37825198 Changing Role of HR

EDGAR H. SCHEINThe Changing Role of the HumanResource Manager

CIP - Kataloøni zapis o publikacijiNarodna in univerzitetna knjiænica, Ljubljana

005.32

SCHEIN, Edgar H., 1928-The changing role of the human resource

manager / Edgar H. Schein. - Bled : IEDC -Poslovna øola, 2008

ISBN 978-961-6720-02-1

237139200

EDGAR H. SCHEINThe Changing Role of the Human ResourceManager

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It is my enormous pleasure to present to you a new publication of the IEDC-

Bled School of Management, which we chose to title IEDC Masterclasses. I am

particularly honored that Professor Edgar Schein, a world-renown authority in

the field of management and organizational behavior, is our inaugural author.

This book is about organizational culture. Edgar Schein is a Professor

Emeritus at Sloan School of Management, one of the top schools in the United

States and the world. Edgar Schein has written a number of books, including

Organizational Culture and Leadership, which was chosen as one of the 100

best books on management ever written. Professor Schein is also the founder

of Reflections - the journal of the Society for Organizational Learning. One of

the best articles on using art in leadership development that I have ever read

was published in that journal.

Ideas presented in this publication were originally shared at IEDC's 2007 HR

Forum. Professor Schein has come all the way from the United States espe-

cially for this event in Slovenia. He was joined by 150 people from 17 coun-

tries. We have always had participants from different places, but this time,

because of Professor Schein, the other panelists, and the extremely interest-

ing topic, the country representation was very wide: Austria, Bosnia and

Herzegovina, Croatia, Germany, Hungary, Italy, Kazakhstan, Macedonia, the

Netherlands, Poland, Romania, Russia, Serbia, Slovenia, Ukraine, and the

United States.

In addition to the reflections offered by Professor Schein, a panel of top

human resource professionals shared their experience in a roundtable dis-

Introduction

cussion entitled "The Biggest Challenges Facing the HR Manager in the

Future". This panel featured Stephan Baron, HR Director, AVL List GmbH,

Austria; Ursula Kuntner-Schweickhardt, Head of Strategic Group HR

Development; Erste Bank Group, Austria; Marina Pakhomkina, Corporate

Learning Director, TNK-BP, Russia; and Vanda Peœjak, HR Director, Goodyear

Dunlop CSEE, Slovenia. The discussion was moderated by Dr. Nadya

Zhexembayeva of Case Western Reserve University, who joined IEDC as a full

time faculty in 2008.

As the ideas and concepts offered by the panel were very rich and connected

directly to the issues of organizational culture, we decided to include this

discussion as a real-life illustration of Edgar Schein's reflections.

I hope you will enjoy the wonderful wisdom of one the most prominent

management thinkers of our time.

Prof. Danica Purg

President

I would like to share with you some thoughts on what is continuing to happen

to the Human Resource Function and the implications of these events for the

role of the Human Resource manager. There are three basic forces that are

causing these changes:

- the impact of globalization

- technological complexity

- cultural diversity

1. The world is becoming more of a global village in which the inter-

dependencies between countries and between organizations are

increasing dramatically. Through subsidiaries, joint ventures and

partnerships of various sorts more and more companies are

reaching across national boundaries. The basic driver is, of course,

economics. In the effort to be competitive, more and more

organizations are discovering the need to look beyond their own

boundaries for markets, cheaper labor, and scarce resources.

2. The second major force is the growing technological complexity of

all of the business functions. Products themselves are today more

complex, which reflects the incredible strides that engineering has

made in design and manufacturing technology. But the same thing

has happened in finance and accounting, in sales and marketing,

and in the field of strategy itself. The business executive of today is

a generalist who has to align and integrate the various business

The Changing Role of the HumanResource Manager by Edgar H. Schein

Sloan Fellows Professor of Management Emeritus

MIT Sloan School of Management

07

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functions, each of which is by itself too complex to be completely

understood.

Is this true in HR as well? Of course. Labor Relations has become a

highly complex political bargaining process which has to take into

account local laws and customs. Compensation systems are highly

refined, with complicated computations of bonus allocation. A whole

new technology has arisen in the field of organizational

development in the design and implementation of group and

organizational exercises and simulations designed to give executive

insight into the systems dynamics of complex organizations.

3. The third major force is, in a sense, derived from the other two-

the complexity that arises from cultural diversity. Culture is a

group’s learned response to the problem of survival in the external

environment and the problem of internal integration. If there is no

history of problem-solving, there is no culture. So countries or

regions of countries have cultures, organizations have cultures, and

occupations develop cultures. So when salesmen with a sales

culture are talking to engineers with engineering culture mentality,

and they come from different countries and different parent

organizations, it is a wonder that they can communicate at all, much

less solve problems together.

To understand how these forces will impact on the HR function, we must first

look historically at the different roles that HR managers have played and see

which of these is most relevant today. We can distinguish four basic roles:

- Champion of the “employees”

- Payroll and contract administrator

- Partner in top strategy

- Professional conscience and organization developer

ROLE 1: CHAMPION OF THE EMPLOYEES

- Empathy for and identification with the worker

- Upward influence skills

- Pro-labor values

- Belief that worker situation can be improved

T H E C H A N G I N G R O L E O F T H E H U M A N R E S O U R C E M A N A G E R

Culture is a group’slearned response to theproblem of survival in theexternal environment andthe problem of internalintegration. If there is no history of problem-solving,there is no culture.

One of the first and most important roles of HR managers was to be

the spokesperson for the employee. Not all companies honored this

role, but in the heyday of the human relations movement of the

1940s and 1950s it fell to human resources to show management

how employees' working conditions, wages and benefits needed to

be upgraded.

To play this role effectively required a certain set of attitudes,

values, and skills. The HR manager, called the Personnel Manager

in those days, had to have empathy for the employees, the desire to

improve the lot of the worker even if this meant less profit for the

company, and the skills to influence upward.

ROLE 2: EXPERT ADMINISTRATOR

- Efficiency orientation and values

- Administration skills

- Knowledge of systems and procedures

- Belief in standardization

The Personnel Department of most organizations has the job of

managing the pay and benefits system, which requires efficiency

and precision. The HR manager for whom this role is central must

have a good knowledge of the relevant systems and procedures,

must believe in the value of standardization, must defend

procedures that often appear to be “too bureaucratic” to

employees, and must have the administrative skills to build and

manage the pay and benefits organization. If labor relations are an

issue in the organization, the HR manager must also know the laws

and have the negotiating skills to deal with the contract negotiation

process.

As we discuss each role, note that the required skill and attitude set

is quite different for each role, implying potential role conflicts in

the person occupying the HR job. Which role to prioritize and which

sets of attitudes, skills and values to cultivate can become a difficult

psychological balancing act.


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ROLE 3: PARTNER IN STRATEGY

- Empathy for and identification with the leaders/managers

- Ability to think systemically and strategically

- Broad view of the business

- Belief in economic values

As corporations became more complex and recognized the

centrality of human resources to the success of their longer-range

strategies, they began to demand of the HR function some

participation in the strategy and planning process. How many

people with what kind of talent will be needed? How are the

relevant people to be found, integrated and developed? Can career

systems be designed to insure proper supplies for succession in all

key jobs? Sometime in the 1960s and 1970s the Personnel Manager

became the Manager of Human Resources to acknowledge the

importance of people in the longer-run strategy of the organization.

In most organizations a problem arose, in that senior management

wanted HR help in strategy, but HR managers were not trained in

that kind of thinking and, worse, frequently had pro-employee values

that made them fight rather than help senior management. The HR

manager who could play this role would have to empathize with the

strategic issues facing the CEO, would require the skills to think

strategically and systemically, would need to have a broad view of

all elements of the business, and, most importantly, would have to

share the idea that the ultimate goal of the business is to increase

shareholder value. The conflict with Role 1 is obvious.

This role is fulfilled very unevenly in today's businesses because

either the skills or the attitudes are unevenly distributed. If it

becomes more critical to do HR planning as part of the strategic

process, then companies will have to improve their process of

selecting and developing HR managers who can fulfill this

requirement.

