels.
Indeed, Rolls Royce have raised issue with SMEs and their need to invest in new machine
tools and equipment (BIS, 2010).
One final difficulty, as considered by BIS (2010), concerns the difficulties faced by
SMEs entering the aerospace supply chain from other sectors. Recognition of the fact
that the level of regulation in the aerospace industry, and costs involved in gaining
accreditation were significant obstacles to entry – this shows how regulatory politics and
processes have shifted. Whilst it is understandable that a high level of regulation is
necessary in the aerospace industry to ensure the safety standards are maintained these
should not be an insuperable barrier to entry. BIS have suggested the relevant bodies
consider ways in which it can facilitate SMEs entering the aerospace supply chain. In
particular, they recommend that it undertakes a simplification review of regulations
governing entry to the industry and considers how it can reduce the costs to SMEs
seeking accreditation. As will become apparent in subsequent sections, there are
multiple sources of assistance in place, from both government and private sector
operators, seeking to offer support ranging from financial aid, lean manufacturing
training to senior personnel from the major manufacturers such as Airbus and BAE
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Systems spending time with SMEs and acting as mentors, in an attempt to combat some
of the above described problems.
When considering the relationship between the SME and their typically larger
customers in the supply chain, the influence derived from stakeholders within ‘coercive
networks’ (as considered in the literature review) are relevant and are foretold to
stimulate the development of HRM to a greater extent than advisory mechanisms of
change (Bacon and Hoque, 2005). Kinnie et al. (1999) believe one such influence
originates from supply chain pressures and customer demands. In agreement with
Hunter et al.’s (1996: 253) findings relating to instances of ‘supplier development’
leading to the “wider diffusion of current HRM techniques”. SMEs in the aerospace sector
are typically dependent on a few key customers: usually much larger organisations that
develop, manufacture or operate aircraft. The balance of power is skewed in favour of
these larger organisations. Supplier management protocols instigated by BAE Systems
for example dictate supplier alignment with their own code of conduct. In line with ‘high-
road’ systems of employment relations: pay and working conditions, recruitment
practices, training initiatives and employee involvement and participation schemes all
feature (BAE Systems, 2013).
Additionally, in the UK the aerospace industry is licensed to operate and heavily
regulated from a quality control standpoint by the Civil Aviation Authority (CAA). Whilst
the standards required by the CAA are not directly stated in terms of HRM, logical
reasoning would suggest that for organisations to perform well and meet the required
standards imposed by the CAA staff in these SMEs need to be trained and skilled with
sufficient records kept reflecting as much; HR is foreseen to play an important role in
that process. It is nuances such as these, that SMEs encounter in their interactions with
the external regulatory environment, alongside similarly curious developments and
complex processes of adaption, which are to be further analysed in the empirical
chapters, with a view to better understanding HRM, formalisation and change in
aerospace SMEs (this links to the first research question of the thesis).
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4.2 An opportunity recognised by the British government: Re-grouping and new
forms of re-regulating
The UK government consider the UK aerospace industry a “phenomenal success story”
and a sector that offers “tremendous opportunities for growth” (AGP, 2012: 2). The
aerospace sector is a segment of the UK economy that has negotiated recent economic
hardships relatively unscathed and in a strong position to grow; the aerospace sector is
currently growing at a rate ten times faster than the rest of the UK economy and has
grown by 39% since 2010 alone (AGP, 2014; ADS, 2016). With a 17% global market share
(AGP, 2013); the UK has the second largest aerospace industry in the world, surpassed
only by the USA in terms of GDP.
The sector is responsible for supporting 230,000 jobs across the breadth of the
UK and depositing almost £31 billion into the economy each year (ADS, 2016). Its
standing in industrial policy terms is dictated by forecasted market growth figures
equating to $5 trillion by 2031 in the global civil aerospace market (AGP, 2014). Arising
predominantly from significant opportunities to exploit overseas investment; including
those originating from the ‘rising powers’ of India and Brazil (AGP, 2012). With
approximately 90% of production currently exported to users outside of the UK (AGP,
2014), equating to £27 billion in exports, and 74% of which heading outside of the EU
(ONS, 2014), it is understandable why the UK government wishes to maintain a firm
foothold in the aerospace market at a time when expansion and growth is on the horizon
in addition to mounting levels of international competition, particularly from other
European countries (Poole, 2016). For example, the French aerospace industry saw
revenues increase by nine per cent in 2013, and is presently the country’s leading source
of exports, with 79% of sales going abroad (Poole, 2016).
4.3 The Aerospace Growth Partnership (AGP): the politics of collaboration
In 2011 the UK government, alongside numerous industry leaders, formed the
Aerospace Growth Partnership (AGP) and committed to investing £2 billion towards
improving and strengthening the UK’s position as a world leader. The Aerospace Growth
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Partnership (AGP, 2012; 2013; 2014) is a joint government and industry led taskforce,
established in collaboration with Airbus, BAE Systems and Rolls-Royce plc., amongst
others.
The Aerospace Industrial Strategy (AIS) was published in March 2013 and sets
out a plan to keep the UK at the forefront of world aerospace manufacturing. Developed
in collaboration between government and industry through the aforementioned AGP.
Aerospace Industrial Strategy (AIS) key objectives:
1. Ensuring the UK remains Europe’s number one aircraft manufacturer and globally second only to the United States.
2. Support UK companies at all levels of the supply chain to broaden and diversify their customer base.
3. Provide long-term certainty and stability to encourage industry to invest in UK technologies for the next generation of aircraft.
Adapted from AGP, 2013
Objectives appear to be geared predominantly towards offering support and
developmental mechanisms to supply chain SMEs, establishing strong connections
between key actors in the innovation system is deemed instrumental in the creation and
dissemination of knowledge; how businesses access the UK’s research and information
infrastructure, including its facilities and knowledge base, is paramount. The initiative
seeks to encourage stronger links between entrepreneurs, innovators, academia,
original equipment manufacturers (OEMs), aircraft manufacturers and financiers. This is
deemed significant to the thesis, as it identifies the aims and objectives of key
stakeholders with a particular interest in SME activity and the subsequent pressures and
influences they may be putting upon supply chain SMEs. It is entirely possible such
mechanisms and interests encroach onto people management and HRM related
activities, and as some of the examples in the following sections will illustrate; highly
likely, however this is something this PhD thesis is seeking to elucidate further. Further
tangible outcomes of the Aerospace Growth Partnership are listed in the following table:
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Aerospace Growth Partnership (AGP) outcomes
1. The creation of the Aerospace Technology Institute (ATI) and its headquarters at
Cranfield. The Institute will seek to facilitate connections between industry,
researchers and academia to allow for collaborative R&D projects.
2. The £40 million National Aerospace Technology Exploitation Programme (NATEP), to
help SMEs develop innovative technologies and increase their ability to win new
global business.
3. The £120 million Sharing in Growth initiative; a performance improvement
programme established to strengthen the capabilities of aerospace supply chains.
4. The Supply Chain Finance Forum, involving banks and finance providers, to date the
Forum has engaged with over 500 SMEs to get a better understanding of some of the
financial challenges they face.
5. The International Aerospace Xchange event; providing potential suppliers with a clear
vision of the long-term requirements and what smaller companies need to offer to
secure contracts on future programmes.
Adapted from AGP (2013)
4.4 National Trade Association: The ADS and the new voices within the sector
Closely aligned with the objectives and purpose of the AGP is the national trade
association ADS (an acronym for Aerospace, Defence, Security and Space); who seek to
champion these industries at both a national and international level. Focusing
specifically on the work ADS do in the aerospace sector, support activities centre around
influencing policy debates, supporting UK manufacturing and supply chain industries,
encouraging investment in technology and innovation, supporting business
development opportunities, promoting British interests overseas and offering guidance
to SMEs on grants and funding schemes. Returning to the notion of improving aerospace
supply chains (as will become apparent throughout this appendix, this is an objective
high up on the agenda of many aerospace stakeholders), ADS run a programme called
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Supply Chain 21 (SC21); supported by many of the major players in the sector, the
programme is designed to accelerate the competitiveness of the UK aerospace and
defence industries by raising the performance of the supply chains principally from a
quality, cost saving and efficiency standpoint. As already cited, increasing levels of
international competition, together with technological advancements, necessitates
rapid improvement in the effectiveness of supply chains, seen by many as the potential
‘weak link’ in the exploitation and attainment of the aforementioned levels of projected
sector growth. With that in mind, Rolls-Royce plc. recently stated; “steps needed to be
taken to drive up the quality of the supply chains” (BIS, 2010: 29). A further tangible
benefit of ADS membership includes the ability for businesses to join and get involved in
various special interest groups (SIGS), these groups consist of ADS members and
stakeholders with similar professional interests and expertise. For example, some of the
groups include: the Aircraft Interiors Group or the Maintenance, Repair, Overhaul and
Logistics Group. These groups enable likeminded members to network, seek out
business development opportunities, learn, influence markets and stakeholders and
keep up to date with current developments. Predominantly, these groups appear geared
towards maintaining and improving quality standards, business development
opportunities (particularly overseas, with SMEs typically finding it difficult to access
international markets) alongside technological advancement and innovation related
agendas, perhaps to the neglect of HRM or labour related activity. However, ADS is
providing a platform from which SMEs can interact with similar organisations, including
with those operating at different levels of the supply chain, alongside other interested
stakeholders and it can be foreseen that indirectly people related initiatives become the
topic of discussion, particularly centred around training, development and skills. This is
just one example that illustrates the degree to which aerospace SMEs are operating
within a complex and intricate web of stakeholders, actors and external environmental
stimuli, and are not operating ‘outside the system’ in isolation as large proportions of
the extant literature may suggest.
