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The HR function

Michael Page Case Study
Question 1
Drawing on the knowledge you gained from the module, what key factors in the external environment might the recruitment firm Michael Page need to take account at the time of the case. How might these external factors be expected to change going forward into the future? Given the issues outlined in the case, what would be the key implications for Michael Page?
To examine external factors that PageGroup might be facing one could apply ‘PESTEL’ (UNICEF, 2015). PESTEL is an analytical tool to help analyse external factors that should be considered to succeed in an initiative or project. The word PESTEL stands for political, economic, social, technological, environmental and legal. PageGroup could be argued to face most, if not all, of these factors, but here the focus will be on political, economic, legal and social.
PageGroup is a British company so the first thing that comes to mind regarding political external factors is Brexit. Whether or not the UK government makes a deal with the EU, and what kind of deal, could greatly affect PageGroup’s dealings in countries who are part of the EU. Another external factor to consider is economy. In the case study it is mentioned that the economy strongly effects PageGroup’s turnover and the scale of employees’ raise. Even though the PageGroup expects the economy to grow one can never be certain of these things. Should the world experience another financial crisis like the one in 2008, it is very likely that recruitment agencies will suffer greatly.
As an international company with offices in around 30 countries PageGroup must be aware of the legal factors in each of these countries. The case study states that PageGroup have legal, financial and equal opportunity departments in major countries of operations, which make it sound like they do not have these departments in all the countries in which they operate. Considering the amount of countries who all, most likely, have different employment laws it seems strange to not have ‘proper’ legal departments in each country to ensure everything is handled correctly.
The fourth and final external factor to be discussed it social. As stated, several times, PageGroup is an international company which originated in the UK. There might not be a big social/cultural difference between the UK and other western European countries, but it is safe to assume that there is a fairly big difference between the culture in the UK and in India. Not only in context of how to recruit people from the area, but also how the company presents itself must be considered.

Question 2

Describe the HR function at Michael Page at the time of the case. Does the HR function serve its purpose? Why or why not? Following from your response to Question 2, given the firm’s proposed corporate growth strategy, how should it organize its HR function going forward? What should its HR Strategy be?
Strictly speaking, PageGroup does not have an HR function. At least not an official one. Operational managers and country directors are responsible for typical HR areas such as training, career management and mobility, recruitment and evaluation. So, since the HR function is virtually non-existent how can it then be serving its purpose? Simple, it cannot.
The good news is, that since PageGroup do not have a set HR function making one should prove a smaller challenge than changing one would have been. Ulrich (1998) argued that for companies to stay ahead of their competition they must show organizational excellence, and he thought HR could help facilitate this in four ways. (1) HR should be made a partner with management in strategy execution and help move planning to the marketplace from the conference room. (2) HR should become an expert in organizing and executing work. HR should also deliver administrative excellence so that costs are reduces while the quality remains. (3) HR should be the employees’ champion and represent their concerns to senior management. At the same time HR should also work towards increasing employees’ ability to deliver results and their commitment to the organization. (4) Finally, HR should fight for continuous transformation. It should shape culture and processes which improves the company’s capacity for change.
Ulrich, Younger, Brockbank and Ulrich (2012) also argued that HR plays, or should play, an essential role in an organization’s development and performance. The researchers identified six essential competencies that HR professionals must demonstrate to make an impact on an organization’s performance. These six competencies are (1) to be a strategic positioner, (2) to be a credible activist, (3) to be a capability builder, (4) to be a change champion, (5) to be an HR integrator and innovator and (6) to be a technology advocate. In their study the researchers also found that almost 10 per cent of business success can be explained by HR professional competence.
With all this in mind PageGroup should set up HR departments with the intention of making the HR professionals strategic partners who advocate change, championing the employees etc. Perhaps one HR department per country could prove useful as each HR department could then specialise on the social and cultural challenges each country/culture represents.

