THE NATURE AND CHALLENGE OF PERSONNEL MANAGEMENT

Institutional spokesmen have often proclaimed that the work force of an organization

constitutes one of its more important system components, e.g. “People are our most

important asset.” In recent decades, the magnitude of this importance has transcended

organizational borders. Society at large has proclaimed its human resources to have

vital needs that move beyond a “work force” status. As a consequence, the modern

personnel manager is located at the nexus of at least three major forces: (1) the

institution, as it calls upon one to provide an able and willing work force to accomplish

organization objectives, (2) institutional employees, as they ask for reasonable

fulfillment of physiological and psychological needs, and (3) general society , as it

demands often through legislation, that the institution assume a larger responsibility in

developing, enhancing, and protecting its human resources, with particular reference to

disadvantaged groups such as the handicapped, the aged, and minority races, religions,

and nationalities.

The role of the personnel manager has thus change through time. At first, the

personnel manager was an instrument of top management in procuring and maintaining

an effective work force. As knowledge expanded in executing this role, the manager

began to understand the necessity for ascertaining and accommodating to the needs of

the human beings who constituted that work force. He or she constantly searched for

that program which would support the accomplishment of both organizational and

individual objectives. The job was made more difficult by such factors as the rise of the

modern labor union, the increasing educational level of societal members, the
increasing size and complexity of the organization and its technology, and the insistent

and sometimes violent demands of less privileged segments of our society. This last-

named factor has led to the final major alteration of the personnel manager’s role. As

will be discussed at lent in chapter 3, the private organization is expected to recognize,

define, and attempt to fulfill a general social responsibility in addition to its originally

assigned role. Though society “permits” and encourages the use of its citizens as

means to organizational ends, the fact that they constitute and instrumental work force

in no way detracts from the fact that they are (1) human beings with certain inalienable

rights, and (2) society’s citizen with assigned rights and privileges. In this newly

expanded role, the personnel manager will at worst act as the organizations social

conscience, and at best will work, as an informed specialist, with all members of the

organization in determining and meeting the demands of this social role.

The modern personnel manager therefore requires a broad background on such

fields as psychology, sociology, philosophy, economics, and management. He or she

must deal with issues and problems that often do not have “right answers” obvious to

all. There will be required an ability to understand that which is not logical, a capacity to

protect pne self into other positions without losing perspective, and a skill in predicting

human and organization behavior. Reading or studying a text such as this will not

magically change one into an effective personnel executive. Study should be of material

assistance, however, in giving a perspective from which to view the field in suggesting

possible answers to current problems, and in helping to define the way toward further

improvement and research. Certainly, in this text the technical content of the field will be

thoroughly discussed. The personnel manager who does not meet the demands of this
initially assigned role may not be around to worry about the other two. We shall also

emphasize and attempt to define the nature of the forces brought to bear by individuals

and society. At the minimum, the personnel manager needs to keep his or her head

above water while swimming in the confluence of these three major streams of

influence.

DEFINITION OF PERSONNEL MANAGEMENT

It is appropriate and helpful to offer, at the beginning of the discussion, a definition of

the subject to be covered. In the following definition we are presenting and outline of

this entire text. In the first place, we are dealing with two categories if functions

managerial and operative. A manager is one who exercises authority and leadership

over other personnel the president of a firm is certainly a manager and so also is the

department head or supervisor. On the other hand, an operative is one who has no

authority over others but has been given a specific task or duty to perform under

managerial supervision thus the personnel manager is a manager and as such must

perform the basic function of management. This is true no matter what the nature of the

operative function. Yet a comprehensive definition of personnel management must

include also the operative function in the field. In outline form, the definition would

appear as follows;

1. Management functions

a. Planning

b. Organizing

c. Directing

d. Controlling
 2. Operative functions

a. Procurement

b. Development

It is therefore possible to summarize this entire text into the following sentence

personnel management is the planning, organizing, directing, and controlling of the

procurement development, compensation, integration, and maintenance of people for

the purpose of contributing to organizational, individual, and societal goals. A brief

elaboration of the component parts of this definition is given below.

PLANNING Effective managers realize that a substantial portion of their time

should be devoted to planning. For the personnel manager, planning means the

determination in advance of a personnel program that will contribute to goals

established for the enterprise. Presumably, the process of goal establishment will

involve the active and enlightened participation of the personnel manager with his or her

expertise in the area of human resources.

ORGANIZING After a course of action has been determined an organization must

be established to carry it out. And organization is a means to an end. Once it has been

determined that certain personnel functions contribute toward the firm’s objectives the

personnel manager must form an organization by designing the structure of

relationships among jobs, personnel, and physical factors. One must be aware if the

complex relationships that exist between the specialized unit and the rest of the

organization. Because of increasing expertise in this functions many top managements

are looking to the personnel manager for advice in the general organization of the

enterprise.
DIRECTING at least in theory we now have a plan and an organization to

execute that plan. It might appear that the next logical function would be that of

operation doing the job. But it has been found that a “starter” function is becoming

increasingly necessary. In our above definition, this function was labeled “direction” but

it may be called by other names, such as “motivation,” “actuation,” or “command.” At

any rate a considerable number of difficulties are involved in getting people to go to

work willingly and effectively.

CONTROLLING Now, at last the personnel function are being performed. But what

the management duty at this point? It is logical that its function should be that of control,

that is the observation of action and its comparison with plans and the correction of any

deviation that may occur or at times the realignment of plans and their adjustment to

unchangeable deviations. Control is the managerial function concerned with regulating

activities in accordance with the personnel plan, which in turn was formulated on the

basis of an analysis of fundamental organization goals or objectives.

It is believed that the four above-name functions are basic and common to all

manager. In Chapter 4 and 5, the personnel manager’s responsibilities for planning,

organizing, and controlling will be discussed. The essence of the fourth function,

direction, is so closely allied with the operative function of integration that its discussion

will be delayed until later in this text. Though all managers must unavoidably direct their

subordinates, the personnel manager should possess exceptional expertise.

There is a skill in managing that can be transferred to various operative areas,

but no one will deny that an effective manager must know what it is that he or she is
managing. The greater portion of this text is devoted to these personnel operative

functions.

PROCUREMENT This first operative function of personnel management is concerned

with the obtaining of the proper kind and number of personnel necessary to accomplish

organization goals. It deals specifically with such subjects as the determination of

human resources requirements and their recruitment, selection, and placement.

Slection and placement cover the multitude of activities designed to screen and hire

personnel, such as reviewing application forms, psychological testing, conducting

interviews, and inducting. These activities are presented and analyzed in Chapters 6 to

9.

DEVELOPMENT After personnel have been obtained, they must be to some degree

developed. Development has to do with the increase of skill, through training, that is

necessary for proper job performance. This is an activity of very great importance and

will continue to grow because of the changes in technology, the realignment of jobs, and

the increasing complexity of the managerial task. Discussion of both management

development and operative training will be presented in Chapters 10 through 13, along

with such supporting activities as performance appraisal and promotion programs.