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4.5 Regional aerospace alliances: New stakeholders and coordination strategies at
local spatial levels
Whilst such initiatives offered by the AGP and ADS amount to help and guidance at a
national level, there are additional bodies and initiatives at a regional level. BIS recently
praised the aerospace industry for “the proactive steps it has taken to improve the
quality of the supply chain… we are encouraged by the steps taken by Regional
Development Agencies to support this” (BIS, 2010: 31). One of these regional aerospace
alliances includes the North-West Aerospace Alliance (NWAA) which represents and
supports the cluster of aerospace firms located in the North-West of England; the largest
industrial district in Europe and the fourth largest in the world, responsible for
contributing in excess of £7 billion in the UK economy, and accounting for one quarter
of total UK aerospace turnover (NWAA, 2016). The NWAA has been forging close coupled
links between industry, academia and associated support organisations in the
development of their ‘super cluster’ concept. The NWAA has itself ran numerous
projects with a similar objective to that of the AGP, the development and progression of
supply chain SMEs. For example, their Aerospace Supply Chain Excellence programmes
(ASCE), which have the backing of major actors including BAE Systems, Airbus and Rolls
Royce, sought to create a world class supply chain in the North West of England (NWAA,
2016).
Other significant regional alliances include the West of England Aerospace Forum
(WEAF, 2016) who support the South-West of England, the Midlands Aerospace Alliance
(MAA, 2015) who offer support and guidance to firms operating in the Midlands and
central England, Farnborough Aerospace Consortium (FAC, 2016) who champion
aerospace companies in the South-East of England, the Aerospace Wales Forum (2016)
and finally ADS Scotland and Northern Ireland (ADS, 2016). Again, these membership
trade associations serve to champion and support the interests of the aerospace and
defence industries in their respective districts; which principally amounts to the
delivering of supply chain initiatives which connect the SME community to the primes
(for example BAE Systems or Airbus).
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These regional bodies work closely with the aforementioned national federation
the ADS and also play a crucial role in the dissemination of AGP objectives. This thesis is
seeking to understand how these regional alliances’ interests and involvement with
aerospace SMEs impacts upon their people management and HRM activities, it has
already been reported above for example that these alliances are attempting to bolster
links between SMEs and various local aerospace colleges and engineering courses to
strengthen and support the SMEs’ skill base, particularly over the long term. It is forecast
that other activities are undertaken, however it is suspected such activities will again
mainly centre around improving employee skill levels and the recruitment of candidates
with sufficient skills in line with AGP objectives and government concerns stated in the
previous section.
Interviewing regional aerospace alliances as part of this PhD thesis was
accordingly considered important given that these actors appear to occupy a critical
segment of the regulatory space and are the primary link between the SME and wider
external regulatory environment, particularly with other actors functioning in the
aerospace sector. These support organisations were foreseen to be acting as enablers,
facilitating the networking and linkages between small firms and external knowledge
providers; including other small firms, academic institutions, customers, suppliers or
training bodies.
Associated with regional aerospace alliances and the clusters or industrial
districts which they represent are the theoretical contributions made by DiMaggio and
Powell (1983) and more recently by Dacin (1997) and Ferner and Quintanilla (1998) and
their respective studies investigating ‘institutional isomorphism’ (see literature review
chapter 2, section 4.4 – Clusters and industrial districts: isomorphic pressures for
development within local spaces); the presence of normative, mimetic and or coercive
pressures to conform to the institutionalised expectations of the local environment. In
application to the aerospace sector, normative pressures could be the attainment of
legitimacy, conceived through licensing and accreditation with the regulatory body; the
Civil Aviation Authority (the CAA). Mimetic pressures include the incidence of
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collaboration amongst clustered firms and the degree to which localised environmental
conditions facilitate shared spaces of development and are thereby constituting a
learning environment: including via channels of inter-firm support, learning and skill
diffusion, particularly in respect of a high skilled specialist workforce. Thirdly, coercive
pressures could be made up of governmental mandates or customer and supplier
pressures who in the main appear to be larger organisations made up of airlines and
aircraft manufacturers. A further example of forecasted contextual pressures that can
influence HRM development in the SME.
4.6 Financial difficulties and funding opportunities
The newfound requirement for aircraft to be greener (in line with more stringent
environmental regulations), quieter and more economical to run has been recognised
by the government and industry alike, thus making technological innovation key to its
growth plans (AGP, 2012). The UK is particularly well placed to exploit this trend, having
strong capabilities in relevant areas such as technology, manufacturing and regulatory
frameworks (ADS, 2016). Further to that, SMEs are recognised to have an increasingly
important role in innovation: providing the industry with essential applications and
bespoke technologies (EC, 2014). However, SMEs are typically called upon to make
strategic decisions, and take financial and research risks, often disproportionate to their
available resources (EC, 2014). As briefly indicated earlier, smaller firms, particularly
those in the start-up phase, frequently encounter difficulties in obtaining capital or
credit, particularly in the form of up-front investment costs, complicated further still by
the potential long timescales to make a return (AGP, 2014). Albeit there are schemes
and sources of aid available, for example, the aforementioned creation of the Supply
Chain Finance Forum by the AGP is in recognition of these difficulties (AGP, 2014).
Furthermore, various funding sources are available: Innovate UK for example (an
executive non-departmental public body sponsored by and reporting to the Department
for Business, Energy and Industrial Strategy (BEIS)) has established the HITEA project –
Highly Innovative Technology Enablers in Aerospace – offering a sum total of £19 million
in funding to enable breakthrough advances in the aerospace industry. To date over 30%
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of funding recipients have been SMEs (Innovate UK, 2015). While the Horizon 2020
research programme offered by the European Commission; a financial instrument
promising in excess of £60 billion of funding available over seven years (between 2014-
2020) with the objective of securing Europe’s global competitiveness, is also of
relevance. The initiative is open to all organisations sited within EU member states and
is not limited to aerospace related research. However, the programme does specifically
identify European Aerospace SMEs as being an area of particular interest in which it is
seeking to support (EC, 2014).
4.7 Return to questions of skills and regulation: The aerospace workforce and the
importance of the apprentice
Presently, the sector employs in excess of 128,000 people directly (ADS, 2016), in
addition the sector supports over 120,000 jobs indirectly (AGP, 2014). The average salary
for an employee in this sector is £41,000, considerably higher (over 50% higher) than the
UK average (AGP, 2014): higher wage determination in this instance is believed to be the
result of the high skilled specialist work being undertaken relative to the availability of
these skills freely in the labour market.
Much of the extant literature would suggest workforce skill mix can influence the
development of HRM (Baron and Hannan, 2002; Bacon and Hoque, 2005): in
circumstances where the skill level is high there is greater incentive to have sophisticated
recruitment and selection policies and innovative training and development practices
that assist in delivering employees of the required calibre. A series of reports recently
published by the UK government have raised concerns regarding the ability of SMEs in
the aerospace sector to attain and uphold sufficient standards, particularly in light of the
aforementioned projected increases in demand and the advancement of competition
from overseas (AGP, 2012; AGP, 2013) alongside the aging demographic of the
workforce. The introduction of an advanced apprenticeship scheme has been
announced to combat such concerns, illustrating increasing intervention by the state,
and indicating a move away from ad-hoc notions of training in the SME. Since the
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inception of the scheme in 2010, the aerospace sector has employed over 4,100
apprentices (ADS, 2016).
5.0 Summary conclusions: Between de-regulation and re-regulation
For contextual and background purposes, Appendix B has deliberated over the major
developments and the changing landscape of the UK aerospace sector. Since the end of
the second world war with the establishment of the civil aerospace market, to the
aerospace sector presently, alongside forecasted projections of the changing aerospace
landscape over the next two decades. Themes of disorganisation are becoming more
apparent in how the sector is currently organised, as is the ever-growing integral role of
the SME within the sector, principally a result of technological advancements and the
innovative capacity of specialist high-tech supply chain SMEs.
Additionally, Appendix B has served to identify who the aerospace specific actors
currently participating in the sector and occupying the ‘regulatory space’ including: the
British government, regional aerospace alliances and sectoral primes. These actors offer
differing degrees and forms of support to the SME, particularly from an operational
efficiency, quality control and innovation standpoint. These frameworks are complex
and becoming increasingly fragmented in nature. This PhD thesis will attempt to advance
understanding by intricately mapping the framework’s arrangement and accounting for
all the actors, influencers and intermediaries (of both state and civil origin) who are
occupying the regulatory space, such an objective is particularly well aligned with the
fourth empirical chapter (chapter 8). In that chapter attention is directed to the external
regulatory environment in an attempt to better understand how the stimuli derived
from those inhabiting the space can encourage HRM formalisation. Examples have
already been presented herein of how contextual dynamics can influence HRM policy
and practice in aerospace SMEs, at odds with the informal ideals conveyed by extant
literature that tends to be heavily characterised by elements of informality and size
determinism. For example, the influence derived from stakeholders within ‘coercive
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networks’: customers, suppliers and the CAA on training and development mechanisms
in the SME for quality control purposes.