ROLE 4: ORGANIZATION DEVELOPER AND PROFESSIONAL CONSCIENCE

- Identification with the profession (not only the organization)

- Ability to see the organization in the larger social context


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- Skills in managing change

- Belief in perpetual improvement

In a 1975 article for the Journal of the College and University

Personnel Association I outlined what at that time seemed to be the

major change the HR function was undergoing. I noted that HR

managers were, of necessity, becoming “change agents” and

“process consultants”. This role shift was in part the result of the

“professionalization” of the function. More was known about

employee motivation, career development, leadership and

management development, and it was often the role of the HR

manager to bring the research knowledge into the organization.

Instead of identifying with the employee (Role 1), the administra-

tive functions of the company (Role 2), or the senior management

(Role 3) HR managers began to identify with each other and with

the HR profession. In the other three roles, the HR manager is still

an “organization” person. In Role 4 the HR manager is a

professional whose loyalties lie outside the organization. By virtue

of this shift in identity, the HR manager can become the

“conscience” of the organization, bringing knowledge and new

attitudes to his or her employer. However, in order to bring in new

knowledge and skills, it has become obvious that to fulfill this role

the HR manager must possess a new, powerful influence and

change agent skills. The HR manager must be able to think of

the organization in broad systemic terms and be able to pass that

perspective to the executive suite. So paradoxically, as HR

managers get pulled up into the strategy discussion, they will also

find themselves in the difficult role of influencing that discussion in

directions that executives might not want to hear.

To deal with this paradox and potential conflict, organizations have

sometimes split the HR role into (1) A personnel manager who plays

roles 1 and 2, and (2) A manager of “organization development” (OD)

who reports directly to the CEO or the Executive Committee. In

some organizations this person has also been called the Director of

Management Development, reports to the CEO, and is in charge of

the development of the top 100 or more senior managers (given that

The HR manager must beable to think of the organization in broad systemic terms and be ableto pass that perspective tothe executive suite. So paradoxically, as HR managers get pulled upinto the strategy discussion, they will alsofind themselves in the difficult role of influencingthat discussion in directions that executivesmight not want to hear.


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this group is often thought of as the organization's critical human

resource pool).

It is significant that whereas in 1975 the OD role was just beginning

to be recognized as important in organizations, there is hardly an

organization functioning today that does not have an OD

professional working somewhere in the system. OD has become a

“taken-for-granted” function, but it is not always located in the

HR department. For the HR executive of today this situation can be

a dilemma in that it is not clear whether the broader role of

“conscience” should by design be more marginal than the typical

central HR role.

Preliminary conclusion and next steps

For a given HR manager to unscramble the potential role conflict or role

overload that the above discussion implies, he or she must examine more

closely some of the environmental forces that are operating and some of the

new tools that may be available to analyze the role more fully.

Trends that will impact the HR function:

- technological changes which make all functions more complex

- globalization and consequent cultural diversity

- more educated employees

- changing expectations of top management

- rapidity of social change regarding employment, careers, and

psychological contracts

I previously mentioned the broad trends toward globalization, technological

complexity in all areas of business, and growing cultural diversity. In

addition one should note that the level of education worldwide is slowly

increasing, which means that organizations will be dealing with smarter and

more educated and sophisticated employees. There is also a change in the

expectations of top management as to the role that HR should play. There

are growing pressures toward being able to play Roles 3 and 4. Finally,

there is clearly a change in social values surrounding the importance of

work/life balance and the psychological contract between company and


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employee. Employment security is rapidly transforming into “employability”

security. Companies argue that even if they fire you, you will have learned

important new skills that will make you more employable elsewhere. This

may not be objectively true, but many companies argue that they are,

therefore, justified in hiring and firing at will.

Some specific trends that impact on HR:

- changing concepts of “career”- more mobility, less loyalty, more

concern for self

- more variety in “career anchors” and organizational needs

- greater need to analyze and correctly describe jobs/roles

- increased recognition of the importance of culture and other

non-technical elements of business

- linking organizational learning to human capital (career anchor

types)

First, the concept of career is itself slowly metamorphosing into a variety of

concepts, especially as globalization reveals that in different cultures work

and career have different meanings and is differently integrated with family

and self. In the western world this shows up most clearly in the increasing

mobility that employees display (as well as sometimes, the refusal to move),

in the decline of company loyalty, and the growing concern for self and

family. Much of this is due to the growing number of dual-career families in

which the family is managing two full careers.

Second, research on employees has shown increasing variability in what

they are good at, seek, and value. My own research on “Career Anchors”,

which I discuss below, shows that organizations must be prepared to

respond to a wide variety of employee needs and avoid the stereotype of

“everyone wants to climb the corporate ladder.”

Third, with technological complexity work itself becomes more complex.

The HR manager will have to help line and other staff managers to develop

better tools for figuring out what needs to be done and how to communicate

that to employees. I will describe the process of “Job/Role Analysis and


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Planning” as one such tool that takes us beyond the simplistic Job

Description that so many organizations lean on.

Fourth, cultural diversity is increasing and so is management's discovery of

culture. Culture and sub-cultures have always been with us, but the

discovery of the importance of culture in the performance of the firm is fairly

recent. Managers don't quite know how to deal with an abstraction like

culture, so it will fall to the HR function to educate management on what

culture is and does, and beyond that will be involved in the implementation

of culture evolution, culture change, and, in the case of sub-culture

conflicts, culture alignment.

Finally, human resources are slowly changing from being an expendable

resource and a cost factor in the economics of the firm to being a capital

investment to be valued and nurtured. Here again the career anchor will

come into play because human capital comes in many forms and the

organization will have to figure out what kind of human capital it needs in

relation to its strategic goals.

New tools and concepts for dealing with complexity and diversity

In my own work with organizations and with HR issues I have found three

sets of concepts of particular help:

- career anchors

- job/role planning

- culture analysis

To deal with the growing diversity of human resources and the individual

differences that employees today represent in terms of motives, talents, and

values I use the concept and methodology of helping employees to

understand their own “Career Anchors”.

To help organizations deal with the growing complexity of work and to

provide a better concept for describing work I use the methodology of

job/role analysis and planning.

And to better understand and cope with the dilemmas of globalization,

mergers, joint ventures and other cross-cultural phenomena I use cultural

Cultural diversity isincreasing and so is management's discovery ofculture. Culture and sub-cultures have alwaysbeen with us, but the discovery of the importance of culture in theperformance of the firm isfairly recent.


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analysis. Each of these can be viewed as conceptual and methodological

tools in the HR executive's arsenal.

So let's talk a bit about Career Anchors, Job/Role Analysis and Culture.

A career anchor is an adult's self-definition of:

a. his/her competencies

b. his/her motives

c. his/her values

The career anchor is based on work and life experience; it describes what

one would not give up if forced to make a choice.

The concept of career anchors grew out of longitudinal research that was

originally launched in 1960 with a panel of MIT graduates and has since

been carried out in different countries, different populations and different

occupations. The career anchor is an evolving self-image that reflects edu-

cational and work experience. As we gain experience we learn what we are

good at, what we really want out of our work and career, and what our val-

ues are. By the time we are in our 30s we have had enough experience to

begin to figure out what our anchor is, in the sense of what it is we want and

what it is that we would not give up.

As the research evolved, a number of categories emerged of the types of

anchors that characterize careers:

- technical/functional competence

- general managerial competence

- entrepreneurial creativity

- autonomy

- security

- service

- pure challenge

- lifestyle

We found that every occupation has all of these anchor types, so one should

not stereotype occupations. But it is crucial to understand that the different

anchor types have different views of what is important in their careers, what

incentives they will respond to, what they regard as career progress, and

The career anchor is anevolving self-image thatreflects educational andwork experience. As wegain experience we learnwhat we are good at, whatwe really want out of ourwork and career, and whatour values are.


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what kind of recognition is important to them. For example, the

technical/functional anchor types are the modern craftsmen, the employees

who love their particular type of work, who want to get better and better at

it, who do not want generalist jobs, who want to be paid what the external

market for their particular skill is, and who respond to recognition only from

others who know what their skill really is. They are often victims of the Peter

Principle in the sense that if they are good at what they do, they get promot-

ed into generalist jobs where they eventually fail. They will accept

management in their technical specialty but not general management. Note

that every occupation has people of this type.