COMPENSATION This function is defined as the adequate and equitable

remuneration of personnel for their contribution to organization objectives. Though

some recent morale surveys have tended to minimize the importance of monetary

income to employees, we nevertheless contend that compensation is one of the most

important functions of personnel management. Where employees do indicate a

decreasing interest in the importance of wages, it may be suspected that and adequate
remuneration program already exists. In dealing with this subject, we shall consider only

economic compensation. Psychic income is classified elsewhere. The basic elements of

compensation program are present in Chapters 14 to 16, with an emphasis upon such

subject as job evaluation, wage policies, wage systems, and some of the recently

devised extracompensation plans.

INTEGRATION With the employee procured, developed, and reasonably

compensated, there remains one of the most difficult and frustrating challenges to

management. The definition labels this problem “integration.” It is concerned with the

attempt to effect a reasonable reconciliation of individual, societal, and organizational

interests. It rests upon a foundation of belief that significant overlapping of interests do

exist in our society. Consequently, we must deal with the feelings and attitudes of

personnel in the conjunction with the principles and polices of organizations. This broad

problem, as well as the narrower related problems, such as communication, informal

organization, and labor unions, will be covered at length in Chapters 17 to 23.

MAINTENANCE It is only logical that the last operative function should be that of

sustaining and improving the conditions that gave been established. This would of

course, encompass the continuance of the functions mentioned above. But at this point

we should like to emphasize the specific problems of maintaining the physical condition

if our employees (health and safety measures) and of maintaining the physical attitude

toward the organization (employee service programs). As in all areas if general

management, research can and must continue to advance the effectiveness of the

entire program. Consideration of these three subjects constitutes the final section of this

text in Chapters 24 to 26.

 The purpose of all the activity outlined above, both managerial and operative, is

to assist on the accomplishment of basic objectives. Consequently, the starting point of

personnel management, as of all management, must be a specification of those

objectives and determination of the subobjective of the personnelfunction. The

expenditure of all funds in the personnel area can be justified only in so far as there is a

net contribution toward basic goals. For the most part these are goals of the particular

organization concerned. But as suggested earlier. Society is tending to impose human

goals upon the private business enterprise, goals that may or may not make an

immediate contribution to an organization particular objectives.

PERVASIVE NATURE OF PERSONNEL MANAGEMENT

Within an organized society, every subsidiary unit is formed for some primary

purpose or objective. The economic system is designed to allocate scarce resources

among competing economic ends for the purpose of enhancing the general standard of

living in material things. The objective of a manufacturing firm, an economic subunit, is

to produce and sell a product or service for a return of some type. Activities directly

related to the primary objective are often designated “line functions”. Thus functions

commonly designated as line within the manufacturing firm are production, sales, and

finance. Performance of these enables the firm to accomplish the primary responsibility

levied upon it by society.

It has been found that the performance of certain secondary activities will

enhanced the effectiveness of the primary. Thus, secondary function, often designated

“staff function,” are those that do not contribute directly toward the primary objective but

rather do so indirectly by facilitating and assisting in the performance of line work. In the
typical manufacturing firm, the personnel manager and the specialized unit are usually

denoted as “staff.” They assist line managers by supplying adequate numbers of

personnel, assisting on their training and development, and the like. But it should be

evident that it is neither feasible nor advisable to separate completely all personnel

management functions from line managers. All the responsibility for personnel work

cannot and should not be centered in a staff personnel department. In most areas, a

staff service unit can only assist operating managers rather than completely relieve

them of personnel responsibility. Thus all executives must unavoidably be personnel

managers. This responsibility does not deny the need for staff assistance. Despite the

seeming simplicity of the field, it has become increasingly complex because of such

factors as the growth of unions, the extension of government into the labor management

field, the creation of new techniques of personnel evaluation, and the variable quality of

human nature. Specialized staff activity in the personnel field can usually be justified in

the medium and larger-sized firms.

It should also be noted that society can alter its assignment of responsibility. It

can state that the firm should enhanced the material standard of living but that this must

be accompanied by affirmative action to assist culturally disadvantaged groups within

society. In this event, the personnel manager may become the instrument of society in

the enforcement of its decrees, thereby adding an element of authority that goes

beyond a secondary status. In effect, the primary mission of the firm has been changed,

leading to aredefinition of primary and secondary function. Though the personnel unit is

still predominantly a secondary staff activity in most firms, the trend toward greater
societal concern with the operation of private organizations may well lead to changes

ion status in the future.

Though emphasis in this given to personnel management in the large

organization, obviously similar functions exist in the firm with no specialized department.

The line supervisor may have to carry job specifications in his or her head, recruit and

hire personnel, induct and train them, and integrate them into the existing organization

with little or no assistance from others. Once may not be able to afford some of the

more advanced and expensive techniques of performing these function, but certain

funding concepts common to both large and small organization should be of value.

It should also be apparent that performing personnel function is as necessary on

the office, retail store, or governmental organization as on the more commonly cited

factory organization. The first personnel departments were formed for production

organizations, but obviously similar problems arose in procuring, developing, and

integrating clerks, engineers, salesmen, or professional government workers. Personnel

management seems to transcend all functions, regardless of the nature, size, or type of

personnel involved. Common problems demand common principles to assist in their

analysis and solution.

NATURE OF PERSONNEL MANAGEMENT PRINCIPLES

Numerous principles of personnel management will of course be set forth in this

book, and we should at this point indicate the nature of these principles. A principle is a

fundamental truth, generally stated in the form of a cause and effect relationship.

Principles are discovered by research, investigation, and analysis. Some people tend to
confuse principle with policy, the latter being a rule or predetermined course of action

established to guide an organization toward its objectives. It is to be hoped that when

policies are established by management they will be formed on the basis of known

principles. It is quite often happens, however, that we lack knowledge in an area where

we still have to make policy. Though we should recognized a close correlation of the

two in practice, we shall do well to keep the distinction clear. Policies should not be

construed as fundamental, unchanging truths nor should principles be considered rigid

rules applicable to all situations without change.

A second significant points concerning the concept of principles is that in the

social sciences they are no exact in their working. When people are part of the problem

it is naïve to expect that we can follow principles as if they were rules with sure

predetermined results. For example a commonly accepted principle of disciplinary

actions is that its administration to an individual in private will usually produce the most

satisfactory results in terms of future productivity and cooperation. Most managers

agree that this a principle a fundamental truth. Yet on a specific occasion a public

reprimand may well be the technique that well accomplish most for a particular worker

at a particular time given particular circumstances. We have in personnel management

and art rather than an exact science.

Many of the principles of personnel management have been discovered through

practice and general observation without controlled experimentation and research. As a

result social scientists tend to deny their validity and label them useful generalization or

theoretical concepts. It is suggested however that many of these practices have been

subjected to such repeated ise with reasonable success in the realistic laboratory of
practical experience that their designation as truths can be substantiated. In addition the

field pf personnel rests heavily upon such supporting disciples as psychology and

sociology in which there has been much controlled research. Such researched

principles would still have to be adapted to conditions of actual practice.