It is interesting to understand where these small firms go to for HRM related
advice, and if the aforementioned aviation specific actors offer forms of guidance over
and above the more generic forms of advice and assistance provided by ACAS, the CIPD
or the HSE. Further questions to be answered by this thesis include the extent to which
clusters and shared spaces of development (in line with the above-mentioned regional
alliances) facilitate or encourage organisational learning in aerospace sector SMEs,
particularly in relation to people management and employee relations (this is linked to
research question 3 which is concerned with how influential the actors and bodies
occupying the external ‘regulatory space’ are upon the development of HRM in the firm).
This question is also aligned more generally with one of the main aims of this thesis
which is the attainment of a deeper understanding of HRM, formalisation and change in
SMEs and the complexities inherent to such a process (aligned with research question
1).
Furthermore, the thesis will also explore ‘inside’ the aerospace SME, how these
firms balance and cope with what can be assumed are often contradictory pressures
placed upon them by various competing external sources, or how they navigate the
living tensions between wanting to remain small, focused, flexible and particularistic on
the one hand, and the development of ‘high-road’, ‘professional’ forms of HRM common
to larger corporate firms on the other (linked to research question 2).
This thesis is also seeking to better understand the extent to which these SMEs
identify and perceive themselves as an integral part of the aerospace sector, particularly
as their roles typically place focus on one specific aircraft component part and are
undertaken at a location that is usually physically removed from the aircraft and in many
cases the airports also. Moreover, organisational memories, particularly those of ex-
British Aerospace employees for example, are to be considered and evaluated, as this
thesis seeks to understand how the cultures, values and norms experienced by these
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individuals as part of such a sector and labour market are linked to the changing
structure and fragmentation of the sector.
Finally, industrial relations have historically been active in the sector and trade
union membership has been high, particularly within the larger aerospace firms. The
trend does not appear to have followed and remained stable in relation to the
abovementioned forms of fragmentation and disorganisation. No sector agreements are
in place and SMEs in the sector appear largely unaffected by industrial relations
influences. This line of analysis will be duly analysed and reflected upon in the empirical
chapters.
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APPENDIX C – Interview schedule: Employee
Section 1: EMPLOYEE PROFILE, PERCEPTION & PARTICIPATION
1. What is your official role/ job title in the organisation?
2. When did your employment at the organisation start? * a. Were you appointed directly into your current position or have you been
promoted? b. Could you tell me a little about your professional background and career to
date? c. Have you worked anywhere else? How did it compare? d. What does it mean to you to work in the aerospace sector? How has it
changed during your tenure?
3. Tell me about how this organisation has changed during your time here? * a. Has the organisation been subject to growth?
i. Approximately how many staff members did the organisation employ when you started?
ii. How many employees work for the organisation now? iii. What were the reasons for such growth? iv. Has growth brought about a more decentralised structure/ hierarchy?
b. Do you feel that the organisation is run in a more professional manner as a result?
i. More procedural? Are employees subject to more written policies and practices?
ii. How has this newfound degree of formality received by the workforce?
c. Has the organisational culture changed in any way? How? i. Why do you think that is?
4. Are you a member of a trade union? * a. Are you aware of what a trade union’s purpose/ role is? How it can help you? b. Is there a trade union presence in the aerospace sector? c. Do you feel the role of the trade union is relevant? d. If trade unions are absent from the sector/ your workplace, how do you feel
your rights as an employee are upheld?
5. As an employee, do you feel trust, involvement and discretion is commonplace? Why? a. Can you give an example of acts that signify trust on behalf of the
management? b. Are employees able to work with a large degree of discretion? Are you closely
supervised/ monitored?
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6. Could you describe the organisation’s HR function at this organisation? * a. Who do you go to HR related advice? b. Do you have formalised HR policies and practices? c. What people management initiatives are utilised? For example; performance
appraisals, employee attendance administration, company inductions, training plans, flexible working schemes etc.
d. How important or necessary do you think HR policies and practices are to the functioning of this organisation?
7. Do aerospace SMEs need to adopt formal professional ways of operating? Do they need written procedures? Especially when their smaller size could allow word of mouth to communicate decisions for example. Informality could also allow for a degree of flexibility and allow these smaller firms to react quickly to changing customer demands.
8. Can you give any examples of employee participation or involvement in the workplace? Are there times when management ask for your opinion? Either in an informal or formal setting?
a. Does the organisation actively encourage employee participation? b. Do you feel your level of knowledge or experience is recognised by
management? c. Have you ever been asked to complete a questionnaire/survey by
management that asks for your thoughts and opinions on workplace practices? If not is it something that appeals to you?
d. If you have an idea about changes/improvements that could be made, how would you put them forward? Are there any formal mechanisms that allow you to put forward your thoughts and opinions? Or would you discuss directly with your line manager? How confident are you such recommendations would be seriously considered?
e. How much of an impact do you feel that you and other employees have on business strategy and the direction the business is heading? Are you asked your opinion prior to the making of decisions?
f. Are you kept closely in the loop on developments through formal communications from senior management or would you be more likely to find out changes through the medium of shop floor ‘gossip’.
Section 2: RECRUITMENT & SELECTION
9. How did you become aware of the job? a. Did you have any personal contacts who at the time were a member of the
organisation that made you aware of the job?
10. Can you remember much about the recruitment and selection process?
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a. How were you recruited? b. Did you have an interview? Who carried it out? c. Who was responsible for your selection?
11. What are staff turnover rates like? a. When employees do leave what reason(s) is it usually for?
12. Did you have an induction when you first started?
Section 3: TRAINING AND DEVELOPMENT
13. With respect to employee training and development, have you partaken in any form of training during your tenure at the organisation?
a. Have they been undertaken by external bodies or undertaken ‘on the job’ or both?
b. Please give examples of the training you have undertaken.
14. Who determines what training you as an employee partake in? a. Can you volunteer and/or request specific training? b. Does cost appear to play a factor? c. Do customers, suppliers, regulatory bodies etc. play a role in determining the
training provisions for staff?
15. When training is undertaken, are their specific reasons behind it, the result of a recent happening, or is it more concerned with employee development?
a. i.e. ad-hoc or with strategic intent?
Section 4: PERFORMANCE APPRAISAL
16. Have you ever been subject to a performance appraisal evaluation? a. If yes, who conducted it? How did you feel it went? b. Would you classify it as an informal chat or did it follow strict guidelines (i.e.
written document)? c. Did you feel you gained objective, ascertainable goals because of it? d. Do you feel the whole task was worthwhile? Or just a paperwork/box-ticking
exercise?
Section 5: CONCLUDING QUESTIONS
17. Overall, how do you feel about working in the aerospace sector? *
18. Are you satisfied with the HR policies, practices and processes that your organisation currently has in place? Please, explain your answer.
a. Are there any changes you would like to see?
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19. The literature would say smaller firms generally take a less formal approach to HRM and employee management. Would you say your organisation has adopted a more formal/ professional/ procedural approach to employee management? *
a. What has caused such a change? i. Sector effect/ product nature? I.e. that a focus on compliance with
safety and quality result in a greater level of formality and a ‘culture of process’? That has knock-on effects to other areas of the organisation, such as the HRM agenda?
ii. Presence of a HR Department? iii. Customer influence? iv. Regulatory body – the CAA? v. Mixture/ other?
20. Is there anything else you would like to tell me? Are there any aspects of this topic that have not been covered, but you want to discuss?
a. Do you have any other thoughts or opinions on HR practices at your organisation?
21. Do you have any questions for me?
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APPENDIX D – Interview schedule: Line manager Section 1: LINE MANAGER PROFILE & PERCEPTION OF EMPLOYMENT RELATIONS AND HRM
1. What is your official role/ job title in the organisation?
2. When did your employment at the organisation start? a. Were you appointed directly into your current position or have you been
promoted? b. Could you tell me a little about your professional background and career to
date? c. Have you worked anywhere else? How did it compare?
3. What do you consider to be your main role in the organisation? * a. Could you describe a typical working day? b. Are you responsible for any HR related activities? For example, recruitment
and selection or training and development? c. Can you describe the degree of autonomy you have in your role?
i. Can you make decisions about personnel for example? Or do you have budgetary authorisations? Or must you seek the approval of the owner/manager?
d. What aspects of your job do you find most enjoyable? i. Least enjoyable/ most challenging?
4. Tell me about how this organisation has changed during your time here? * a. How do you feel the bureaucracy and the managerial role of your work has
changed? i. Is it more procedural?
1. How do you feel about this? Is it a burden? Do you have the time?
b. Has the organisation been subject to growth? i. Approximately how many staff members did the organisation employ
when you started? ii. How many employees work for the organisation now?
iii. How did you manage this growth? What were the reasons for such growth?
iv. Has growth brought about a more decentralised structure/ hierarchy? v. As numbers employed grew, did a delegation of control/ authority take
place? Were department/ line managers the recipients? vi. Did you encounter any problems because of this growth? Particularly
relating to personnel management? vii. Are employees subject to more written policies and practices as a
result?
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1. Did you meet employee resistance to change? 2. How did you operationalize such changes?
c. Has the organisational culture changed in any way? How? i. Why do you think that is?