In contrast, in every organization and every occupation there are those who

realize that they do want to climb the corporate ladder, to be promoted to

higher levels of responsibility where they will manage larger numbers of

employees and bigger budgets. Rather than becoming better and better at a

particular skill, they want to integrate the skills of others. We learned that

this group, from which executives are drawn, had a clear view of the skills

necessary to succeed in general management:

- Analytical competence: the ability to make decisions using

insufficient and often unreliable information;

- Interpersonal competence: the ability to handle individuals, groups

and larger organizational units;

- Emotional competence: the ability to make impossible decisions

and still sleep at night, by which they meant the ability to fire old

and loyal employees when necessary, to decide between equally

valid proposals from valued subordinates, to manage large budget

decisions knowing that the livelihoods of hundreds or thousands

depended on the quality of those decisions, and to do this kind of

thing every day, all day, all year.

The HR challenge is to recognize early in employees' careers that these two

types are very different and need different development and career paths.

Equally important is for the HR manager to educate line management in this

difference, because line managers with general manager anchors tend to

project their own self-images onto others and to create incentive systems

that work only for general manager types. Yet if technological complexity in

all of the functions is a reality, then the organization of the future will be


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more dependent than ever on the technical/functional type and will have to

develop multiple career ladders to accommodate all of the types.

Several other anchor categories have implications that need to be examined.

The entrepreneurially-anchored individual needs to be nurtured with promis-

es of ownership, having his or her own patents, and support even if early

failures pile up. Members of this group will rarely stay in traditional

organizations unless they are given promises of ownership and control.

The autonomy-anchored person prefers to be outside of organizations

altogether in a teaching or consulting job, but if the organization needs his

or her particular expertise, it should be prepared to offer contract work,

part-time work, the ability to work at home, and other incentives that permit

the exercise of autonomy.

By contrast, the security/stability-oriented employee is willing to give loyalty

and career control to the organization in exchange for some form of tenure.

This group is often regarded in western companies as unambitious, yet most

organizations could not survive without large numbers of people who are

willing to do repetitive and often boring work for long periods of time.

The people with a service anchor organize their career concepts around

some important value such as environmentalism or improving employment

conditions. For them, as for the technical/functional types, the important

incentives are to be able to continue to do work that they regard as relevant

to their values.

The pure challenge types are a small group of employees who are only

challenged when they face an “impossible” task or an interpersonally

competitive situation. They are people who can be drawn in when unusually

high levels of motivation and commitment are needed to solve particularly

difficult problems.

Finally, the most important group from the HR point of view is the group that

is increasingly defining their career in terms of broader lifestyle issues.

They are often in a dual career situation, they are responsive to recent

social trends which emphasize personal needs more, they are more mobile

and hence will seek their careers in urban centers that provide both

themselves and their spouses with career opportunities. This group, like the

autonomy and technical/functional groups, will require the most innovation


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in terms of work contracts, incentive systems, and work/life balance

solutions.

The implications of all this is that organizations will require all of these typesand will, therefore, have to invent multiple incentive and reward systems tomaximize the potential of each. If we take human capital seriously we mustrecognize that it comes in many forms, all of which are necessary to optimalorganizational performance.

Career anchor types as human capital:

- each anchor type represents a different set of skills, motivations,

and values

- most organizations have all of the types among their employees

- an effective organization would maximize the potential of each

type

Job/role analysis and planning:

- define the job as the center of a role network

- analyze the present and future role expectations of key role

senders

- consider what skills, motives and values the future role applicant

must have

In my consulting on HR issues I often found that the employment process

and the succession planning and promotion processes were hampered by

the organization's inability to describe accurately what the new employee or

future occupant of a job would actually be doing. The job description as a

primary tool was woefully inadequate in communicating the richness and

complexity of a job situation, especially the cultural nexus in which jobs

typically exist. Especially in succession planning and in evolving HR

strategies, it became apparent that we needed a more dynamic way of

describing the evolving work of organizations.

A helpful tool for this purpose was to view the job as a role embedded in a

role set of stakeholders, each of whom had certain expectations of what the

job holder should be doing. Viewing a job as a set of organizational

expectations, supplemented by the expectations of family, friends, and

others outside the organization, and filtered through one's expectations of


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oneself provides a much richer picture of the reality of work. Mechanically

this can be done for a given job by having a group consisting of a present

job holder, one of more past holders of that job, and one or more peers and

subordinates sit together and actually draw the role diagram with the core

job at the center and each stakeholder on the periphery with arrows of

various sizes (representing relative importance) pointed at the focal job.

Once such a diagram has been drawn it immediately makes possible both

the analysis of the present situation and planning for the future. The totality

of the diagram of the role set will reveal:

1) “Role Ambiguity”, in that there will be stakeholders whose specific

expectaions will not be known to the job holder, requiring some

inquiry as to what they do expect;

2) “Role Overload”, in that it will be immediately obvious that the job

holder cannot meet all the expectations of everyone in the role set,

requiring some setting of priorities and the communication of these

to members of the role set who may be perpetually at the bottom of

the in-basket;

3) “Role Conflict”, in that it will become obvious that the expectations

of some stakeholders, i.e. shareholders who want to keep costs

down to maximize profits, will conflict with those of others, i.e.

subordinates who want better wages, technical subordinates who

want better equipment, etc.

Analyzing the role in this way also forces the job incumbent to define his or

her own expectations and how to approach the job as the management of a

complex set of social relationships, not merely a technical performance.

The job description can outline the responsibilities and the goals to be

accomplished, but without an understanding of the dynamics of the role set

the incumbent cannot figure out how to get anything done.

Analyzing jobs using role maps provides an important tool for the planningrequired in developing HR strategies and succession planning. Most suchplanning is done by second-guessing from the current job description whatevolution might occur in the work. If one does this without a role map one islikely to miss the environmental and technological forces that cause suchevolution. Performing a job/role planning job therefore requires analyzing


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for each major stakeholder where that stakeholder's expectations may headas we project into the future. It then becomes possible to predict, for example,that a particular shareholder will become ever more cost-conscious, that manufacturing heads will increasingly wish to take manufacturing into othercountries with lower labor costs, that the community and the local govern-ment will become more stringent about environmental issues and emissioncontrols, that rapid technological evolution will make it possible, maybe evenmandatory, to decentralize work geographically and team communication totake place purely electronically, etc. The point is that each stakeholder'sworld is evolving and by analyzing each stakeholder's world before we examineimpacts on a particular job, we get a more accurate and rich picture of howthe job will change and how the requirements for future job holders willtherefore change. And that brings us to the third tool: cultural analysis.

Culture and sub-culture:

- all groups and organizations develop a culture through their shared experience

- the essence of culture is the shared taken for granted assumptions about how to relate to the external environment and to each other internally

In order to understand the role of culture in HR affairs we must be sure wehave a common definition. I think of culture as the accumulated learning of agroup that has worked well enough to enable the group to survive and meetits external environmental challenges as well as managing its internalaffairs. Culture becomes the most stable element of a group's identity and istherefore the hardest thing to change, should that become necessary.

The best way to think about culture is to recognize that it shows up in theovert and visible behavioral norms of a group: the rules of how to behave.But behind that is usually a set of espoused values and ideology, what thegroup aspires to and would like to be, and beneath that is the essence of theculture, the shared tacit assumptions that have been learned over time andthat actually drive daily behavior.

What level of culture to work on in a change program?

- overt behavioral norms

- espoused values

- shared taken-for-granted assumptions

The best way to think aboutculture is to recognize thatit shows up in the overt andvisible behavioral norms ofa group: the rules of how tobehave. But behind that isusually a set of espousedvalues and ideology, whatthe group aspires to andwould like to be, andbeneath that is the essenceof the culture, the sharedtacit assumptions that havebeen learned over time andthat actually drive dailybehavior.


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Culture as an important concept has emerged in several contexts. With

globalization, companies have had to face the fact that different countries

do things differently when it comes to most of the business functions. Social

values and norms affect labor relations, customer relations, manufacturing

processes, and, especially, financial affairs (when is bribery a normal way of

doing business, and when is it “corruption”?)

Second, with mergers, acquisitions, joint ventures and subsidiaries, compa-

nies have had to face the fact different companies also develop different

cultures and these often clash at the level of business goals, values and

management processes. The most troubling of these are usually in the HR

area, where varying norms surrounding pay scales, the use of bonuses, the

availability of various kinds of perquisites, etc. bring colleagues into

potential conflict with each other because they respond to different reward

and incentive systems.