Question 3
Describe the psychological contract in use at Michael Page at the time of the case. Is it appropriate? Why or why not? Following from your earlier answers, would the psychological contract need to change? Would there need to be accompanying changes to the way motivation is managed? Why or why not?

Based on the information presented in the case study, it appears that PageGroup have a transformational leadership style. Transformational leadership inspirationally influences followers (Barling and Cooper, 2008). Bass (1985) argued that transformational leadership can be achieved through the four I’s. Idealized influence, inspirational motivation, intellectual stimulation and individualized consideration. These four I’s can be found in the managers who train, follow up on and evaluate new consultants who join PageGroup.
Presumably the managers are role models to the new consultants as they most likely started as junior consultants themselves at one point. Inspirational motivation can be seen as the managers surely pitch the vision of the possible career progression opportunities available to the junior consultants. There is also plenty of intellectual stimulation as the new consultants receive plenty of training, guidance and evaluations. Finally, the individual consideration is also present as there are different career paths within the company the junior consultants may take. One of the directors also stated that PageGroup would be upset to see people leave as a result of PageGroup not having given them enough opportunities.
To assess PageGroup’s organisational culture the cultural web developed by Johnson (1992) was used. Examples of symbols could be the titles staff earn as they work their way up in the organization. PageGroup definitely had control systems in place such as an evaluation every trimester, monthly turnover ranking which are posted on PageGroup’s intranet and a yearly re-evaluation of variable and fixed compensation based on staff’s potential and performance.
These are only a few of the outer circles from Johnson (1992) web of culture, however, they all seem to add up to the following. Everyone has started ‘at the bottom’, work hard and you can work your way up and earn promotions and greater financial compensations.
The transformational leadership style of PageGroup seems to match their organisational culture well. Transformational leadership is about inspiring followers and that is exactly what PageGroup appears to have the culture for. The managers are there to help you develop and they would rather help you move ‘sideways’ than see you go. Therefore, as the leadership style and organizational culture seems like such a good match there should be no need for change.

Question 4

Assess the leadership and management of Michael Page and their fit with the firm’s organizational culture at the time of the case. Following from your response to Question 3, do you anticipate that leadership and management of the firm or its organizational culture or both would need to change? Why or why not?

Psychological contract was defined by Rousseau (1989) as an individuals’ beliefs regarding the mutual obligations that exists between the employer and the individual. These obligations come from the belief that a promise has been made implicitly or explicitly and the fulfilment of obligations depend on whether the other fulfils their obligations (Barling and Cooper, 2008). Failure for one party to fulfil their obligation, especially the employer, may lead to feelings of unfairness, turnover intention (Tekleab and Taylor, 2003), lower organizational commitment (Coyle-Shapiro and Kessler, 2000) etc.
Based on this definition the psychological contact at PageGroup seems to be that if you work hard, achieve/precede your goals/targets you will receive promotions and financial compensations. This seems to be what is actually occurring at PageGroup as well. However, the psychological contract may still not be appropriate. Even if a consultant works as hard as he/she can, if the client base is not looking for consultants the employees’ turnover might not reflect the efforts put in. It would perhaps be more appropriate to look at how much effort an employee puts in, and a little less on the outcome to avoid feelings of unfairness.
Motivation can be defined as what directs, energizes and maintains a persons’ behaviour (Park and Rainey, 2012). It is very individual what motivates a person, but PageGroup appears to be focusing on extrinsic motivation (i.e. promotions and financial compensation). The employees are evaluated on their turnover each trimester. The case study does not mention what happens if an employee does not meet their targets, but one can imagine that the evaluation can be demotivating if that is the case. Deci and Cascio (1972) found that negative feedback can decrease intrinsic motivation. A study by Park and Rainey (2012) suggested that intrinsic motivations is significantly associated with organizational effectiveness and job involvement. Therefore, the way motivation should change from the heavy focus on extrinsic towards an intrinsic approach.
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