5. As an employee, do you feel trust, involvement and discretion is commonplace? Why? a. Can you give an example of acts that signify trust on behalf of the
management? b. Are employees able to work with a large degree of discretion? Are you closely
supervised/ monitored?
6. Could you describe the organisation’s HR function at this organisation? * a. Who do you go to HR related advice?
i. Are in-house professional HR staff utilised? ii. Are external HR/ employment law consultants utilised? What impact
have consultants of this kind had on your organisation? b. Do you have formalised HR policies and practices? When were they
introduced? i. How has the HR function of the organisation evolved?
i. In line with organisational growth/ development? ii. Were HR duties undertaken by you as the owner/ manager
initially? iii. Who took responsibility thereafter?
ii. Did you meet employee resistance to change? iii. How did you operationalize such changes?
c. What people management initiatives do you utilise? Performance appraisals for example.
d. How important or necessary do you think HR policies and practices are to the functioning of this organisation?
7. How would you describe the corporate culture of your organisation? a. For example, family orientated or professional? b. Is the culture facilitative or disruptive towards the attainment of organisational
goals?
8. Do aerospace SMEs need to adopt formal professional ways of operating? Do they need written procedures? Especially when their smaller size could allow word of mouth to communicate decisions for example. Informality could also allow for a degree of flexibility and allow these smaller firms to react quickly to changing customer demands.
Section 2: RECRUITMENT & SELECTION
9. Are you responsible for any recruitment and selection decisions?
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a. For what roles? b. What attributes do you look for in a potential employee? How important is ‘fit’
with the organisational culture?
10. Can you outline the process for recruitment and selection at your organisation? * a. How do you recruit and select potential new employees? b. Do you have written recruitment and selection procedures in place? c. Is there an interview?
i. Do you undertake it? ii. Have you received any formal training in interviewing techniques?
d. What methods of sourcing potential candidates do you use? i. Do you have a referral policy at your organisation? Do you employ
friends, family or acquaintances of current staff members? ii. Do you adopt the same method of recruitment and selection for each
post available? (i.e. for technical and administrational posts?) ii. Is there use of apprenticeship schemes?
i. How many apprentices have you had/ do you have presently? ii. Are they linked with a learning institution or college?
iii. Do you source candidates for open positions through an internal labour market? Are current employees given appropriate consideration for promotion or lateral position changes?
e. Would employees usually be skilled workers with specialist knowledge? i. Have they usually had prior experience of working in the sector?
f. Dependent upon the position being offered does that individual interviewing change?
i. What role do senior management play in recruitment and selection? g. Has the recruitment and selection process changed to that of 3/5/10 years
ago? i. If yes, how so? Has it become standardised?
11. Are there difficulties finding staff with the appropriate skillset? a. Skill shortages? b. Are skilled workers with experience wage demands too high for smaller firms?
Section 3: TRAINING AND DEVELOPMENT
12. Are you responsible for deciding what forms of training are or aren’t undertaken? a. Does the owner/ manager impact on such decisions?
13. What forms of training and development are employees at the organisation subjected to?
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a. How much a role does ‘on the job’ training play in employee training and development? Is training usually undertaken on the job or off the job? (or a mixture?)
b. Can you give some examples of recent training activities, whether internal or external, that employees have undertaken?
14. What factors determine training provisions? * a. Does the cost of potential training ever become a determining factor in
whether training takes place? Is employee training provision a part of an annual budget/expenditure allowance?
b. Is training positively associated with employee seniority level? Or do all staff members have equal access to training provisions?
c. Do customers, suppliers, regulatory bodies etc. play a role in determining the training provisions for staff?
d. Is there a strategic element (skills matrixes etc.) to training decisions or is it more reactive? In response to an immediate work related problem.
e. Can employees request specific forms of training? f. Do potential disruptions caused by not having staff on the workshop floor play
a role in deciding what training takes place?
15. Are skill shortages a problem at your organisation?
Section 4: INVOLVEMENT & PARTICIPATION
16. Do you actively encourage employee involvement and participation? Why? a. Can you give any examples of employee participation or involvement in the
workplace? In what circumstances would management usually ask for an employee’s opinion? Does this process take on an informal or formal setting?
b. Do you feel management actively recognise and utilise an employee’s level of knowledge and experience?
c. Have you ever asked employees to complete a questionnaire/survey asking for their thoughts and opinions on workplace practices?
d. If an employee has an idea about changes/ improvements that could be made, how would they put them forward (e.g. a suggestions box)? How often does this happen? Are there any formal mechanisms that allow them to put forward their ideas? Or would they discuss directly with their line manager? How easy is it for employees to make such recommendations? How seriously would you take such recommendations?
e. Do you ask for employee input prior to the making decisions? Particularly if those decisions affect them?
f. Do you feel employees are kept abreast of organisational developments? Do you use formal communications? Or would you rely on such information dissipating down to all levels and departments (i.e. word of mouth/gossip)?
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g. Has the degree of involvement and participation afforded to employees changed?
i. More or less a prominent feature? ii. If so, how? More procedural in line with organisational growth for
example?
Section 5: PAY & PERFORMANCE
17. Does your organisation have a performance appraisal system in place? a. How long has it been in place? b. Are you aware of written procedures in place?
18. Do you undertake performance appraisals? a. Have you received training? b. How often are performance appraisals undertaken? c. Who undertakes your performance appraisal? Did you feel you gained
objective, ascertainable goals because of it?
19. From your experience, do the performance appraisals take on a more structured approach or is it more of a ‘chat’ between manager and employee?
20. Do you find the performance appraisal process is a beneficial one? a. Is it a process you feel that the employees value and take seriously?
21. Are performance related pay schemes utilised in conjunction of appraisal results? a. How are pay levels determined? Do you have authority over pay decisions?
i. Is there an industry standard? ii. External influence? Market influences? Benchmarking?
Section 6: EXTERNAL CONTINGENCIES – THE INFLUENCE OF REGUALTORY CHANGE
22. What pressures or challenges or difficulties (if any) do you and your organisation currently face? *
a. Demand levels? Surplus or struggling to keep up with growing levels of demand?
b. Quality levels? c. Skill gap? d. Other?
23. With regards to regulations centred around employment law and health and safety, how is the external regulatory environment changing? *
a. Do you believe you suffer from excessive red tape? i.e. the role of the government and employment legislation etc.?
b. If yes, what impact is this having on your organisation and the HR function? c. Does your organisation recognise as much? Are there policies and documents
and meetings focused on such issues?
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d. How knowledgeable are you on regulatory requirements of this kind? e. How have you responded to growing levels of regulatory compliance? f. Do you utilise business consultants/ mentors? Including Employment Law or
Health and Safety consultants? g. How would you typically access information relating to employment law?
i. Online toolkits?
24. Does the very nature of the business, of the line of work you’re in and the focus on compliance with safety and quality result in a greater level of formality and a ‘culture of process’? That has knock-on effects to other areas of the organisation, such as the HRM agenda?
25. What impact have larger organisations had on your HRM agenda? For example, the airlines and aircraft manufacturers? *
a. Do these organisations place stipulations on you before working with them? Particularly with respect to HR and people management? e.g. BAE Systems utilise ‘supplier development protocols’.
b. Do they influence training initiatives or apprenticeship schemes for example, to ensure quality standards remain adequate?
c. Would you say you were heavily dependent of larger customers or suppliers? Are there asymmetrical power relations?
26. What impact does sector specific regulation, in terms of the CAA, play in shaping HR/ people directives? *
a. Does it impact upon your HR practices (even indirectly)? For example, upon recruitment and selection or training and development initiatives.
27. Is there an active presence of trade unions in the sector? a. Or employers federations such as the EEF? b. If yes, what impact do they have? c. Are you aware of any members of your staff being affiliated with a trade
union?
Section 7: CONCLUDING QUESTIONS
28. Overall, what do you feel are the main drivers of change? With particular emphasis on your HRM protocols. *
a. What influence do evolutionary, market and regulatory pressures have?
29. What are the main challenges you presently face? a. What do you feel can be done to help them?
30. From your own experience, if you had to surmise the HR systems of your organisation in a few words, what would they be?
Is there anything else you would like to tell me? Are there any aspects of this topic that have not been covered, but you want to discuss? Do you have any questions for me?
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APPENDIX E – Interview schedule: Owner/manager
Section 1: ORGANISATION BACKGROUND & OWNER/MANAGER PROFILE
1. Could you tell me about your organisation? a. The organisation’s background/ history? b. How/ when did the organisation come in to fruition? c. What is the organisations ownership structure? d. How is the organisation structured? What governance structure is in place? e. Are you a single site operation? f. How many employees does the organisation currently employ? g. Does the firm have a familial ownership dimension? h. Any other key developments in the organisation’s history?
2. What services or products does your SME offer in this sector? a. Secondary or tertiary? Manufacturing/ assembly or services? b. Who are your customers? c. Who are your suppliers? d. Are these actors local/ regional or further afield and located nationally/
globally? e. Do you export your goods? f. Is it a case of being offered work or are you tendering for it?
3. When did your employment at the organisation start? a. Were you appointed directly into your current position or have you been
promoted? b. Could you tell me a little about your professional background and career to
date?