Culture change

Focus on new, desired behavior:

- identify how new behavior will solve the business problem

- if desired behavior is consistent with assumptions no culture

change is needed

- if desired behavior is inhibited by some cultural assumptions,

these need to be changed

How to change culture?

- identify the specific cultural element that needs changing

- focus on the new behavior that is desired and enforce it

- bring into discussion the new goals and assumptions and solicit

participation on how to change the necessary behavior

- support the new behavior with the appropriate reward and

discipline systems

If elements of a culture become dysfunctional and culture change is needed,

it is imperative to recognize that, though the essence of a culture is in its

tacit shared assumptions, one cannot change them directly. Instead, one

must start with the business problem to be solved, determine what actual

behavioral changes would solve that problem, create a change program to


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produce those behavioral changes and use elements of the culture to help

achieve the changes.

If there are other elements of the culture that inhibit the desired behavioral

changes, these must then be analyzed and dealt with in a further change

program, but only when they have been clearly identified as inhibiters of the

desired behavioral change. If one consistently enforces the new behavior

and if that new behavior improves the business situation, then the norms

inhibiting it will gradually lose their coercive power and will be replaced by

new norms.

The role of subcultures

Every organization has three generic subcultures which must be aligned:

- the operator (line) culture

- the engineering (design) culture

- the executive (financial) culture

Organizations have discovered that the subcultures that develop around

different business functions within a given company also have to be

analyzed and managed. The values and norms of finance, engineering,

marketing and manufacturing in a large retail organization may operate very

differently, which can create inefficiencies in ultimate performance. In

nuclear plants the goals and norms of the executive culture (costs, profits,

safety) may not be aligned with the operator culture that deals with all the

unexpected contingencies, and the engineering culture that wants basically

to automate and get people out of the system altogether. The issue is not

which sub-culture is “right”, since all are needed, but how to align them with

each other to maximize organizational performance. Aligning subcultures:

- realize that each subculture is necessary

- recognize that each subculture is valid

- create dialogues across subcultures to help employees understand

and accept each other

To stimulate such alignment the executive culture must first acknowledge

publicly that all three cultures are required and that each culture is

intrinsically valuable in its own right, and then stimulate dialogues across

cultural boundaries to help employees understand and accept each other.

Organizations are themselves multi-cultural units and must learn to function

Organizations have discovered that the subcultures that developaround different businessfunctions within a givencompany also have to beanalyzed and managed.

The issue is not which sub-culture is “right”,since all are needed, buthow to align them witheach other to maximizeorganizational performance.


as such. What does all of this mean for the growth and development of HR

executives?

Developmental needs for HR executives

First and foremost, the HR profession needs to develop much better systems

of selecting and developing leaders, keeping in mind that leadership in the

different sub-cultures requires very different kinds of people and that career

anchors limit in a constructive way the kinds of leadership that is possible.

Bringing a technical/functional person into technical management makes

great sense, but turning him or her into a general manager is usually a

disaster both for the person and the organization. Similarly, putting a general

manager in charge of a technical group that does not respect him or her is

equally disastrous. I find that organizations continue to assume that

everyone wants to be a generalist. I think it is up to the HR function to do a

better job of developing multiple ladders to allow all human capital to

flourish, not just general manager types.

Second, I think the HR profession needs to do a better job of analyzing the

nature of work and how work is changing in the context of the various

trends described above. Especially important is to note the growth of dual

careers, the trend toward lifestyle anchors instead of career anchors, and

the growing concern about work/life balance. The job/role planning exercise

should provide vivid data by showing how the needs of the various stake-

holders of a given job are themselves changing, thus requiring different

skills, attitudes and motives on the part of job incumbents.

Third, culture is as invisible to members of the organization as water is to

the fish that swim in it. It is therefore the job of the HR function to make the

relevant cultural issues visible. As I said above, this works only in the

context of a business problem that the organization is trying to solve,

because the culture can then be viewed as a strength. If elements need to

be changed, this may then be done in a context of positive evolution rather

than negative destruction. Culture surveys or questionnaires are not helpful

because they do not go deep enough and they are usually disconnected

from the business problems that need attention. Whatever surveys claim to

measure, it is not the shared tacit assumptions that are the essence of culture.

23

Culture is as invisible tomembers of the organization as water is tothe fish that swim in it. It istherefore the job of the HRfunction to make the relevant cultural issues visible.


Fourth, and finally, the HR function needs to reinvent itself or at least to

become conscious of itself and its critical role in the future of organizations.

No matter how much we automate, downsize or break up organizations

geographically, people will always, in the end, be the key to performance.

The reason for this is simple: no amount of engineering and planning can

predict all of the contingencies that will arise in a dynamic world. It will

always fall to some people somewhere to make sense of the new data and

new problems that will show up. So whether we like it or not, people will

continue to be central to the organization, and the HR function will continue

to be central to their management.

FURTHER SUGGESTED READING

The most recent and up-to-date material pertaining to this talk and

related matters can be found in the folloing books.

Bailyn, L., Breaking the Mold, 2d Ed. Cornell University Press, 2006.

Gunz, H. & Peiperl, M. (Eds.), Handbook of Career Studies. Sage,

2007.

Schein, E. H., The Corporate Culture Survival Guide. Jossey-Bass,

1999.

Schein, E .H., Organizational Culture and Leadership, 3d Ed.

Jossey-Bass, 2004.

Schein, E. H., Career Anchors, 3d Ed. Jossey-Bass, Pfeiffer, 2006.

24

No matter how much weautomate, downsize orbreak up organizationsgeographically, people willalways, in the end, be thekey to performance. Thereason for this is simple: noamount of engineering andplanning can predict all ofthe contingencies that willarise in a dynamic world.It will always fall to somepeople somewhere to makesense of the new data andnew problems that willshow up.


25

Nadya Zhexembayeva

We will start our discussion by giving the floor to the panelists, but we hope

to engage everyone after that. What are the challenges and priorities for

human resource management as we move into the new century? Where are

we, and where are we going?

I would like the panelists to start out with a short introduction of their compa-

nies, because they all operate in very different contexts. If the speakers tell us

a little bit about what they represent, we will have a clearer idea of their back-

grounds.

Marina Pakhomkina

I represent the TNK - BP Company. TNK-BP is a vertically-integrated oil com-

pany which was formed in 2003 from the merger of BP and the oil and gas

assets of TNK, and whose portfolio contains a number of producing, refining

and sales enterprises in Russia and Ukraine. In 2006 TNK-BP produced 73 mil-

lion tons of oil; its retail network includes 1,600 gas stations in Russia and

Ukraine operating under the TNK and BP brands. The company's headquar-

ters is in Moscow. Company personnel total about 66,000 people who work in

eight major regions of Russia and Ukraine. My own role is to increase organi-

zational capability through various interventions related to people's knowl-

edge and skills.

The Biggest Challenges Facing the HRManager in the Future

A Roundtable Discussion

26

Vanda Peœjak

I represent Goodyear Dunlop Central and Southeastern Europe. We have

operations in 12 countries and our headquarters is in Prague. We have a pro-

duction facility in Slovenia, manufacturing tires. In 1995 we produced 11,000

pieces a day; today, we have reached 22,000. There has been a tremendous

increase in productivity but also in the importance of the human resource

function. I am certainly happy that I can use my knowledge and experience in

such a large company.

Stephan Baron

My company is based in Austria. It was founded by a university professor

some 55 years ago but it is not as well known as the companies that the other

two panelists work for. We are involved in research and development of

engines for trains, passenger cars, ships and trucks. We also develop systems

for engine testing, transmission testing, and vehicle testing.

We employ 1,700 to 2,000 people in our Austrian headquarters and about 2,500

in 43 subsidiaries. If you work in a high-technology company with so many

branches, your job becomes complex, and this complexity has increased dra-

matically over the past 15 years. I joined AVL List in 1992, when we had 1,200

people worldwide. Now the number is close to 4,500. That makes us a small

global player. This peculiar situation creates some challenges that I will be

happy to discuss here.

Ursula Kuntner-Schweickhardt

I work for Erste Bank out of Vienna. We are a retail bank. We celebrated our

10th anniversary this year. In 1997 we were a very small organization with

some 3,000 people, but we now have 40,000 employees with subsidiaries in

eight countries in Central and Eastern Europe and are one of the most suc-

cessful banks in this region. At the moment, we are establishing a holding

company, which implies huge organizational change. Our intention is not to

have eight banks in eight countries but eight banks in one group. This is a big

challenge for human resource management.