CHALLENGES OF MODERN PERSONNEL MANAGEMENT

We need not look far to discover challenging problems on the field of personnel

management. Managers may ignore or attempt to bury personnel problems but these

will not lie dormant because of the very nature of the problem component. Many

problems are caused by constant changes that occur both within and without the firm.

Among the many major changes that are occurring the following four will illustrate the

nature of the personnel challenge.

1. Changing mix of the work force

2. Changing values of the work force

3. Changing demands of employers

4. Changing demands of government

Changing mix of the work force

Though each person is unique and consequently presents a challenge to our

general understanding one can also appreciate broader problems by categorizing

personnel to delineate and highlight trends. Among the major changes in the mix of

personnel entering the work force are: (1) increasing number of minority members

entering occupation requiring greater skills (2) increasing levels of formal education for

the entire work force (3) more female employees (4) more married female employees
(5) more working mothers and (6) a steadily increasing majority of white collar

employees in place of the blue collar. The fourth challenge has had much to do with

many of the above listed changes.

Prohibition of discrimination and requirements for positive action to redress

imbalances in work force mix have led to greater numbers of minority personnel being

hired for all types of jobs. The proportion of blacks for example has increased

significantly in professional technical managerial, clerical, sales, and craftsman type of

jobs. However this group still holds a disproportionately large share of the less skilled

and lower paod jobs such as those of service worker and laborer. Steady increases in

the level of formal education would seem to bode well for continued change. Then

number of black college graduates in the work force doubled during the 1960s and it is

predicted it will double again by 1980.

Improvement in the educational level faor blacks has also been accompanied by

increased levels all along the line. 1972 approximately 15 percent of the civilian labor

force had four years or more of college. This projected to rise to 18.5 percent in 1980 to

21.2 in 1985 and to 23.8 in 1990. In 1972 the percentage of the labor force with eight

years or less of schooling stood at 33. By 1990 this is expected to decline to about 6

percent. These projections present both a serious problem and a vast challenge for

personnel managers. In the past employers expectations with respect to hiring

requirements have tended to rise with increases in the qualifications of the jobseekers

themselves. If not altered this practice could contribute to continued discrimination

against better-educated minorities. It definitely will contribute to the alienation and

frustration of all employees if they are placed on jobs for which they are overly qualified.
Increased competition for promotion among greater numbers of more highly qualified

personnel can create serious conflicts and strains within our organizations. Rather than

relaxing with the feeling that more of a good thing (education) is even better if we do not

redesign jobs to effect a match with better qualified personnel we are contributing only

to frustration absenteeism grievances and turnover.

Laws as well as activist groups have contributed ti greater numbers of female

employees entering the work force. In 1974 approximately 32 million of a total civilian

work force of 93 million employees were female. This number is projected to rise in

1980 to 37 million female workers. This would be double the number employed in 1950

reflecting a major change in life-style in this country. Also of significance to the manager

is the fact that an increasing proportion of these employees are married with children

below the age of six years. For every two married men in the work force there is one

married woman. Ten years ago this ratio stood at 2.6 to 1 and twenty years earlier it

was 3.5 to 1. Over 40 percent of the married women in this country are in the civilian

work force. Having children below the age of six years makes it quite difficult for the

nether to become a regular employee of an organization. Yet the percentage of mother

with children this young who have entered the work force has risen sharply 13 percent

in the past decade. This change in the work force mix also poses challenges for the

firm. Many have met them by providing flexible hours of work permitting sharing of a job

by two or more women and providing child care during working hours. More serious

problem lie in the areas of improved job placement promotion and pay. These are

discussed at greater length in Chapter 3.

 One of the more interesting changes in skill mix that has occurred in our society

is depicted in Figure 1-1. In 1956 white collar jobholders outnumbered blue collar

workers for the first time. By 1980 almost one half of the total work force is expected to

hold white collar jobs. Within this general category one of the fastest growing segments

is the professional and technical class encompassing such specialties as scientist,

engineer, mathematician, accountant, lawyer, and chemist. Management of the

“knowledge worker” is one of the foremost challenges that the personnel manager must

face in the modern industrial society.

In researching the utilization of highly educated and skilled professionals

considerable attention has been given to their attitudes toward both the employing

organization and their particular disciplines or professions. If the dominant posture is

one of dedication and service to the pursuit of professional knowledge using the

organization as a means to that end the attitude is labeled “cosmopolitan.” If on the

other hand the organization is accorded primary loyalty with professional skills being

exclusively adapted toward its ends the attitude is termed “local.” Obviously and

professional who is employed by an organization has elements of both “localism” and

“cosmopolitanism.” As suggested in Figure 1-2 attitudes can be positioned in one of four

quadrants: (1) relatively indifferent (2) heavily oriented toward the profession (3) heavily

oriented toward the organization and (4) oriented significantly toward both the

profession and the organization.

In a study conducted by Miller and Wager these four different orientation were

discovered among 390 engineers and scientists in two units of a major American

aerospace company. The researchers utilized a questionnaire technique and labeled 31

percent “cosmopolitans,” since they exhibited high professional orientation

accompanied by a low bureaucratic attitude. Members of this group were largely

physical scientist with Ph.D. degrees working in the basic science research laboratory.

They exhibited such attitudes as “I would most like to publish a paper in the leading

journal pf my profession event though the topic might be of minor interest to the

company,” and “In the long run, I would rather be respected among specialist in my field

outside the company.” Thus the cosmopolitans view the universe as the field of their

profession wherever they find themselves. They are not necessarily bound to the

current organization for which they happen to be working and they tend to be highly

mobile. They often ask questing and make critical comments that traditional managers

fell to be bordering on disloyalty to the organization. Yet the skills and scientific

viewpoint of the cosmopolitan are the fountainhead of the ideas that contribute to

organization progress and growth.

Twenty seven percent of the 390 engineers and scientists were characterized as

“local,” since they possessed a relatively low orientation to professional values with a

high concern for and loyalty to the organization. The greater bulk of these were

engineers without the Ph.D. if the professionals remain with a single organization for a

considerable time the attitude tends to become more local in character. They tend to

agree with such statements as “Being able to pursue a career in management is very

important to me,” and “Having a job which permits me to take on progressively more

administrative responsibility is important to me.” Engineers more often that scientists are

likely to move toward this set of values. The significant reference group os management

rather than outside professionals in the field. “Locals” are usually more cooperative and
willing to take direction from management. The “cosmopolitan” often contends that

freedom and dedication to scientific values will produce greater total net return to the

enterprise despite short run costs caused by uncooperativeness time spent on projects

of tittle vakue to the organization and at times outright insubordination. An interesting

paradox is presented by the fact that the engineer who tends to be more oriented to the

organization than the scientist is also more prone toward unionization. Scientists are

less likely to submit toanycontrol company or union. It must be recognized that the

terms “local: and “cosmopolitan” are relative in nature that just as engineers are more

“local” than scientist they in turn are more “cosmopolitan” than craftsmen or assembly

line workers. Only a small percentage of engineers have been organized into unions

the largest of which are the American Federation of Technical Engineers and the

Scientific Professional and Engineering Association each having approximately 13000

members.