4. What do you consider to be your main role in the organisation? * a. Could you describe a typical working day? b. Are you responsible for HR related activities? For example, recruitment and
selection or training and development? c. Do you delegate responsibilities or aspects of the day-to-day running of the
organisation? What responsibilities and to whom? d. What aspects of your job do you find most enjoyable?
i. Least enjoyable/ most challenging?
5. What does your position at the head of this organisation mean to you? * a. Do you feel responsible for the livelihoods of your employees? b. To what extent do you feel you are responsible for the development of the
employees in the organisation? Both in a professional and personal capacity.
6. What does the aerospace sector mean to you? * a. What are the problems you are encountering, if any, in the sector?
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b. How has the aerospace sector changed during your tenure? c. How would you describe the culture of the aerospace sector? d. What are the ideals of the aerospace sector? e. What is current thinking? What trends are apparent?
Section 2: INTERNAL DYNAMICS
7. Existing theory would suggest HRM and employment relations in the small firm falls into one of two categories; which of these two short statements best describes the employment relations in the aerospace sector? Why?
a. “Working relationships are harmonious, with low levels of conflict, and an ease of communication; a ‘family’ atmosphere that provides an all-round better place to work.”
b. “Employees are subject to strict control, poorer working conditions and have little involvement in decision making.”
7. Has the organisation been subject to growth? a. How did you manage this growth? What were the reasons for such growth? b. Has growth brought about a more decentralised structure/ hierarchy? c. As numbers employed grew, did a delegation of control/ authority take place?
Were department/ line managers the recipients? d. Did you encounter any problems because of this growth? Particularly relating
to personnel management? e. Are employees subject to more written policies and practices as a result?
i. Did you meet employee resistance to change? ii. How did you operationalize such changes?
f. Has the organisational culture changed in any way? How? i. Why do you think that is?
8. Could you describe the organisation’s HR function at this organisation? * a. Do you have formalised HR policies and practices?
i. How has the HR function of the organisation evolved? 1. In line with organisational growth/ development? How so? 2. Were HR duties undertaken by you as the owner/ manager
initially? 3. Who took responsibility thereafter?
ii. Have you consciously sought to develop/adopt more formal HR administrative processes and procedures?
1. Employee numbers? 2. Sector effects? 3. Regulatory compliance? 4. External actors such as employment law consultants?
iii. Has this always been the case?
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1. Did you meet employee resistance to change? 2. How did you operationalize such changes?
b. What people management initiatives do you utilise? Performance appraisals for example.
c. How important or necessary do you think HR policies and practices are to the functioning of this organisation?
9. Do you employ in house professional HR staff? * a. If yes, how long have you had specialist HR personnel in place? b. If yes, what prompted you to employ HR staff? c. Is HR outsourced? Do you use contractors or external HR/ employment law
consultants utilised? i. What impact have consultants of this kind had on your organisation?
d. Do you utilise any of the following outlets for advice or guidance? If so, how are they utilised?
i. ACAS? ii. HSE?
iii. BIS? iv. CIPD? v. Solicitor? Accountant?
vi. Other?
10. How are the HR goals/objectives of the organisation aligned with the organisation’s wider goals/ strategy? *
a. Have these objectives changed or developed as the business has evolved? i. Transition from informal to procedural?
ii. For example, a focus on recruitment and selection or training and development, upskilling, or apprenticeships in a bid to ensure quality standards are maintained or improved in line with growth.
iii. The hiring of functional specialists? etc.
11. How would you describe the corporate culture of your organisation? * a. For example, family orientated or professional? b. Is the culture facilitative or disruptive towards the attainment of organisational
goals?
12. Do you have a business plan?
13. Do aerospace SMEs need to adopt formal professional ways of operating? Do they need written procedures? Especially when their smaller size could allow word of mouth to communicate decisions for example. Informality could also allow for a degree of flexibility and allow these smaller firms to react quickly to changing customer demands.
14. As an employer, do you feel trust, involvement and discretion is commonplace? Why?
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a. Can you give an example of acts that signify your trust of employees? b. Are employees able to work with a large degree of discretion? Are you closely
supervised/ monitored?
Section 3: RECRUITMENT AND SELECTION
15. Can you please outline the process for recruitment and selection at your organisation? *
a. How do you recruit and select potential new employees? b. Do you have written recruitment and selection procedures in place? Who is
responsible for the upkeep of such procedures? c. What methods of sourcing potential candidates do you use?
i. Do you have a referral policy at your organisation? Do you employ friends, family or acquaintances of current staff members?
ii. Is there use of apprenticeship schemes? Are they linked with a learning institution or college?
iii. Do you source candidates for open positions through an internal labour market? Are current employees given appropriate consideration for promotion or lateral position changes?
iv. Have they usually had prior experience of working in the sector?
d. Do costs impact on recruitment methods adopted? e. Do you undertake any form of recruitment planning?
i. Forecasting employment needs based on current and expected contracts?
ii. Seasonal demands – do you hire agency or temporary workers? iii. Or is it undertaken more on an ad-hoc basis?
f. Has the recruitment and selection process changed to that of 3/5/10 years ago?
i. If yes, how so? Has it become standardised? g. What attributes do you look for in a potential employee? How important is ‘fit’
with the organisational culture?
16. Are there difficulties finding staff with the appropriate skillset? a. Skill shortages? b. Do they hold industry-wide recognised qualifications? c. Are skilled workers with experience wage demands too high for smaller firms? d. Are their sources of help you can use? Regional Aerospace Alliances or Primes
for example.
17. Who is responsible for recruitment and selection of a shop floor engineer for example? a. Is there an interview? Who undertakes it? b. Have these individual(s) received any formal training in interviewing
techniques?
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c. Dependent upon position being offered does that individual interviewing change?
d. What role do senior management play in recruitment and selection?
Section 4: TRAINING AND DEVELOPMENT
18. What forms of training and development are employees at your organisation subjected to?
a. How much a role does ‘on the job’ training play in employee training and development? Is training usually undertaken on the job or off the job? (or a mixture?)
b. Can you give some examples of recent training activities, whether internal or external, that employees have undertaken.
19. Who is responsible for deciding what forms of training are or aren’t undertaken? a. Do you as the owner/manager have an influence over such decisions?
20. What factors determine training provisions? * a. Does the cost of potential training ever become a determining factor in
whether or not training takes place? Is employee training provision a part of your annual budget/expenditure allowance?
b. Is training positively associated with employee seniority level? Or do all staff members have equal access to training provisions?
c. Do customers, suppliers, regulatory bodies etc. play a role in determining the training provisions for staff?
d. Is there a strategic element (skills matrixes etc.) to training decisions or is it more reactive? In response to an immediate work related problem.
e. Do potential disruptions caused by not having staff on the workshop floor play a role in deciding what training takes place?
f. Does the calibre of employees you have at your disposal determine how much you invest in them?
g. Has poaching/ headhunting ever been an issue? Does it offer reluctance to the training of staff?
21. What training networks exist? If any? * a. Are there links with academic institutions, colleges, trade unions or other
employer and public bodies? b. Do customers or suppliers play a role?
i. Do OEMs offer training?
22. Do you look to attain accreditations? Such as Investors in People?
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Section 5: INVOLVEMENT & PARTICIPATION
23. How much emphasis do you place on employee involvement and participation? Do you actively encourage employee participation? Why?
a. Can you give any examples of employee participation or involvement in the workplace? In what circumstances would management usually ask for an employee’s opinion? Does this process take on an informal or formal setting?
b. Do you feel management actively recognise and utilise an employee’s level of knowledge and experience?
c. Have you ever asked employees to complete a questionnaire/survey asking for their thoughts and opinions on workplace practices?
d. If an employee has an idea about changes/ improvements that could be made, how would they put them forward (e.g. a suggestions box)? How often does this happen? Are there any formal mechanisms that allow them to put forward their ideas? Or would they discuss directly with their line manager? How easy is it for employees to make such recommendations? How seriously would you take such recommendations?
e. How much of an impact do employees have on business strategy and the direction the business is heading? Do you ask for employee input prior to the making decisions?
f. Do you feel employees are kept abreast of organisational developments? Do you use formal communications? Or would you rely on such information dissipating down to all levels and departments (i.e. word of mouth/gossip)?
Section 6: PAY & PERFORMANCE
24. Does your organisation have a performance appraisal system in place? a. How long has it been in place? b. Do you have written procedures in place? When were they last updated? Who
is responsible for the upkeep of such procedures? c. How often are performance appraisals undertaken? d. Who undertakes performance appraisals?
i. Have they received training? e. From your experience, do the performance appraisals take on a more
structured approach or is it more of a ‘chat’ between manager and employee?
25. What are your motives for having a performance appraisal system? a. Is employee commitment and development of concern? b. Is it a process you feel that the employees value, take seriously? c. Do you find the performance appraisal process is a beneficial one?
26. Are performance related pay schemes utilised in conjunction with appraisal results? a. How are pay levels determined?
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i. Is there an industry standard? ii. External influence? Market influences? Benchmarking?
Section 7: EXTERNAL CONTINGENCIES – THE INFLUENCE OF REGUALTORY CHANGE
27. What pressures or challenges or difficulties (if any) do you and your organisation currently face? *
a. Access to finance a problem? What forms of funding are available? b. Demand levels? Surplus or struggling to keep up with growing levels of
demand? c. Quality levels? d. Skill gap? e. Entry in to the market? f. Other?