Ten years ago we had enough time to think about human resource manage-

ment priorities. Today the challenge is to single out the main priority.


27

Nadya Zhexembayeva

It seems that culture is one of the issues that are beginning to emerge from

these introductions. Merging two types of company- one young and dynamic,

the other more mature- may pose interesting challenges. The issue of cultur-

al diversity was also mentioned. My question for you is: what is the top prior-

ity in your job today?

Vanda Peœjak

I would say that my main priority is flexibility and speed. Years ago, we had

enough time to ponder problems and prepare the system. Nowadays, you

have to move fast. The biggest change in the human resource management

function in the past 10 years is that we have become a provider for our inter-

nal customers. We are evaluated every year and have to act in accordance

with the needs of our business.

One of the greatest challenges for the leader of the human resource depart-

ment, then, is to prepare subordinates by showing the way and being a role

model. If you do not do that, your subordinates will ask you why you expect

them to do what you are not capable of doing. Speed, adaptation, flexibility,

and constant learning are essential. I am not talking just about learning from

courses and seminars. Learning on the job is just as important.

Marina Pakhomkina

I would like to start with a metaphor related to the issue of culture. Imagine

you have married somebody and after the initial merrymaking you realize how

different you are. This can create all kinds of conflicts. However, it can also

be a source of value and synergy. One way to tap this is through interaction.

You watch the other person and observe a different model of doing things.

Then, you enter a slow evolutionary process. The second way is to agree on

a few principles - how you spend your budget, where you go on vacation, how

many children you will have.

Speaking of priorities, you have to get people to interact and share knowledge

and expertise, to learn from each other and realize that there are a variety of

leadership styles, not just command and control as the case used to be in our

country.


28

You need to create a set of shared values that defines the kind of company

you are and how you operate. You need to ensure that the company delivers.

People are not paid for loyalty, but for delivery. I will share with you some of

the things that we do to make people communicate and adopt decisions

together.

A priority that relates to the specifics of our culture is foreign language acqui-

sition. Only 10 percent of our employees speak English, and that creates a

great handicap because we cannot communicate normally. We have a huge

staff of interpreters who must ensure that there is some mutual understand-

ing in our communication. In order to deal with this, we have set individual

objectives for each British and Russian executive. They have to learn Russian

and English, respectively, and we monitor their progress very closely. Their

bonuses are linked to how successful they are as students of a foreign lan-

guage.

Nadya Zhexembayeva

It seems that, depending on the context, priorities can be very different. Can

you think of any other priorities in human resource management in your com-

panies?


We are currently trying to find an answer to the question of how a high-per-

formance organization can be created. Because we are in the financial

sector, this is very important to us. We are also trying to understand how our

bank can be differentiated from the existing competition. Why should people

come to work for us? We would like to know if our group has something in

common across all our countries that gives us an identity. We often ask our-

selves if we can base decisions on a shared policy or should leave that to

local initiatives. Getting the best people from the labor market in our countries

and retaining them in the company is also a major challenge. Finally, we have

a big cultural issue because we have a culturally diverse workforce. This is

one of the main issues that I am grappling with at the moment.

Nadya Zhexembayeva

Stephan, can you share with us some of your personal priorities? Are they dif-

ferent from Ursula's?


29

Stephan Baron

Yes and no. Our company has a special workforce because in a sense we are

something like a university. We employ engineers who develop new high tech-

nology for sexy businesses. We work for automotive companies like Ferrari,

Toyota, BMW, Porsche, GM, and Ford. Although our company is not famous,

90 percent of all car engines have been tested with our products. That means

that we are well-known in the automotive community but we are not well-

known by the public. This is one of the problems that we have when we try to

attract people outside Austria. In Austria everybody knows us and wants to

work for us. In Japan and the United States, nobody has heard of us. If we

place a job ad in an Austrian newspaper, we get 300 applications. If we adver-

tise in a Tokyo newspaper, we get no responses at all.

However, getting the right people is not the only issue. Once you have identi-

fied them, you have to keep them in the company.

Our main problem at the moment is that we work out of offices all over the

world and it is not easy to achieve a good level of integration of cultures,

ideas, and processes. Managing intercultural teams is a tough challenge.

Managing growth is not easy either. We have achieved 20 percent growth this

year and expect another 50 percent next year. We are facing a lot of new proj-

ects and we need new people who can integrate into the organization. I agree

with the statement that speed has become a very important factor in recent

years. Our project managers do not accept slow human resource manage-

ment. They say that the customers are putting tremendous pressure on them

and they cannot wait for us. They want the human resource department to be

as fast as everybody else. My challenge is to convince my team to accept the

challenge imposed by this reality.

I try to be involved in the business decisions of the company in order to obtain

the information that I need so that I can support our business. I need not only

to develop employees but also to help support our service to the customers.

In that sense, we have to be a service department.

Nadya Zhexembayeva

You have already moved from the priorities to the solutions. One of the solu-

tions that Stephan suggested is being involved with the decision-making


30

process so that you do not feel left out. In that way you can make a far more

valuable contribution.

Vanda Peœjak

The main problem that we have to deal with is the lack of human talent in

Slovenia and in other countries. All over the region it is hard to find qualified

people who would be motivated to work in production. However, without pro-

duction, there will be no tires. And without tires, modern life is impossible. We

have had long discussions with our trade unions in order to find a way to get

people interested in working for us. Of course, money is an issue, but we have

found that young people do not care only about money. They want to have

more spare time on weekends because they have families. And, they want to

participate in day-to-day decisions concerning production.

We have also discovered that the quality of human resources management

leaves a lot to be desired. We thought that we were doing well because our

financial results were good, but we carried out a survey which suggested that

people were not satisfied with our management style. For this reason we have

launched a coaching program for all top executives in production, as well as

sales and administration.

Another thing is that we do not have enough people taking challenging jobs.

People prefer jobs with low levels of complexity. One of our most important

projects is our talent management system. We would like to conclude agree-

ments with the best universities in Europe and attract their best students. We

have opted for this creative approach because we have realized that direct

recruitment from the labor market or agencies is not a very good method for

getting the most talented people.

Stephan Baron

There is no one best solution that works for every company. There is such a

thing as basic principles of human resources management, but you also need

to demonstrate a good deal of creativity in the context of your company.

Businesses are different and they are at different stages of development. Our

company has evolved tremendously over the past 15 years. Each consecutive

level calls for specific solutions. You always have to ask whether a particular

approach is the right one at the right time for your company.


31

We are soon going to have a human resource management meeting with rep-

resentatives of all our subsidiaries. They are all very different and we wonder

how we are to manage that diversity. We have branches with 300 people and

with 10 people. The large ones have human resource managers, whereas in

the small ones this function is performed by the chief executive officer. How

can we talk about universal solutions?

Our branches expect headquarters to solve problems but on the other hand

they want freedom. Balancing these expectations is an enormous challenge.

Nadya Zhexembayeva

I would like to give the floor to Marina, who saw the merger of two very dif-

ferent companies. It would be interesting to hear what challenges they

encountered and how they handled the situation.

Marina Pakhomkina

One of our first and very urgent tasks was to integrate foreigners into our

environment and vice versa. We established a program called Mutual

Mentoring. We paired up foreign and Russian executives in the hope that they

would learn from each other how they do things in their own cultures. We

scheduled formal meetings for them, but we also expected some informal

sharing of information. This helped people understand the unfamiliar culture

of the other party.

We have another program called Reverse Secondment. BP brought in a lot of

sophisticated technology that our people were not familiar with. It was very

important to ensure that the appropriate level of knowledge was in place. We

invited BP experts to stay in Russia for a year and a half and share their

knowledge. Each came with a clear program about the kind of knowledge that

he would bring, who he would transfer it to, and how he would ensure that it

would be absorbed.

We also sent quite a lot of Russian employees to BP in the UK on long-term

business trips so that they could see a different cultural environment where

business is based on time-honored mature practices. We expected them to

learn how to use new technologies, but also to be aware of issues such as

transparency.


Upon their return to Russia, these people proved to have acquired not only

new skills but also a new mindset. They began to act as change agents and

spread what they had learned.