The remaining personnel in the Miller and Wager study were divided into the two

hybrid types 15 percent ware “indifferents,” with low orientation to both sets of values

and 27 percent were “local cosmopolitans,” who exhibited high orientations to both the

profession and the organization. This suggests that an entering engineer might have

begun with high orientation to either the profession or the organization or both but was

slowly transformed into an “indifferent” as he or she experienced lack of progress in

both areas. The “local cosmopolitan” was more likely to be an engineer who had worked

for the company for a shorter period of time. It is apparent that the management of

highly educated and skilled personnel poses a considerable challenge to personnel

management.
Changing values of the work force

The changing mix of the work force inevitably leads to introduction of new values

to organizations. In the past and continuing into the present the work force of America

has been heavily imbued with a set of values generally characterized by the term “work

ethic.” Work is regarded as having spiritual meaning buttressed by such behavioral

norms as punctuality, honesty, diligence, and frugality. One job is a central life interest

and provides the dominant clue in interpersonal assessment. A work force with this set

of values is highly adapted to use by business organization in their pursuit of the values

of productivity, efficiency, and effectiveness.

There is growing evidence that the work ethic is declining in favor of a more

existential view of life. Instead of organization providing the basic guides to living

persons are responsible for exploring and determining for themselves what they want to

do and become. With this philosophy work becomes only one alternative among many

as a means for becoming a whole person in order to do one’s own thing. Family

activities, leisure, avocation, and assignments in government, churches, and schools

are all equally viable means through which person can find meaning and become self-

actualized. The absolute worth of the individual is a value which is merged with the

concept that all people are member of the great guman family. Concerning specific for

its accompanyingmaterialistic symbols becomes lessimportant than self-expression

through a creative accomplishment. Private lives outside the job and firm are relatively

autonomous accompanied by an increasing reluctance to sacrifice oneself or one’s

family for the good of the organization.

 A vice president of General Electric Company gas predicted a number of specific

changes in values for the decade of the seventies. Among these are moves toward (1)

quantity of life over mere quantity, (2) equity and justice for the employee over

economic efficiency, (3) pluralism and diversity over uniformity and centralism, (4)

banished as a symbol of regimentation in some firms may have to reappear in different

role of time accumulation. Some laws require penalty payment for hours in excess of

eight per day and/or forty per week. Supervisors will have to train and delegate self-

supervision rights for hours when they are not present. Outsiders will have to be

informed of the restricted core time hours when they can expect to find all persons

available.

Currently it is estimated that no more than 100 firms with approximately thirty thousand

employees in this country employ some type of flexi time. Movement to a four day week

has been more popular. However it is apparent that the four day week firms that gave

moved to this schedule some 15 percent have abandoned the effort as being

dysfunctional. Fatigue is cited as the principal disadvantage of compressing the

schedule into four days.

Changing demands of employers

Changes are not all on the side of members of the work forces. Organizations

constantly undergo changes in their internal environments in response to competitive

pressures as well as advancing technological progress. Two of the many major changes

are (1) growth of the huge international organization and (2) steadily increasing

attempts to automate operation. Effects of these upon personnel programs will be briefly

outlined.
 The most important face of the personnel process in the establishment and

operation of overseas plants and facilities is that of selection and placement of key

personnel. Plains should be taken to assure that selectees possess certain basic

characteristics. Among these are: (1) a very real desire to work in a foreign country (2)

spouses who have actively encouraged their mates to work overseas (3) cultural

sensitivity and flexibility (4) high degree of technical competence and (5) a sense for

politics. One survey of the opinions of 127 overseas managers revealed that they

thought that the spouse’s opinion and attitude should be considered the number one

screening factor. Cultural sensitivity is also essential if we are to avoid the image of the

one study emphasized the great importance of setting consistent and accurate initial

expectations about the work situation of the overseas assignment. This would require

considerableeducation of the candidate concerning the culture country politics language

and business setting of the international facility.

That a challenge definitely still remains in this area is revealed by a survey of

personnel activities actually undertaken for a group of overseas managers.

Approximately 80 percent of the firms involved used no tests in screening for these

assignments of those who did only 20 percent attempted to validate them. Two thirds of

the firms never bothered to consult candidate’s spouses concerning their attitudes and

feelings about the assignment and the designated country. Two thirds provided no pre

departure training for selectees to acquaint them with such matters as the people their

political system and their government. Though the selectees will learn in time this initial

ignorance not only leads to many daily mistakes and gaffes but it also manager must
take more active role on this steadily increasing challenge resulting from changed

employer demands.

The second illustration dealing with altered employer demands is automation

though it has been given various specific meanings in its simplest terns it is applied to

machine and work processes that are mechanized to the point of automatic self-

regulation. Among some of the major effects upon personnel management of

automation are the following:

1. The restructuring of production jobs. Some of the routine dull monotonous

jobs will be eliminated. New jobs will be created with a “systems

viewpoint” rather than the “specialized task” perspective introduced by

time and motion studies of the past. And increase substitution of capital for

labor.

2. Necessity for upgrading the work force. The restructuring of jobs will levy a

considerable burden upon personnel managers to retrain and upgrade

personnel to qualify for these new jobs. This will require more classroom

instruction as well as on the job training.

3. Structure unemployment. A most challenging problem to all those

interested in effective personnel management is the adjustment of

thepresent work force in terms of quantity. Some jobs will be eliminated

and others created that call for higher levels of skill and knowledge. Some

personnel cannot be retrained because of fundamental deficiencies in

education and abilities. Some personnel cannot be reabsorbed even if

retainable. The unemployment that results is a problem of such

 significance and complexity that it requires the efforts of not only private

industry but labor unions and all levels of government as well.

4. Labor relation problems and adjustments. Restructuring of jobs will also

affect the organization of corresponding labor unions. Some unions will die

though unwillingly as a specialized occupation is automated out of

existence. Changes in union jurisdictions would also mean changes in

seniority units. The trend may well be in the direction of larger units

covering a series of jobs or occupations or perhaps encompassing the

entire plant or company.

5. Adjustment in wage structures. The intricate tie in among jobs and work

stations in a highly mechanized or automated plant tends to place the

emphasis upon cooperating rather than competition. The individually

oriented piece rate wage system may have to give way to systems which

reward the group. As jobs are altered to fit a system the related pay

structures will require corresponding adjustment. Basic pay plans may

gain be based largely on time spent at work with extra compensation

geared to improvement in group output.