28. How does the environment impact your HR agenda? * a. What do you and your organisation consider to be the pressures for change? b. What role does the market and the external regulatory environment play?
i. Legal compliance? ii. Buyer pressure?
iii. Political pressure? iv. Economic influences? v. Technological factors?
vi. Social influences? c. How do the various actors/ bodies or legislative statutes influence the policies
and processes of the organisation?
29. With regards to regulations centred around employment law and health and safety, how is the external regulatory environment changing? *
a. Do you believe you suffer from excessive red tape? i.e. the role of the government and employment legislation etc.?
b. If yes, what impact is this having on your organisation and the HR function? c. Does your organisation recognise as much? Are there policies and documents
and meetings focused on such issues? d. How knowledgeable are you on regulatory requirements of this kind? e. How have you responded to growing levels of regulatory compliance? f. Do you utilise business consultants/ mentors? Including Employment Law or
Health and Safety consultants? g. How would you typically access information relating to employment law?
i. Do you have access to online toolkits? h. Would you say you were fully compliant?
i. If not, why not?
30. Does the very nature of the business, of the line of work you’re in and the focus on compliance with safety and quality result in a greater level of formality and a ‘culture
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of process’? That has knock-on effects to other areas of the organisation, such as the HRM agenda? *
31. What impact have larger organisations had on your HRM agenda? For example, the airlines and aircraft manufacturers? *
a. Do these organisations place stipulations on you before working with them? Particularly with respect to HR and people management? e.g. BAE Systems utilise ‘supplier development protocols’.
b. Do they influence training initiatives or apprenticeship schemes for example, to ensure quality standards remain adequate?
c. Would you say you were heavily dependent of larger customers or suppliers? Are there asymmetrical power relations?
32. What impact does sector specific regulation, in terms of the CAA, play in shaping HR/ people directives? *
a. Does it impact upon your HR practices (even indirectly)? For example, upon recruitment and selection or training and development initiatives.
33. Is there an active presence of trade unions in the sector? a. Or employers federations such as the EEF? b. If yes, what impact do they have? Do you recognise a trade union? c. Are you aware of any members of your staff being affiliated with a trade
union?
34. Do you think HR practices in aerospace SMEs could be impacted and become more formalised and professional because of being sited in a cluster? *
a. Is there evidence of networking, inter-firm support, knowledge sharing and learning? Skill diffusion? Joint ventures, collaborations or projects? As a direct result of being located within a cluster?
b. Does benchmarking occur? Against who? Larger corporations further up the supply chain? Against non-aerospace firms?
35. Could you tell me about your relationship with; a. Government/ BIS b. Sector Primes c. National aerospace bodies such as the ADS or the Aerospace Growth
Partnership d. Regional aerospace alliances (RAAs)
i. Are you a member of your local RAA? ii. Why are you a member? What is your main reason for joining?
iii. What services do you take up that they offer? iv. Does membership expose you to larger organisations and ideas which
you seek to benchmark? v. Do they impact upon organisational process in any way? HR agenda?
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36. I am looking to ‘map’ the external environment of aerospace sector SMEs. Who are the key external supports and/ or influencing organisations? Particularly in respect of the HRM function.
a. Who are the actors or stakeholders with a presence/ interest in the activities of your business?
b. Who could you potentially interact with in addition to those already discussed? e.g. in addition to customers, suppliers, regulatory bodies, regional aerospace alliances, trade unions, employer’s federations etc.
c. What other organisations or agencies do you work with? i. Do you collaborate with academic institutions for example?
ii. Do you work with sector skills councils? iii. Other SMEs? iv. Other sources of expert support and guidance? v. Any others?
d. What communities are you apart of? How well connected are you to local networks?
i. Are you aware of any general policies or support structures that exist, in both the private and public spheres, for SMEs operating in this area?
e. How do these actors/ bodies impact upon your HR agenda?
Section 8: CONCLUDING QUESTIONS
37. Overall, what do you feel are the main drivers of change? With emphasis on your HRM protocols. *
a. What impact do evolutionary, market and regulatory pressures have?
38. What are the main challenges you presently face? * b. What do you feel can be done to help?
39. From your own experience, if you had to surmise the HR systems of your organisation in a few words, what would they be?
Is there anything else you would like to tell me? Are there any aspects of this topic that have not been covered, but you want to discuss? Do you have any questions for me?
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APPENDIX F – Participant Information Sheet
Understanding the complexities of HRM development in the SME; supply chain firms caught between regulatory and market forces in the aerospace sector.
Participant Information Sheet
You are being invited to take part in a research study, as part of a PhD student project, that is looking to understand the development of Human Resource Management (HRM) practices in aerospace sector small and medium sized enterprises (SMEs).
Before you decide, it is important for you to understand why the research is being done and what it will involve. Please take time to read the following information carefully and discuss it with others if you wish. Please ask if there is anything that is not clear or if you would like more information. Take time to decide whether or not you wish to take part. Thank you for taking the time to read this.
Who will conduct the research?
Peter Schofield; PhD researcher The University of Manchester Alliance Manchester Business School Booth Street West Manchester M15 6PB, UK Email: [email protected]
What is the purpose of the research?
This research project is attempting to gain a better understanding of HRM in small firms. Existing literature and research has tended to focus on larger multi-national organisations when exploring HRM. This research project is looking to examine the current state of HRM practices in smaller firms in an attempt to better understand their motivations for adopting (or not adopting) more formalised professional procedures. The research is seeking to understand if context specific determinants, for example operating in the aerospace industry, bear influence on HR decisions.
Why have I been chosen?
To gain a representative sample, participants have been chosen based on three criteria; their length of service, their department of operational deployment and their level within the company hierarchy. By selecting individuals from your organisation in this manner it allows the researcher to attain a more objective, balanced and comprehensive understanding of HRM in your organisation.
Approximately fifteen individuals will also be selected for interview from your organisation.
What would I be asked to do if I took part?
Research participants selected and whom provide their consent will be interviewed, on a one-on-one basis, and asked questions relating to HRM and your experiences of it. Questions will focus on the HR practices in use by your organisation, for example with respect to recruitment and selection procedures, or training and development initiatives. The research will seek to explore why and when such practices
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were adopted, how well they have been adopted and received by the workforce and the influence posed by external sources, for example customer and suppliers, in their uptake.
What happens to the data collected?
All data collected will be used in conjunction with the researcher’s PhD thesis. It is anticipated the findings may also be utilised by the researcher for publication in peer reviewed journals. Data will not be used for any other purpose. In all instances data will be reported in anonymous fashion with pseudonyms used.
How is confidentiality maintained?
All data will be stored, analysed and reported with full anonymity; pseudonyms will be used.
All data will be held in a manner that complies with the Data Protection Act 1998.
All data, including audio recordings, will be kept in digital format under password protection accessible only by the researcher and his supervisory team. All data will be kept for a period of five years and destroyed thereafter. Data collected will not be accessible by third parties.
All participants can request access to all data relating to them by simply contacting the researcher whose details are on page one of this information sheet.
What happens if I do not want to take part or if I change my mind?
It is up to you to decide whether or not to take part. If you do decide to take part, you will be given this information sheet to keep and be asked to sign a consent form. If you decide to take part, you are still free to withdraw at any time, during the interview process itself or thereafter up to time of publication, without giving a reason and without detriment to yourself.
Will I be paid for participating in the research?
You will not be paid or receive any kind of compensation or benefit for participating in the research.
What is the duration of the research?
It is expected that the interview will last approximately 45 minutes to 1 hour.
For clarification purposes follow up interviews may be arranged, again lasting no more than 1 hour in duration.
Where will the research be conducted?
The research will be conducted at your place of work during working hours. The exact time and location is subject to confirmation and will be arranged at a mutually convenient time for yourself and your employer.
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Will the outcomes of the research be published?
It is anticipated that the findings of this research will be used principally by the researcher for their PhD thesis. Data collected may also be used by the researcher for publication purposes; in the form of an article in a peer reviewed journal. Should this be the case, all data will still be reported in anonymous fashion.
Who has reviewed the research project?
This project has been reviewed and approved by the University of Manchester Research Ethics Committee.
What if I want to make a complaint?
Minor complaints
If you have a minor complaint, then you need to contact the researcher(s) or their supervisor in the first instance;
Researcher:
Peter Schofield The University of Manchester Alliance Manchester Business School Booth Street West Manchester M15 6PB, UK Email: [email protected] Tel. 07979 506757
Supervisor:
Prof. Miguel Martinez Lucio The University of Manchester Alliance Manchester Business School Booth Street West Manchester M15 6PB, UK Email: [email protected]
Formal Complaints
If you wish to make a formal complaint or if you are not satisfied with the response you have gained from the researchers in the first instance then please contact the Research Governance and Integrity Manager, Research Office, Christie Building, University of Manchester, Oxford Road, Manchester, M13 9PL, by emailing: [email protected] or by telephoning 0161 275 2674 or 275 2046.
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What Do I Do Now?