We also have a program with INSEAD. We send executives there not only for

the knowledge that they can obtain but also because we wanted them to

interact with peers from other countries and set up professional networks.

We set up quite a few projects literally in the middle of nowhere- even places

in central Siberia without any infrastructure or buildings. We had to get peo-

ple to work there and that was a tremendous problem. We employ 70,000 peo-

ple but they are not very mobile. Russians do not relocate easily. If you have

a family and children, you are unwilling to move.

We had to identify mobile people and set up a special compensation scheme.

This is a new development in Russian management because

formerly there was no need for this kind of approach.

Nadya Zhexembayeva

We have heard stories that indicate a great deal of diversity in environments

and practices. Do you think there is such as thing as an ideal organizational

culture? If there is a better culture, can it be transferred to another environ-

ment?


Personally, I do not think there is an ideal culture. The culture should reflect

the main goal of a company, its business, its strategy. We have a socially

responsible culture and do a lot for our employees. If we did that in some

other countries, they might think we were a little stupid. For example, we have

a Greenfield operation in Ukraine. If we tried to implement the principles of

Austrian culture there, it would not work.

Vanda Peœjak

The question of an ideal organizational culture is very difficult. I do not think

it exists even in fairy tales. It depends on the kind of employees or

associates you have. However, because people are so different, if you ask

them what is ideal, you will hear all sorts of conflicting opinions.

32


33

I would say that you should not assume that if something is good and works inAmerica it will also be successful in Slovenia. However, if you add a specialSlovene flavor, it might work.

Inspired by similar US practices, we set up a Family Day for all company asso-ciates and their families. In the first year, we had some 400 applications. Thefollowing year, we had 1000. The numbers kept rising and this year we had4,300 in the Kranj stadium. This used to be a public relations event but I tookit over and invited trade union representatives. They asked me how much Iwould pay for overtime. I sad I would not pay anything. We were holding thatevent for our people. It is also very important for top management to attend.They must be available and they must talk to everybody.

These are some of the things we do in order to build a culture. But I mustadmit that we still have a long way to go. We are great in production but thatis not enough. We need passion.

Stephan Baron

You can do this from the top down but you can also do it from the bottom up.We started an international management development program against thewill of some top managers and the owner of the company because theythought it was unnecessary and cost too much money. That is why humanresource managers need to be part of top management, and they need to bestrong. I cannot afford to wait until all top managers agree.

We employ engineers and they do not like to manage people. They like to turnscrews. If you turn the right screw, you get the right result. But that is not howyou manage people, and for that reason they do not want to be managers.They hate solving people's problems and discussing salaries. They want todevelop technology, and have a mechanistic view of the world. Our goal is tochange that view. Twelve years ago we started practicing skill management.We realized that to be successful it is not enough to have technology skills.This is especially true if you work in a multicultural environment. That wasvery difficult to explain to engineers. They had to learn communication, lan-guage, and self-management. They had to learn how to manage people for thepurpose of a project. It took us five or six years to make them accept this.

We wrote a brochure in which we mentioned 10 non-technical skills. One was

intercultural communication. At first, everybody laughed because they

thought they did not need it. I asked them how well they were getting on with


34

their projects in China and Japan. They said it was terrible. They were happy

when the projects were over because they thought it was absolutely impossi-

ble to work with the people there.

It was obvious that we needed intercultural training. Our engineers accepted

that and at the end of the training period they were very happy because they

had learned how seemingly impossible things could work.

The thing is to know the direction in which you want to go. Then you can start

from the top but it is also possible to go from the bottom up.

Marina Pakhomkina

In Russia we have always had stories about heroism in production: going the

extra mile, achieving a little more, etc. However, BP brought in a different

value: human life. Our executives had not even been used to using seatbelts.

When we enforced the use of seatbelts, newspapers started making fun of us.

Now this policy has caught on and our employees accept it. This is a good

example of how a company can create and propagate a value that was not

there before.

Nadya Zhexembayeva

We have heard interesting stories from very dissimilar business environ-

ments. Would anybody like to ask any questions of the panelists or make a

comment?

Edita Kuhar

A couple of years ago entrepreneurship was not valued much in Slovenia, but

this is now changing. I heard top managers say some time ago that we,

Slovenes, lack the necessary spirit for entrepreneurship; there is not enough

courage and innovativeness. I would like to ask Vanda Peœjak how much she

thinks local culture influences what happens in a company.

Vanda Peœjak

In the past five years I have been listening to the same story, concerning the

lack of talent, not only in Slovenia, but all over the world. For example, if you

want to have a good accountant, you need somebody who is not only knowl-

edgeable about local standards but also has sufficient experience with


35

American principles of accounting and speaks good English. Very few single

individuals offer such skills.

Consequently, one of the most important things for us is the selection, motiva-

tion, and retention of personnel. In Slovenia we decided to offer scholarships

for technical education. Do you think we got many takers? No. Engineers want

to get Master's degrees and go on to work in institutions. Some even want to

be professors. If you ask them to work in production and solve problems on a

daily basis, they do not come.

The environment has changed. The younger generation wants a new type of

job. When we advertise positions in public relations or marketing, we get tons

of applications. When we advertise accountants' jobs, we get five or ten

applicants. When we want to recruit somebody in production maintenance,

hardly anybody turns up.

The hardest question for us now is how to become a preferred employer.

Would money solve the problem? No. The new generation of employees

expects autonomy, empowerment, and development on the job. They also

want more flexible working hours, but that is hard in production.

I would like to hear opinions on this topic. How do you motivate people to stay

in the company? What do you give them? Is it money? Or a car? Or a special

position?

Question from the audience

Do you think you can change the culture of a company with the same employ-

ees?

Marina Pakhomkina

There is no need to try to implement changes in all areas. You should just cre-

ate the right sort of synergy among different habits. Let me give you one exam-

ple. In Russia, people are very action-oriented. They want to know who does

what and who is in charge. British people are different. For them it is very

important to understand the context and have a consensus of views. They

want to involve everybody in discussions and have a shared vision. They also

prefer to point out the direction without giving specific instructions.

You do not have to change either of the two. You can instead combine the best


36

of both. For example, we have instructed our Russian managers to provide

some context before a meeting and to ask people what they think so as to

ensure a diversity of views. On the other hand, the British have gotten used

to having minutes of meetings. In that way you can keep track of what has

been decided and who is responsible for what.

In the past, we were very inflexible with respect to targets. We had to reach

them no matter what. The British are more lenient about that. We have tried

to integrate these two approaches.

In Russia, when you make a mistake, you get punished. British people have a

different concept of responsibility. You are responsible for achieving results,

but you do not get punished for failures. We integrated this philosophy into a

performance management system where a large part of an employee's bonus

is linked to team effort. That was a tremendous change.


I would like to ask why people should change their behavior in the first place.

If you cannot answer this question, nobody will change. If people do not

understand why they need to change, nobody will change.

We wanted to change our selling practices from being driven by aggressive-

ness to understanding the customers' needs. But to do that, we tried to find

out why our sales force might be willing to change its behavior. If you do not

have an answer and they do not see any personal benefit, you cannot imple-

ment a change.

Stephan Baron

A company's first goal is to make money and survive. If the human resources

department does not support that goal, the company will be in trouble.

Ten years ago, we changed our structure dramatically. Having been a hierar-

chical organization, we became a process-based organization. A lot of people

did not like that and we lost them. However, many others thought they would

survive. We tried to support the change by means of communication seminars.

There was nothing about technology. We just listened to their fears and tried

to understand why they were not excited about the change. We were quite

clear that the change was necessary for the company to survive. Luckily, we


37

made the change at a time when the business was growing and we were mak-

ing a lot of money. We came in for some criticism but eventually achieved a

happy ending. The goal of human resource management is to defend the inter-

ests of the company, not of a few people who do not like the turn that things

are taking. However, sometimes I clash with top management who are reluc-

tant to spend money on education and coaching. A person in my position has

to play many roles at the same time

Can you change behavior? You can do that quite easily by means of bonus

manipulation. However, you cannot change deep-seated values.

Vanda Peœjak

If the question is how to change behavior and values, we are talking about dif-

ferent things. Behavior is indeed easier to change. You can watch and moni-

tor it and manipulate it with your bonus system. The important thing is that you

have an open discussion about these issues.