6. Human relations difficulties. The restructuring and revised layout of work

necessarily involves the alteration of existing patterns of interpersonal

relationships. The size of any work group could well decrease new layouts

could force people to in comparative isolation. This may cause problems

of adjustment as evidenced by the demands of workers on one British

factory of new fringe benefit of “lonely” pay. Certainly it is easy to predict

 the human problems that accompany the introduction and grudging

acceptance of changes involving the loss of job or obsolescence of skills

developed over the year. Automation is introduced for technical and

economic reasons but its immediate consequences and difficulties are

essentially human in nature.

Changing demands of government

Throughout this text we will deal with pertinent national legislation when

undertaking the discussion of particular functions of personnel management. It is well at

sone point however to recognize and appreciate the fact that personnel management is

becoming increasingly legalized in our society. The following incomplete listing of major

items of feral regulations pertaining to each personnel fiction should support this

contention.

Procurement

Civil Rights Act of 1964 (Prohibits discrimination in hiring on basis of race, color,

religion, nationality, and sex.)

Equal Employment Opportunity Act of 1972 (Empowers federal comminssion to

undertake direct court action.)

Executive Order 11246 (Requires contractors of federal government to establish

affirmative action programs ion hiring minority groups.)

 Rehabilitation Act of 1973 (Requires government contractors to take affirmative

action to hire handicapped personnel.)

Development

Civil Right Act (Applies to training programs.)

Manpower Development and Training Act of 1962 (Funds special programs for

the unskilled.)

Economic Opportunity Act of 1964 (Funds special programs for the hard core

unemployed.)

National Apprenticeship Program Act of 1937 (Details basic program

requirements for certification.)

Compensation

Civil Rights Act (Applies to pay.)

Davis Bacon Act of 1931 (Establishes minimum wages and overtime hours for

government construction work.)

Equal Pay Act 1963 (Requires that men and women on same job get equal pay.)

Fair Labor Standards Act of 1938 (Establishes minimum wages and overtime

hours for firms engaged in intestate commerce.)

Walsh Healey Public Contracts Act of 1936 (Sets minimum wages and overtime

hours for contracts in excess of $10000.)

Integration
 Age Discrimination Act of 1967 (Prohibits discrimination against older workers.)

Labor Management Disclosure Act (Landrum Griffin) of 1959 (Protects union

members from abuse by union officials and requires numerous reports.)

Labor Management Relations Act (Taft Hartley) of 1947 (Levies obligation s for

bargaining upon labor unions.)

Labor Management Relations Act (Wagner) of 1935 (Protects right to form

unions levies bargaining obligations on employer.)

Norris LaGuardia Act of 1932 (Limits use of injunctions against labor unions.)

Maintenance

Employee Retirement Income Security Act of 1974 (Protects worker rights in

private pension plans.)

Occupational Safety and Health Act of 1970 (Sets standards and enforces them

through inspections and fines.)

Social Security Act of 1936 (Sets up old age and survivors insurance and

Medicare and stimulates state unemployment compensation.)

In addition to these major pieces of federal regulation all fifty states have

legislation that impinges upon the personnel program. Prominent among these are

worker’s compensation laws that require employer insurance against injuries on the job

and unemployment compensation laws that require accumulation of funds for payment

to workers in the event of layoff. Though one would not like to see a personnel manager

design a program with a basic logistic bent it is undeniable that one requires the
services of a lawyer to monitor compliance with the law. Our society is becoming

increasingly legalistic in nature and great emphasis has been devoted to the protection

and enhancement of our human resources.

SUMMARY

A survey of the function and challenges of personnel management supports the

contention that the modern personnel manager must operate at the nexus of three

major forces. First one must plan, organize, direct, and control the procurement

development, compensation, integration, and maintenance of a work force in order that

the organization may accomplish its designated objectives. In this view the work force is

an instrument of the organization and the personnel manager provides and shapes that

instrument. Organization requirements change with time as in illustrated by the growth

of large multinational corporations.

EVOLVING APPROACHES TOWARDS PERSONNEL

There is usually something to be gained by taking a look at the past. We can often

determine more correctly the direction in which we are headed if we view it from the

perspective of past events and we can often mange to avoid actions that gave been

proved by past experience to be mistaken. For the student of management the pas

helps to give a clearer conception of the present status of the subject. For these

reasons in this chapter we shall present a brief summary of selected significant aspects

of the history of personnel management.

It should be noted at this point that we shall make no attempt to cover in detail

and in chronological order various events that have some bearing on the subject. We
might debate whether to start with the Industrial Revolution and economic and historical

landmark or to go back still further and deal with the master slave or master serf

relationships. We shall avoid such a decision by emphasizing in this chapter the

evolution of management’s basic attitudes or approaches toward employed personnel.

In considering these basic approaches we note that some pressing “modern” personnel

problems have been around for quite some time. Yet the fact that systematic attempts

to deal constructively with them have a rather short history indicates that the basic

approach has undergone considerable change in our lifetime.

Mechanical approach toward personnel

Industrial management in this country has done an excellent job in the mechanical and

electronic implementation of production. For over a century managers have applied the

principles of interchangeable parts transfer of skill from human to machine and

operational specialization to machinery equipment layout and the general plant. This

has been accomplished with a high degree of success. It is not surprising therefore that

the same basic mechanical approach should be applied to labor. If machines can be

made more productive by extreme specialization so can people. Jobs can be created

requiring such little ability that bodies properly numbered can be interchanged readily.

Just as we try to purchase machinery and plant with the lowest direct outlay so we can

hire labor as cheaply as possible. Just as we try to keep plant and equipment operating

economically as long as possible and junk them for better when necessary so we can

use and discard human labor.

This basic approach which we have labeled “mechanical,” has also been called

the “commodity approach” or the “factor of production concept.” These titles are
descriptive of the attitude which assumes that labor must be classified with capital and

land as a factor of production to be procured as cheaply as possible and utilized to the

fullest. The fact that a human being is involved in this factor is little significance. In effect

we are adopting a closed system stance or strategy in our approach to the management

of personnel. We assume that personnel are controllable, predictable, and

interchangeable. The firm is sheltered from outside forces such as government or labor

unions that might attempt to “interfere” with the mechanistic approach to personnel.

Related to this attitude was the “scientific management” movement which also adopted

a rationalistic, deterministic, and closed system approach to the management of the

enterprise. Its recognized founder Frederick W. Taylor introduce such techniques as

motion study tine study incentive wages and specialized foremanship in pursuit of

technical efficiency. As he stated, “Each man must learn how to give up his own

particular way of doing things adjust his methods to the many new standards and grow

accustomed to receiving and obeying direction covering details large and small which in

the past have been left to his individual judgement.” Man is viewed as an excessively

simplistic human system who only strives to avoid pain and obtain money the “economic

man” model.

Since labor is human with multiple complex motives the mechanical approach

usually results in the creation of various management problems personnel problems.