If you have any queries about the study or if you are interested in taking part then please contact the researcher(s);
Peter Schofield The University of Manchester Alliance Manchester Business School Booth Street West Manchester M15 6PB, UK Email: [email protected] Tel. 07979 506757
This Project Has Been Approved by the University of Manchester’s Research Ethics Committee
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APPENDIX G – Respondent profiles and characteristics
Case A Respondent pseudonym
Age bracket Gender
Length of service (years)
Interview length (minutes)
Transcript word count
Director 1 40-49 M 22 51 9,581 Director 2 50-59 M 4 59 8,582 Director 3 30-39 M 15 54 10,071
Manager 1 40-49 M 6 50 9,116 Manager 2 50-59 M 7 21 3,641 Manager 3 30-39 M 5 30 5,137 Manager 4 40-49 M 23 35 5,018 Manager 5 20-29 M 6 41 5,193
Supervisor 1 30-39 M 6 28 4,379 Supervisor 2 20-29 M 4 21 3,389 Employee 1 40-49 M 3 19 2,490 Employee 2 40-49 M 20 21 3,288 Employee 3 50-59 M 13 39 6,482 Employee 4 50-59 M 6 14 2,358 Employee 5 20-29 M 4 21 3,496
504 minutes/
8.4 hours 82,221 words
Case B Respondent pseudonym
Age bracket Gender
Length of service (years)
Interview length (minutes)
Transcript word count
Director 1 40-49 F 18 95 16,946 Director 2 50-59 M 33 53 7,345 Director 3 50-59 M 11 48 5,649 Director 4 50-59 M 25 58 8,212
Manager 1 40-49 M 16 45 5,594 Manager 2 40-49 M 14 66 8,705 Manager 3 30-39 M 10 74 11,456 Manager 4 50-59 M 15 57 7,649
Supervisor 1 30-39 M 15 33 5,636 Supervisor 2 30-39 M 14 40 4,973 Employee 1 50-59 F 30 28 4,795 Employee 2 20-29 M 8 38 6,235 Employee 3 20-29 F 0 23 4,216 Employee 4 20-29 M 2 66 6,192 Employee 5 30-39 M 7 38 6,371 Employee 6 40-49 M 13 33 4,167 Employee 7 20-29 M 4 31 5,631 Employee 8 20-29 M 6 40 5,788
866 minutes/
14.43 hours 125,560
words
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APPENDIX H – Interview schedule: Institutional actors
Section 1: The role of the stakeholder
1. Could you tell me about your organisation and what you do? a. Do you conduct research? b. What products/services does your organisation offer? Particularly to SMEs? c. Do you offer advice?
i. Advice about HR or people management related issues? d. Do you offer any forms of training? To SMEs in particular?
i. Training relating specifically to people management/ employment relations/ recruitment/ training and development etc.?
e. How do you support SMEs? f. Do you utilise toolkits? g. Do you facilitate networks between parties? h. Do you put on conferences or seminars? i. Is there anything else your agency does that we haven’t already spoken about?
2. What other organisations or agencies do you work with? a. What communities are you a part of? b. Do you collaborate with academic institutions for example? c. Do you work with sector skills councils? d. Trade unions or employer’s federations?
3. What pressures or challenges or difficulties (if any) do you and your agency currently face?
a. For example, have there been budget cuts you have had to contend with?
4. Could you tell me a little about your professional background and career to date?
Section 2: Knowledge of SMEs, HRM activity and the aerospace sector
5. How aware are you of operational processes in small firms? c. How do you monitor SME activity? d. Would you describe them as professional or amateur in their approach to
business? Why? e. What are the cultures of small firms like?
i. Family oriented for example? ii. Back street garage mentality?
f. Do they have formalised HR policies and practices? i. What people management initiatives do they utilise? Performance
appraisals for example.
6. Existing theory would suggest HRM and employment relations in the small firm falls into one of two categories; which of these two short statements best describes the employment relations in SMEs? Why?
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a. “Working relationships are harmonious, with low levels of conflict, and an ease of communication; a ‘family’ atmosphere that provides an all-round better place to work.”
b. “Employees are subject to strict control, poorer working conditions and have little involvement in decision making.”
7. Do SMEs typically employ in house professional HR staff? a. What member of the SME would typically contact you/ would you deal with?
i. Owner/manager? HR personnel? Line manager? Finance manager? etc.
8. How do SMEs tend to recruit staff? a. Do SMEs find it difficult recruiting staff with the appropriate skillset? Are there
skill shortages? b. Is a professionally skilled workforce too expensive for small firms? c. Is there use of apprenticeship schemes in small firms?
9. To your knowledge how active are SMEs in training and developing their workforce? a. In comparison to larger organisations – more so or less active? b. Is there a strategic element to training decisions or is it more reactive? I.e. in
response to an immediate work related problem. c. Is training usually undertaken on the job or off the job? (or a mixture?) d. What learning and training networks exist for SMEs? e. Are SMEs linked with academia or educational institutions? f. Do customers or suppliers play a role or have an influence in an SMEs training
provisions?
10. The literature would say smaller firms generally take a less formal approach to HRM and employee management. Do you think this is the case? Why?
a. Existing literature would suggest numbers employed drives the adoption of formalised HRM – with increased employee numbers there becomes the need to adopt a more formal approach. But do you think anything else could bring about a more formal and professional means of operating? For example, contextually specific features such as the presence of a high skilled workforce or the presence of industry specific regulations that must be adhered to for example?
11. From your experience what are the main challenges faced by SMEs today?
12. What do you and your organisation consider to be the pressures for change on small firms?
a. What role does the market and the external regulatory environment play? b. Legal compliance? c. Buyer pressures? d. Political pressures? e. Economic influences? f. Technological factors?
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g. Social influences?
13. With regards to regulations centred around employment law and health and safety, how is the external regulatory environment changing?
a. How are HRM issues and pressures changing? b. Does your organisation recognise as much? Are there policies and documents
and meetings focused on such issues?
14. A lot of small business owners would argue SMEs suffer from excessive red tape? i.e. the role of the government and employment legislation etc. Do you believe this to be the case? There is evidence SMEs and all organisations are subject to greater levels of regulation now as opposed to 30 years ago.
a. How do SMEs typically combat growing levels of regulatory compliance? b. How knowledgeable are SMEs on regulatory requirements of this kind? c. Are you aware of SMEs utilising business consultants/ mentors? For example,
with respect of employment law or health and safety advice/ compliance etc.? d. How else would SMEs typically access such information? e. Are SMEs always fully compliant?
i. If not, why not? f. Does your organisation partner with or recommend particular consultancy
services or companies for use by SMEs?
15. Do SMEs that you have dealings with typically have the financial resources and expertise to enact professional forms of operating?
a. Do SMEs have access to finance? To enable growth and expansion for example, particularly after the recent global recession, are SMEs perceived to be risky?
b. What forms of funding are available to the SME?
16. Do they need to adopt formal professional ways of operating? Informality could allow for flexibility for example.
17. I am looking to ‘map’ the external environment of aerospace sector SMEs, who are the main actors or stakeholders with a presence/interest in SME activities? I.e. who could these SMEs potentially interact with? e.g. customers, suppliers, regulatory bodies, yourselves etc.
18. Do you believe sector of operation impacts an SMEs HR agenda? a. For example, those operating in high end manufacturing/engineering sectors
(e.g. aerospace) in comparison to semi-skilled and low skilled sectors of the economy?
b. Have you had dealings with aerospace sector SMEs? What were your impressions? How did they compare to SMEs of comparable size but operating in different sectors of the economy?
19. How well connected are SMEs to local networks? I.e. to other SMEs, sources of expert support and guidance etc.
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20. Have you come across clusters of SMEs before? Does an SME’s siting within a cluster facilitate inter-firm support, ventures and collaborations or knowledge sharing?
21. Can/do an SME’s customers influence an SMEs operations or people management agenda?
22. What role does the owner/manager typically play in these small firms? Do they tend to hold overarching control?
a. To your knowledge, do employees have a ‘voice’? Are they able to participate in organisational decisions?
23. To your knowledge, how active are trade unions in SMEs? a. Are they recognised by small firms? b. What impact do they have?
24. How do the various stakeholders (trade unions, employer’s federations, customers etc.) typically interact with SMEs?
a. How do these bodies raise issues with the SME?
25. Looking specifically at the North West, are you aware of general policies or support structures that exist, in both the private and public spheres, for SMEs operating in this area?
a. Particularly those operating in the aerospace sector but also other sectors more broadly?
b. What role do BIS and local state structures, beyond regulation, play? Do they offer any forms of support?
Section 3: Concluding questions
26. Overall, what do you feel are the main drivers and pressures of change in SMEs? With particular emphasis on their HRM protocols.
a. What influence do market and regulatory pressures have?
27. What are the main challenges faced by these firms? a. What can be done to help them? Particularly by your agency.
28. From your own experience, if you had to surmise an SMEs HR systems in a few words, what would they be?
29. Is there anything else you would like to tell me? Are there any aspects of this topic that have not been covered, but you want to discuss?
a. Do you have any questions for me?