Changing values is certainly more difficult. They are more resistant to change.

If you want to have different values, you need to have a different environment.

When you work in a multinational company, sometimes you get very rude

requests from a manager who is not local. You may be asked to get rid of

somebody or implement an undesirable practice. You have to explain that

local rules are different and you have to stand by your convictions. That does

not mean that you are inflexible. It means that the company should respect

local rules and regulations. Otherwise, for the sake of business

profit, you could do things that are not only illegal, but also immoral.

Nadya Zhexembayeva

Now I would like to reverse the roles and have the panel ask questions of the

audience.

Vanda Peœjak

We have a system that we use to identify talent or people of high potential.

However, our definition of talent is rigid and includes some controversial

characteristics such as "international mobility". How many mobile employees

do you think we can find among the 30,000 Goodyear employees in Europe?


38

Not enough. In Slovenia we were able to identify only 20 out of 1,700.

As a result, we decided to draw up another list of promotable young people.

Naturally, we must first prepare an environment where these people are inter-

ested in mobility.

What are the criteria for getting on this list? First, your performance on the

job, which is evaluated annually by your manager or peers. The second thing

is how many levels up the hierarchy you can move. For that, you need

leadership skills. We also use psychological assessments. The fourth

element is your inspiration. What kind of promotion are you interested in:

upward or lateral? Finally, the fifth element is your international mobility, at

least within Central and Eastern Europe.

I already asked about the main ways to motivate employees to work for a

multinational company. We are sometimes told that more money will do the

trick easily, but that is not the case. A salary increase produces a short-lived

effect that lasts a few months or a year. What else can you do?

Stephan Baron

My experience is that most people are not mobile and would not like to live

abroad. How do you motivate them to be mobile?

Marina Pakhomkina

Some multinationals say that their company has a history and particular val-

ues but that they have tremendous difficulty implementing those values in a

new environment. How can this problem be tackled? What would you recom-

mend?

My other question is this. What are the main competencies that a human

resource manager must possess in order to be successful?

Lidija Drobeæ

I would like to address Vanda's question about motivation. I discussed this

with a group of colleagues and we prepared a list of relevant issues that need

discussion.

The first issue is setting up the right environment. That is certainly a hard task.


39

The second issue is our differences as individuals and our responses to dif-

ferent motivational patterns. We also change during our lives. Therefore, the

question of how to motivate people does not have a simple answer. You need

to be flexible and be able to provide different incentives to different people.

As for the mobility issue, I would like to ask a different question. Why are we

asking people to be mobile in the first place?

Stephan Baron

You are right, mobility is not a value in its own right. Our customers want the

best products in the field where we operate. At the same time, they want us

to be as close as possible to their location. They may know that some of our

best engineers are in Graz, but they want them in Munich or Stuttgart. This

means that we have to send our people to our customers.

We also develop local talent in places like China or India. To do that, we need

to send somebody out there. We do not send people around the world on some

kind of whim but because the market requires it.

Of course, we also bring people from China and India to Graz. However,

Austrian laws are strict and we cannot host foreigners for a long time.

We also use video conferencing, but face-to-face interaction is irreplaceable.

Douwe Mulders

I think that all issues that have been raised here are quite challenging.

However, I would like to address one that was raised by Marina Pakhomkina.

As far as I understood it, it was about the three most important competencies

for human resource managers in general.

The first one, in my view, is "know what you are talking about". I say this

because I know a lot of people who do not know what they are talking about

and this is the most important thing to start with.

The second thing is to develop a strategic vision. Many of my colleagues do

that by talking to company employees and clients, trying to find out what they

want done and what they foresee. This approach is good, but we need some-

thing more. We have to consider what will change in our field of expertise in

the coming years. We are talking about changes in motivation and mobility,


40

and we have to come up with a corresponding vision.

Marketing departments often have a lot of demographic information but,

unfortunately, there is seldom a link between marketing departments and

human resource management. We are not using that information. We know

relatively little about the people in our company and those who may come in

the future. That is a waste of time.

Another thing is that we need independence and a lot of convincing power in

order to bring up relevant topics of discussion.

Marina Pakhomkina

It is very important for human resource management to transform business

objectives into integrated solutions. We cannot accept a reactive approach:

"Some people are leaving, so let us raise salaries" or "I do not have a good

team, so let us do some team-building", or "My people are falling behind on

their time line, so let us have some training in time management."

Susanna Ulrich

I am a systemic consultant for organizational development and I was chosen

as a representative of our group here. What has not been said so far is that

top management needs to create a dream and make people believe in it. This

also helps to get through difficult periods.

We talked about the search for talent. To me, that sounds a bit arrogant. You

need to have a good mix in your organization. There are people who are happy

to stay just where they are and this needs to be taken into account.

As for mobility, this creates various difficulties because of the incompatibility

of pension schemes, integration of spouses and children, and suchlike.

Repatriation can also be a problem: once an expat has finished his project,

what do you do with him?

Vanda Peœjak

Indeed, when you come back from an overseas assignment, your previous job

is usually gone. Also, if you move from Slovenia to Belgium or the United

States, you get a huge salary increase and you get used to high revenues.

When it is time to return to Slovenia, those people ask to become managing


41

directors, but the director in place refuses to move. This means you have to

be very careful when you ask people to move abroad.

Nadya Zhexembayeva

This has been a very exciting session. Now it is time to give the floor to our

illustrious guest, Professor Edgar Schein, and have him share his opinion of

the discussion.

Edgar Schein

I find this discussion fascinating in terms of how much has come out. I also

find it totally frustrating because there are far more problems than there are

solutions, as the speakers have indicated. Nevertheless, as I listened to the

panelists, I was surprised at the number of solutions that I heard.

If you combine all the points that were raised in the description of what a

human resource manager ought to be, one common theme will emerge.

Whatever human resource managers are, they need to be culture managers.

They are in a unique position to know what culture is, how it works, and what

dilemmas it creates. If they do not know that, they should not expect their line

managers to know it.

This leads to the paradoxical conclusion that culture is both a problem and a

solution in human resource management. Many of the problems that you men-

tioned contained a cultural element. But if you cannot figure out what to do

about them, surely no one else can. That is because you have the independ-

ence, perspective, and training to think about interpersonal and cultural

issues. If I were a line manager, I would assume that you have some expert-

ise in the cultural area. That is not an easy thing to ask of you because culture

is truly a complex matter.

In that regard, what I heard was a simplification of culture that I do not agree

with. We talked about country cultures, as well as generational, regional, and

organizational cultures. But for me, the most important one is occupational

culture. That was referred to by Mr Baron. If you look at his company, you

might wonder why it is so different. The answer is because it is about special

occupations.

There are finance types, and there are engineers, production workers, and


42

many others. They live in different worlds. We keep ignoring the fact, but we

have big cultural clashes inside every company. When your marketing and

production departments do not talk the same language, you have problems.

Then you have to work out how to get the people inside the company to work

toward the same goal.

One of the best questions concerning culture is how to study it so that it does

not seem only a national or organizational phenomenon, because it is also a

local phenomenon that we have to deal with every day. It usually goes under

the label of communication. When we say "communication is important", we

usually mean we have a culture problem inside the company: some people

who should be communicating are not doing that. It is not enough to say that

they should communicate better. The reason that they are not communicating

well is that they live in different subcultures.

If that is the case, the solutions that have been mentioned have to have a cer-

tain characteristic. Years ago, when we reviewed intelligence testing, some-

body pointed out that the way intelligent tests are written favor certain occu-

pational and social groups, particularly middle-class children. When rural

black children in the United States take these tests they look stupid because

the questions are geared toward a different cultural group.

I do not know if you have heard of the "culture-free test". People began to

invent tests that get at intelligence directly, without using language and cul-

ture. Thinking of that, it occurred to me that all these human resources prob-

lems are not culture-free. A solution that may work in one country may not

work in another one. Also, if it works in one company, it may fail in another.

Consequently it does little good for us to tell what works in our own company

because it is not a culture-free solution.

So, what would be an example of a culture-free solution? One good example

is forced interaction between people of different cultures. You will never get

people to understand one another if you do not somehow force them to inter-

act. This can take many forms. You could, for example, decide that the com-

pany's common language will be English. Then everybody will have to take

English classes and during the instruction period they will meet different sub-

cultures.