Many of these problems are quite old and have their beginning with the original

adoption of this approach toward labor. Though the philosophy toward personnel is

change and has change we are still struggling with the aftermath created by the
mechanical approach and tois evident that mangers still exist whose attitudes are

influenced by the of old philosophy.

It is well at this point to survey briefly a few of these pressing modern personnel

problems whose roots we find in the past. Without implying that these are the only such

problems we believe that this presentation should assist in providing some perspective

for the personnel function as performed in the present. The selected problems are (1)

technological unemployment, (2) security, (3) labor organization, and (4) pride in work.

Some indication will be given of how the problems arose what management did about

them using the mechanical approach and what the consequences were of such

proposed solutions.

Technological unemployment

Loss of jobs through the development of new machines or new techniques of work is

termed “technological unemployment.” Labor is replaced either by machines or by

management innovations that result in more work being done by fewer people. The

mechanical approach of management toward technical problems pays off in the

immediate sense. In that same sense the losses to labor are obvious. Reactions of

labor in the past were not greatly different from those of today to similar events fear and

resistance. Yesterday there were riots and attempts to sabotage the new machinery.

Today there are more subtle types of resistance such as slowdowns and union

negotiated introduction of labor-saving devices.

In dealing with this problem we might as well admit at the outset that the

introduction of technological improvements is going to create some immediate problems

particularly in the short run displacement of personnel. The solution will them be

directed toward a minimization of such unemployment and a lessening of the burden

upon the personnel actually displaced.

Labor unions are not against technological progress peruse. Such progress is the

foundation of our high economic standard of living. Machines expand over 90 percent of

the work energy demanded by production and few would like to go back to the “good old

days” of than labor. It has been demonstrated that in the economist’s long run greater

employment results from these technological improvements. The newer techniques

result in a decrease in the price of the product, the lower price results in increased sales

and production and after the required adjustment takes place our unemployed workers

is recalled. Though the effect in the long run is beneficial we still have the problem of

the workers need to eat and live in the short run. He or she may be recalled to another

type of job. Technological improvements usually result in the modification of jobs and

often in their elimination. It sometimes happens that an entire occupation such as glass

blowing is practically wiped out by the introduction of machinery. The reabsorption of

displaced personnel may require extensive retraining and often for a time personal

adjustment to lower incomes.

What are some of the proposed solutions to the personnel problem of minimizing

the adverse effect of technological changes? First, it should be pointed out that forover

century industrial managers in general did not particularly worry about the problem and

that they mechanically laid off the employee. This was the free enterprise system in

which employees looked after themselves. But growing public dissatisfaction with the

manner in which this problem was being ignored stimulated the proposal of some
individual solutions. A few isolated companies, such as Procter and Gamble, advanced

the philosophy of sharing part of the company’s profits with employees in order (1) to

allow workers to benefit from the company’s improved position and (2) to provide some

additional funds to help tide the workers over in case of unemployment. This solution

was not widely accepted to say the least though the Procter and Gamble plan started in

1886, exists to this day. A few companies such as Nunn-Bush Shoe Company, Hormel

Company, and again Procter and Gamble, proposed the idea of guaranteeing an annual

wage for all eligible employees. Though they might work a short week or be laid off

entirely covered employees would continue to receive pay for a limited time a year

being, in most plans the maximum. These employer initiated guaranteed annual wage

plans did not spread. In 1936 the federal government in the social security act impose a

responsibility on private industry for partially financing the out of work employee through

unemployment compensation. Funds collected from taxing employers are available to

eligible persons seeking work. These funds are administered by state employment

agencies and provide some weekly compensation for limited period. In the 1950s we

had the union version of the guaranteed annual wage as an imposed solution to this

problem. In most instances, this means an employer financed supplementation of the

unemployment compensation which would raise the total amount paid to the employee

to over 50 percent of the bse wage. It should be noted that these plans cover all types

of job losses other than discharge for cause and organized strikes. Perhaps the two

moist common reason for job loss are technological change and layoff due to the

reduction in the need for output.

 All the above cited plans profit sharing, unemployment compensation, and

guaranteed annual wages will be discussed in this text. Our purpose at this point is to

demonstrate (1) that we are dealing with a very old personnel problem, (2) that the

problem was long ignored by private industry, (3) that the problem will not take care of

itself through relying on the usual long run economic adjustment and (4) that solutions

imposed from without, by government and labor unions will fill the void left by private

industry. Few thinking people oppose these technological improvements but many are

short run effects on employment.

Security

It is evident that decreased economic security is also a current problem that results

partially from other problems, such as technological unemployment and in turn creates

still other problems, which lead to the creation of labor organizations. The

mechanization of production creates the factory system. With the forming of factories

labor must move from a predominantly agricultural environment to the locale of a city.

The tool or machine assumes greater importance and the worker is often relegated to

the position of machine tender. The uncertainty of steady employment, coupled with the

problem of coming old age, works to produce a greater feeling of economic insecurity.

Granting the increase in the insecurity of employees, we might ask why

management should be concerned, in a free competitive society. Such unconcern was

at one time attitude of industry in general a philosophy that was consistent with the

mechanical approach. This reaction to the problem proved to be wrong, and outside

forces stepped in to impose certain solution. In the first place the workers insecurity led

to the formation of labor unions in order that they might acquire a measure of control
over some of the factors bearing on economic security. Secondly the government again

entered the picture with such requirements as the following:

1. In 1935 the government in the National Labor Relation Act, indicated that

promoting unionization and collective bargaining was to be the national policy.

2. In 1936 the Social Security Act created the Old Age and Survivors Insurance

program, which force industry to contribute to retirement pensions.

3. In 1947 the National Labor Relations Board ordered employers to bargain with

labor unions on the subject of private pension plans.

4. In 1974 the Employee Retirement Income Security Act required employers to

insure their private pension plans against default, and to make provision for

employee ownership of individual shares (vesting) after minimum years of

service, thereby avoiding total loss of pension if separated from the firm before

retirement.

This is not to say that many private employers are not today voluntarily installing

various programs to promote employee security. But it is apparent that both unions

and government feel that privateenterprise by itself will not do enough. Increased

employee security can be rationalized on the basis that it contributes to increased

employee productivity. It is apparent however that business firms cannot “prove” this

relationship to the points that it will voluntarily undertake all the programs that

society feels is necessary for its human resources.

Labor organization
Management’s indifference to the requirements of its personnel contributed heavily

to the creation of labor unions. Immediately after the formation of factories, there

were attempts to create unions in order to protect against management arbitrariness,

management often seemed unaware that it was initiating labor discontent. When

unions were actually formed, various techniques were utilized to destroy them. Labor

organization grew at a very slow pace through the nineteenth century because of

such factors as the following:

1. Periodic economic depressions, during which union members broke ranks to

obtain any kind of employment

2. Immigration, which supplied workers willing to take less than union men

3. The frontier, which always beckoned when things got rough with an Eastern

employer

4. The public attitude, which was generally opposed to labor organization,

considering it antagonist to private property rights and freedom of the

individual

5. The attitude of all branches of government, which was a reflection of the

public attitude cited above

6. The expenditure of union energy and funds for “uplift” unionism concerned

with political reform rather than with the “business” unionism of dealing with

employers for better wages hours etc.