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APPENDIX I – Analysing the data: Coding template
Research domain Themes and sub-themes
GROWTH Change
Product system Increased employee numbers
Elongated hierarchy
Complexity Idiosyncrasies of growth
Employee awareness of growth
The language of growth
Nature of the workforce
Skill level
Background and experience
Line manager capacity to undertake role
Culture and identity
Owner/manager ideology Family
Perceptions of aerospace
Conflict and IR issues Memory of the trade union
Bureaucracy and formalisation
Flexible formalisation
Awareness of bureaucracy Benefits of informality
HRM Evolving nature of HRM
Presence of HR procedures
HR champion and individual networks
Functional HR specialist
Perceptions of HR
Employment law Health and safety
Recruitment and selection
Employee ‘fit’
Staff turnover rates
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Skill shortages
Training and development
Apprenticeships Quality control and auditing
Performance appraisals
EIP and voice mechanisms Managing director delegation difficulties Communication challenges
Gossip
Pay and reward
INSTITUTIONAL POSITIONING AND REGULATORY SPACE
Aerospace sector
Civil Aviation Authority (CAA) Customers
Suppliers
Regional Aerospace Alliances (RAAs) BIS
The state
ACAS HSE
Employment law
HR Consultant
Fear of the employment tribunal
Advisory bodies
CIPD
GM Chambers of Commerce Consultants
Trade unions
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Appendix J – Analysing the data: Summarising the key findings
Themes Case A Case B Similarities/ differences and implications
Links to the literature
Research question
Theme 1
Theme 2
Theme 3
…
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Appendix K – The language of growth
Whilst this thesis has not undertaken a discourse analysis, and nor was it the
researcher’s intention to, Appendix K will reflect upon an interesting finding that is
tangentially related to the narrative, aims and objectives of the thesis. It concerns and
apparent self-awareness – within both case study organisations – of how the SME has
grown and matured, alongside the language used to describe how development and
growth is understood by management and staff.
There appears to be a definite perception, in both case study firms, that their
organisations no longer operate like a “back street garage” or in a “cottage industry”.
The following quote made by an employee of Case A is a prime example of how language
can illustrate how the organisation’s past and size is framed through the utilisation of
various descriptive terms:
You could say in the beginning it was like a little backstreet garage, you’d move
on to ATS [Euromaster] and we’re looking at a Rolls Royce.
(Case A, Manager 4)
By making a comparison between ATS Euromaster, one of numerous automobile tyre
service providers on the British high-street and Rolls Royce, a brand name synonymous
with exclusivity, high-quality engineering, exquisite craftsmanship and a meticulous
attention to detail, it provides a real understanding of how employees conceptualise or
visualise their organisation: inferring notions of ‘professionalism’ or ‘market leader’
status amongst others.
A selection of other descriptive words used by interview participants of both
organisations have been compiled in the following table:
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Respondent terminology
Descriptive Frequency
Case A Case B Total
Professional 41 54 95 Unprofessional 2 3 5 Family 20 63 83 Grow(n/th) 30 39 69 Bigg(er/est) 19 62 81 Evolve(d) 1 5 6 Mature(d) 1 2 3 Advance(d) 2 7 9 Progress(ed/ion) 17 12 29 Improv(ed/ement/ing) 17 28 45 Develop(ed/ment/ing) 40 81 121 Formal(ised) 36 22 58 Procedur(es/al) 44 79 123 Process(es) 35 39 74 Efficien(t/cy) 3 6 9 Productivity 1 1 2 Strateg(y/ic) 5 10 15 Competen(t/ce/cy) 12 5 17 Structure(d) 28 29 57 Hierarchy 1 1 2 Engineer(ing) 30 82 112 Skilled 3 12 15 Reputation 3 1 4 Back street garage 4 4 8 Cottage industry - 4 4 Rolls Royce 1 - 1 Crème de la crème 1 - 1 Manpower 4 6 10 Gossip 1 6 7 Chinese whispers 3 - 3 Team leading 2 - 2
The use of such terminology provides a real sense of how the employees and
management within both case study firms perceive their organisation’s respective
transitions. Furthermore, it could be suggested there is a subsequent impact upon the
worker and their perceived identity. How they conceptualise or visualise themselves
frames behavioural choices in the employee; what they do and how they act, or how
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they react to change for example, including their acceptance of professional and
formalised process.
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Appendix L – BEIS (Business, Energy and Industrial Strategy): Aerospace, marine and
defence sector
The Deputy Head of Aerospace for BEIS was interviewed for this thesis. Appendix L has
not been included in the main body of the thesis because it was deemed not to add
anything of substantial value to the aims and objectives, yet it is interesting and worthy
of inclusion in the appendices for background purposes. A member of the BEIS research
department was also interviewed for this thesis.
The BEIS representative confirmed the existence of a strong government
presence within the R&D segment of the aerospace sector for reasons alluded to in the
previous section; maintaining market share, exporting opportunities and attracting
investment, with the desired end-result being economic growth. Whilst it was stated
BEIS had no direct interaction with SMEs, actors they cooperated with included research
councils and academic institutions, those typically associated with research and
development opportunities, perhaps signifying their intentions and priorities.
BEIS utilise regional aerospace alliances (RAAs) to “find out what is going on in
the sector” (BEIS Representative). Moreover, there was an awareness on the part of BEIS
of the challenges faced by SMEs in the sector, particularly in relation to training and skill
proficiencies as “SMEs must use their money wisely” (BEIS Representative) as they “look
to improve performance all the while reducing costs” (BEIS Representative). To that end,
it was also the determination of BEIS that MNCs mask supply chain issues as they are
“typically very active in skills development and process improvement” (BEIS
Representative). Contrastingly, BEIS also stated that in today’s increasingly competitive
environment MNCs will pass risk down the supply chain, amid growing concerns SMEs
don’t have the financial power to invest in technology or skills to survive. Consequently,
a lot of SMEs in the sector are deemed to “punch above their weight” (BEIS
Representative).
Various government led initiatives concerning training and upskilling in supply
chain SMEs were spoken about during the interview, including a talent retention
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solution, a matching service, or database of individuals “who didn’t quite make it in the
primes who can be picked and recruited by those further down supply chain” (BEIS
Representative). It was also made known that the government also fund additional
apprenticeships at Rolls Royce, with the intention of these individuals entering the
supply chain lower down upon completion of the apprenticeship. Such initiatives were
not mentioned by the regional aerospace alliances when they were interviewed, nor
where either case study organisation aware of such initiatives, suggesting a disconnect
that isn’t allowing information to be disseminated down to the level of the SME. Fault
could be attributed to the RAA, perhaps a consequence of a ‘think local’ mind-set and
inter-region competition that was subtly present throughout RAA interviews. Most likely
though, it is believed to be a consequence of a lack of resources available to the RAA to
effectively go about the task they have been given. A plausible reason when it is made
known that they receive no government funding for their role and rely on membership
fees and the generosity of sector primes. The NWAA for example employs eight full-time
and 2 part-time members of staff, responsible for a region housing the largest cluster of
aerospace firms in Europe (NWAA, 2013); their ability to undertake an effective job and
facilitate change in a manner desired by BEIS or the state is unlikely.
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Appendix M – Policy implications
This section will briefly consider practical implications for the state, advisory and
intermediary actors in dealing with SMEs that have arisen in this thesis. Firstly, virtual
online toolkits appear crucial in the dissemination of information to the SME
demographic, being used by several bodies interviewed for this thesis including ACAS,
the CIPD and the HSE to publicise data. Accordingly, it could be suggested that such
toolkits are working as consensual and mimetic isomorphic information systems (see
DiMaggio and Powell, 1983), promoting homogeneity in SME practice.
Secondly, SMEs appear to be regulated in many cases without a trade union
presence yet there are functional equivalents to worker representation, particularly
ACAS and the role of consultants in the two case studies presented, which all serve to
ensure the SME operates within the boundaries of what would be considered
appropriate conduct related to the notion of a ‘reasonable employer’. There are many
political factors at play that need to be taken into account and issues of the ‘good
employer’ may need to be pushed via such bodies in a more coordinated manner.
Thirdly, the role of the state is a curious one: there are not the uniform or
consistent regulatory pressures from this actor that one would assume. For example,
when considering the advisory strategies deployed by ACAS compared with the
interventionist role of the HSE, we see such distinct roles. Re-regulation discourses have
provided a complex environment, overpopulated by actors with often conflicting ideals
and value systems (MacKenzie and Martinez-Lucio, 2005); yet, as with the discussion
with formalisation of the firm and the role of HRM, it is an environment that SMEs
appear to be struggling to fully comprehend and which may need more formal and
directive forms of socially responsible strategies to guide employers. Moreover, ACAS,
particularly in Case B, represents an important example of the consultative arm of the
state by offering management training and advice; hence, sustaining and not eroding
their presence is an important recommendation of the thesis.
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Fourthly, it appears that it is the “velocity of regulation” (GM Chambers of
Commerce Representative), alongside the complex and evermore crowded regulatory
space considered in this thesis, that must also be contended with by the SME that makes
remaining compliant an increasingly difficult task, a situation the state in particular
would arguably do well to recognise to ensure SMEs, which are typically without internal
expert sources of guidance, are given sufficient opportunity to comply.
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Appendix N – Limitations of the study and future research recommendations
Methodological limitations have been considered in the Methodology chapter. This
thesis has been concerned with the micro-level study of HRM and the SME: the objective
of this thesis has not been to achieve statistical generalisation but instead to provide an
insight in to the complexity of the HRM development process with which SMEs – in a
specific regional and sectoral context – have to contend with. Accordingly, the next step
could be to undertake a comparison with another sector, or the aerospace sector in a
different country, a next step deemed particularly prudent and advisable – hopefully –
given the influence of the external regulatory environment illustrated in this thesis.