Another situation that seems to bring people together is a company crisis. It

is amazing how people from different cultures come to understand each other


43

and work hard at their tasks. Similarly, you can develop tasks that require sub-

cultures to work together.

Note, however, that the culture-free communality is forced interaction. We

have to think of these solutions at that level. However, attention to detail is

crucially important because the kind of forced interaction that works in one

company may not work in another.

Talent development is clearly an answer. But what is the culture-free version

of that? I think that one of the discussion partners hit the nail on the head. You

cannot develop talent if you do not know what is out there. If you do not know

what your own employees know, or want, or can do, there is no way for you

to know what kind of people you need to hire, develop or motivate. Talent

development at a culture-free level would have to be a way of finding out what

people want at a basic level. What do people need? They need livelihoods, but

as Hertzberg told us many years ago, money is only a hygiene factor, not a

motivator. When I have enough money, paying me more will not make me work

harder. Money is necessary but not sufficient.

Obviously, work settings and relationships are things that we all care about.

Work is a daily phenomenon. I keep reminding my children of that. When they

start thinking whether they should take a particular job, I tell them that they

have to imagine how every single day would look. What would it feel like? That

concerns the actual work, but also the climate of the company. It is an intrin-

sic motivator for people because they spend a great portion of their time at

work.

Interestingly, something which was not mentioned here, but is present in all

the research on motivation, is job challenge. A job has to somehow be

interesting. Nobody wants to do boring work eight hours or more a day.

It is interesting to think back to the experiment that Proctor and Gamble did

with their production systems. They had large unionized plants that

prevented any worker from doing anything different from his job description.

They decided that this was not a cost-effective way to do business, and

redesigned the plant according to a new approach in which workers viewed

themselves as a company getting supplies from production. Their job was to

package up what they received in such a way that sales could meet their

orders. In this way they created more challenging jobs for their workers. And


44

lo and behold, the workers started working harder. It was a different way of

looking at the same work, but it had become more challenging. I do not know

if that practice has survived in Proctor and Gamble but it was a revolutionary

idea for many years. It demonstrated that you can take a boring job and turn

it into something interesting. Probably the biggest motivator is precisely that:

giving people something that can interest them. That might be a difficult chal-

lenge.

A long time ago Chris Argyris referred to an interesting example. There was a

large hospital for mentally challenged people in Connecticut. They were bored

all day long. Nearby was a dairy that wrapped butter into packets. Chris sug-

gested that the patients might find that job challenging and stimulating. His

idea worked beautifully. What seemed to be a very boring task for one part of

the population turned out to be very exciting for other people because it made

their lives meaningful.

Job redesign is a big culture-free solution. Whenever you have some of the

problems that you mentioned during this session, you should ask whether the

job is designed in an optimal way. This is related to another issue that was not

mentioned: the new generation. I wonder if one of the things that will happen

in the future, and which will turn jobs upside down, is contract work. More

and more people will decide that organizations do not attract them and will

prefer to work on an ad hoc basis. If that is the case, you will have a major job

retraining managers because they will be the real barrier. You may get the

idea, and the worker will get the idea, but what if the managers do not want

to let go? What if they do not like part-time work or do not like people working

from home because they cannot see them? There are lots of things coming up

that will concern the way that companies are organized. You will have to man-

age that transition. That will be difficult because companies like standardiza-

tion. In order to be cost-effective, they like to routinize work, although that is

boring for the people who have to do the work.

I think we all ought to take a trip through Silicon Valley and see some of the

crazy forms of organization springing up in computer-related business.

Maybe some of those models will set standards for the future.

Finally, in order to set the scene for tomorrow, I would like to talk about the

concept of "career anchors", which I have done a lot of research on. I started

out discovering that if you follow people through their careers, their concept


45

of who they are and what they want gets firmer and they become clearer

about what they really want. There is a finite number of things that people

desire: autonomy, security, etc.

When I share these findings, people always tell me that this is fine as far as

America is concerned, but they want to know whether it works the same way

in other cultures. Surprisingly, Japan is probably the biggest user of career

anchors at this moment. Why are they interested in career anchors? I think

that they are discovering that companies are beginning to ask career coun-

selors to help them relocate people who are being laid off. In other words, as

bureaucracies, state-owned companies, and conglomerates diversify and get

smaller and let people go, people do not know what to do. They have trained

generations of people to be dependent on their companies and now they

expect them to provide some advice.

This career anchor idea forces you to consider how people can be more inde-

pendent and how different people really are. Do they really all want the same

things or do they want different things? Do they want to be promoted upward,

or laterally, or in some other direction? There is more than one way to

advance in a career. Yet, if you look in the literature, it is all about climbing.

We see hardly any acceptance of the fact that there is a security-orientated

anchor that wants stability, whereas the autonomy-oriented anchor wants

freedom. People in the same job may have totally different needs. I think we

have to come to terms with individual differences and job redesign because

the world may be pushing us into problems that will require more of that sort

of thing.


BIOGRAPHIES

Dr. NADYA ZHEXEMBAYEVA, Director of the One-Year EMBA at

IEDC- Bled School of Management (moderator).

Dr. Nadya Zhexembayeva’s teaching, research, and consulting work

focuses on organizational design, change management, and

sustainability as business advantage. In addition to her role at the

IEDC, she is also an Associate Director for International Networks at

the Center for Business as an Agent of World Benefit of the

Weatherhead School of Management, Case Western Reserve

University, USA, where she has earned her doctorate degree in Orga-

nizational Behavior with a dissertation on business innovations for

sustainable development in the ex-USSR republics.

Mr. STEPHAN M. BARON, HR Director, AVL List GmbH, Austria (pan-

elist)

After concluding his studies of mathematics, physics, sociology, psy-

chology and educational science Mr. Stephen M. Baron worked as a

graduate assistant and, as of 1980, as a research associate at

Heidelberg University. From 1989 to 1992, he was employed at imp

GmbH, Heidelberg. In 1992, he joined AVL LIST GmbH. In 1993, he

became head of personnel administration and development, in 1995,

head of the entire human resources management, development and

training for AVL List GmbH. Since then, he has also been responsible

for corporate HR of the global AVL group.

Mrs. URSULA KUNTNER-SCHWEICKHARDT, Head of Strategic Group

HR Development, Erste Bank Group, Austria (panelist)

Mrs. Ursula Kuntner-Schweickhardt started her career as a

consultant followed by several years in a financial institute as an

internal trainer in communications and leadership. Since 1990, she

has worked as a specialist in HR management in an Austrian

financial institute. In 1997, she became head of HR Development in

Erste Bank AG, building a modern HR Development Department in this

fast-growing company. Since July 2006, she has been responsible for

strategic Group HR Development in the Erste Bank Group- a financial

46

47

institute with nearly 40,000 employees in eight countries in central

and Eastern Europe.

Mrs. MARINA PAKHOMKINA, Corporate Learning Director, TNK-BP,

Russia (panelist)

Mrs. M. Pakhomkina has more than 10 years of experience in HR

working locally and internationally. For the last 3 years, Marina works

for TNK-BP in the role of Corporate Learning Director. Presently she

is accountable for individual and organizational development, includ-

ing multi-step system of corporate leadership development, function-

al and technical disciplines development across the company, sup-

port of implementation of Corporate policies and standards, corpo-

rate culture, Universities and colleges graduates sourcing strategy

and programs. Before TNK-BP, Marina has been working as Human

Resources Director at Philips.

Mrs. VANDA PEŒJAK, HR Director, Goodyear Dunlop CSEE, Slovenia

(panelist)

Mrs. Vanda Peœjak started her career in Sava, rubber company in

Kranj, as a manager in purchasing, business development, compen-

sation and personnel development. In 1993, she took the position of

HR director of Sava d.d., and, in 1998, as HR director in Sava Tires and

Goodyear Engineered products, owned by Goodyear company. Since

2006, the business organization has been extended to 12 central

South East countries in Europe and the company operates under the

name Goodyear Dunlop CSEE.

Published by:IEDC-Bled School of ManagementPreøernova cesta 334260 Bled, Slovenia

Year: 2008

Editor:Prof. Danica Purg, Dr. Nadya ZhexembayevaIEDC-Bled School of Management

Design:Eduard Œehovin

Circulation:1000 Copies

Documents

37825198 Changing Role of HR