7. The aggressive efforts of most managements in actively combating the

efforts towards unionization

These factors constituted a decided brake on the labor movement. As each was

modified or eliminated the membership of unions tended to grow.

The first attempt at national organization that met with any degree of success

was the ill-fated Knights of Labor, a union that accumulated over 700000 members in

the 1880s. This organization had in it several defects that led to its early demise. Among

them were (1) a highly centralized form of control under one man, (2) a heterogeneous

membership, which included wage earners of all types and even some small employers,

and (3) a great interest in “uplift” unionism. The American Federation of Labor, formed

in 1886, profited by these mistake and established a labor organization which last to this

day. The federation base its form of unionism on the organization of homogeneous

groups of employees along craft lines. The fact that it was formed as a federation is an

indication of a decentralization of authority. In addition, the basic policy of the AFL was

to refrain from direct participation in politics, a policy which was followed intil the 1940s,

when the passage of the Taft-Hartley Act jarred the organization away from this

philosophy.

Almost from its inception, the American Federation of Labor dominated the labor

movement. During these years, industrial management was well aware of the efforts

being made along the line of employee organization. Many attempts mostly successful,

were made to halt the spread of unionism. A large number of these attempts involved

force and violence. Once interesting example should demonstrate the attitudes of union

and management and the types of activity utilized by both sides in these contests.

The steel industry in 1892 had a union of skilled workers, the Amalgamated

Association of Iron, Steel, and Tin workers. It was a fairly strong union. The Homestead,
Pennsylvania, plant of the Carnegie Steel Company had been struck by this union even

though relations between company and union had been fairly friendly prior to this time.

Carnegie, who had stated that he was wholly in favor of unions, was away in Europe

and had left the factory in the hands of the plant manager, Henry Frick. A wage cut

brought on the strike whereupon Frick shut down the entire plant and prepared to

protect it. The workers seized the mill property. Frick rose to the occasion by hiring

some three hundred Pinkerton detectives, whom he armed with Winchester rifles and

placed on two barges which were towed up the Monongahela River near the plant

property. For one full day a battle that would have done credit to almost any small ward

raged on the banks of the Monongahela. The strikers tried to sink the barges with

cannons, and when this failed the poured oil on the water and set it afire. The detectives

with three dead and several wounded surrendered and were marched out of town. Frick

then appealed to the Governor of Pennsylvania for aid and one week later the state

militia took over the town. With this protection the company reopened the plant and

started to bring in outside personnel. It was estimated that only eight hundred out of

nearly four thousand strikers got their jobs back. So thoroughly was the job done that it

was not until the 1930s that another effective union was established in steel.

The above cited example is not presented to secure sympathy of blame for either labor

or management. Our purpose is to demonstrate the unenlightened role played by both

parties. Much of the stimulus toward labor organization was provide by management

activity.

By 1916 there were approxcimatly three million members of labor unions. During

the next four years period, the number was almist doubled, because of wartime
prosperity and favorable government attitudes. As usual the movement suffered during

the ensuring short depression and managed to stabilize again at about three million

during the 1920s. With some further losses during the depression of the 1930s, the

membership stood at less than three million in 1933. Twelve years later there were

approximately fifteen million union members. The most powerful factors contributing

toward this increase were the favorable public attitudes, wartime prosperity and

passage in 1935 of the Wagner Act, the Magna Charta of Labor Collective bargaining

was pronounced our national policy, and the right to organize was protected.

Management’s authority over another function was reduced and rigorously regulated.

In 1972 union membership stood at 20.8 million, the highest numerical total in

history. Most of the current membership, some 16.4 million, are in union affiliated with

the American Federation of Labor-Congress of Industrial Organization; the rest is in

nonaffiliated unions such as the Teamsters, United Auto Workers, United Mine Workers,

and various local independents. Approximately 21.8 percent of the total labor force is

organized into unions. This represent a decline from a high of 27.1 percent reached in

1953. It is evident however that despite this decline turning back is impossible the labor

union is here to stay as a definite factor in economy. A philosophy toward unionization

different from that of pre-1935 must prevail in the future. We do not suggest that since

union have come this far management should accpt them completely. Such acceptance

is neither disable nor legal. But it should be evident that this problem of labor

organization is one of the foremost of our time and requires more constructive thinking

than gas been evident in the past. Both labor and management would do well to

disclaim pure and righteous actions in the past and to concentrate on the practical
problem of mutual survival in a comparatively economic system. Both must basically

change their attitudes and the change of managements points of view may often be a

prerequisite to a change on the part of labor.

Decreased pride in work

The tightly designed organization structure and precisely planned work system have

played a role in lessening the freedom of the individual organization member. On the

operative level the increasing transfer of skills to machines has often left the worker with

either a task of machine tending or no task at all. For managers introduction of

computers and data processing system has served to regulate more closely their

activities. Chris Argyris has suggested that industrial management in general has

tended to underestimate the intelligence, resourcefulness, goodwill, and creativity of the

American worker. He contends that jobs have been designed that call for docility

passively, submissiveness, and short term perspectives. In his terms the net result is

psychological failure. We should therefore be concerned with a resulting absence of

individual pride in accomplishment engendered by traditional structures of organization

and operation.

As we consider this problem, we should first ask if pride in work is necessary. As

long as the employee grinds the work out day after day regulated by a system of

production and managerial controls, why worry? Yet when a problem is ignored certain

solution are contributed by others which may not be the most desirable. This

worksituationas we have briefly described it is essentially the plight if the mass

production worker, though we have the same problem in many occupations. The CIO

split from the AFL in 1936 for the specific purpose of representing this group of worker
has led to more unionization. The CIO of course later rejoined the AFL to form the AFL-

CIO in 1953.

There are no laws or union demands that require management to create

employee pride in work. The management with a mechanical approach toward labor

has no interest consequently, it can see no need and therefore no possible profit in

considering the employee’s psychology. Further analysis of this problem has fed many

to change their minds and thus their approach to labor. If stimulated employees can

often utilize their talents to make greater contributions than the minimum required.

There is a large relatively untapped reservoir of ability, loyalty and interest. As we shall

note later the individual human subsystem is not so simple as the economic-man model

would propose. The employee has options other than compliance, suggestion that a

close-system strategy is not really possible.

Of all the problems presented in this series, this is the most difficult to solve. It is

even difficult to discuss, inasmuch as it cannot be seen. Many people disclaim any need

or desire for pride in work. Yet the need is present and when there is no constructive

outlet the worker’s energies are diverted toward other channels which often prove to be

undesirable to management. The treatment of surface symptoms by mechanical

management is tantamount to inventing rubber gloves to handle leaky fountain pens.

Those with less confidence in the mechanical manipulation of people have been doing

some work on this problem, which will be treated in a later chapter. But it is fair to say

that even now the surface has been merely scratched. To some we ae in the dilemma

of choosing between high productivity through specialization and mechanization and the

reaction of employee satisfaction while producing. To others there can be a

considerable overlap of interest between the individual and the organization and jobs

can be redesigned that simultaneously enhance productivity and human satisfaction.

Various othe problems of personnel could be classified as a part of this series.

But we feel that the essential point has been made that management has played a large

part in creating many of our modern personnel problems and that these problems have

been too long ignored. Much of the progress made concerning these and similar

problems has taken place within the last twenty tears. Personnel management is a

youthful, skilled profession dealing with some old and ingrained problems.

PATERNALISM

Although not all firms and managers held with the mechanical approach toward

labor it was fairly predominant in our economy up until the 1920s. Then suddenly there

was a drastic reversal of form by a substantial segment of industrial managers. Some

believe that a different approach was created by a fear of labor union growth for during

World War I the union membership almost doubled in number. Employees had

demonstrated that they could escape from the managerially engineered close system.

As employers observe the breakdown of total control they attempted to reclose the

system by demonstrating to employees that there was little need for an outside force the

labor union. They began to undertake “voluntarily” a number of humanistic activities that

they, the “fathers,” felt that the employees needed.

Paternalism is the concept that management must assume a fatherly and

protective attitude toward employees. The cold impersonal attitude of the commodity

concept is now replaced by a personal and sometimes superpersonal attitude of

paternalism. The 1920s were the period during which personnel management became

known as the glamor field of management. Here is where the need arose for the

“backslapper,” the “personality boy,” and the man whose sole qualification was “liking

people.” During this time very elaborate personnel programs were developed,

emphasizing such activities as company stores, company homes, recreational facilities,

and the like. If the objective of this approach was to contain unions it succeed for a time

since the labor movement actually decreased in membership during this period. If the

objective was that of buying employee loyalty and gratitude, it failed, since the

employees considered themselves adults rather than children.

We do not believe that merely supplying many benefits such as housing,

recreation and pensions makes a management paternalistic. It is the attitude and the

manner of installation that determine whether or not a management is paternal in its

dealing with employees. Of firms that offer identical benefits one might be properly

labeled paternalistic and the other might not. To be paternalistic two characteristics are

necessary. First the profit motive should not be prominent in management’s decision to

provide such employee servives. They should be offered because the management has

decided that the employee needs them, just as a parent decides what is good for the

childred. This is not to say that the services may not prove to be profitable, but profit is

not the prome reason for their installation. Secondly the decision concerning what

sevices to provide and how to provide them belongs solely to management. The father

makes the decision that he feells is best for the child. If a firm offers a program of

employee services beacause (1) it feels that such treatment of labor is a sensible and

profitable undertaking that will advance the entire organization or (2) the employees
request and participate in the establishment of such programs, or (3) the labor union

demands such programs, then that firm cannot properly be labeled paternalistic.

It is interesting to note that the paternalistic era coincided with the initiation

of a second school of management though. Just as the first, scientific management,

developed in conjunction with the mechanical approach, the second school grew out of

a series of lengthy experiments at the Hawthorne plant of the Western Electric

Company beginning in 1924. This school, variously titled “human relations” and

“behavioral,” encouraged the adoption of a new model of man as a social being. The

pendulum swung from one extreme to another from simplistic economic man to

simplistic social man. Developing employee morale was viewed as a certain means to

higher productivity. The interest of human and organizations were deemed to be

substantially identical. The impact of this school of thought, populated primarily by

psychologists and sociologist was felt primarily in the 1940s and 1950s. Just as the

scientific management philosophy exacerbated certain human problems within the

organization the softer human relations programs did not meet the requirements of

organizational effectiveness in the experience of many managers. The problem is

instead a highly complex one.

Social system approach

Paternalish died largely during the Depression of the 1930s, though certain

managements still claim to utilize this basic approach even today. Having learned

through experience of the values and dysfunctions of both prior approaches. Managers

and researchers begionto realize that the management of personnel is no simple

process. The pendulum has moved from its extrem simplistic positions to a more
complex location involving analysis of multiple and often conflicting forces. We shall

term this third view of personnel management a “social system” approach. In brief the

organization or firm is viewed as a complex central system operating within a complex

environment which can be termed an “outer extended system.” Managers recognize

that the central system cannot be close and directed in a mechanistic fashion. Options

are available to central system members both within the boundaries of the firm and on

the outside with the aid of such external units as labor unions, government and various

public groups. Significant elements of the systems, depicted in Figure 2-1 will be

discussed in the following sections.

System components

There are many and varied definitions of the term system. The definition by Beckett “A

system is a collection of interacting systems” is perhaps most accurate though

confusing? A system is a conglomerate of interrelated parts each of which in turn can

be viewed as a subsystem. Our central system the firm is a part of a larger system

generally known as the “economic system.” The economic system is a part of the

political system of our nation. Our country is a part of the political system of the world.

The world is a subsystem of the solar system which in turn is a subsystem of a largely

uncharted space system. Thus when we state that a system is a collection of interaction

system we are emphasizing the inevitable interconnectedness and relationships that

management must consider if it is to develop viable programs of personnel

management.

The major components of any one system, as depicted in Figure 2-1 are (1)

inputs from the outer environment; (2) a processor component consisting of people,
functions and physical factors that transforms these inputs into another set of utilities

(e.g., steel into automobiles. Ill patients into healthy people, uninformed students into

knowledgeable citizens); (3) a set of outputs desired by members of the outer

environment, and (4) a nerve system usually designated “management,” which

regulates the inputs, processor, and outputs. One of the significant subsystems of the

processor is termed “personnel.” Though located within the boundaries, modern

managers recognize that they do not have total control over the talents and attitudes of

their employees, thereby requiring an open system strategy of adaptation negotiation

persuasion and compromise. Each individual employee is a complex human system.

Employees tend to develop friendship cliques and associations that in turn become

informal subsystem. We have learned that serious study of individual needs as well as

of informal group processes, can lead to personnel programs that help to align central

system objectives (outputs) with the goals of the personnel component. This is a very

complicated process, defying any easy assumptions growin out iof the mechanistic or

paternalistic approaches of the past. In some instances alignment is not possible and

management must accept and cope with conflict in order to keep the system operating

at acceptable levels. It should also be noted that the subsystem of “management” has

been divided as suggested in the preceding chapter into the functions of planning,

organizing, directing, and controlling. After plans have been developed the processor is

designed and populated through the organizing function Direction provides the initiating

impulses for the processor to begin operation while control works from the feedback of

information concerning the nature and level of ensuing operations. Thus the

management components is also a subsystem. It should be equally apparent that a

personnel department if one exists in the firm is also a subsystem of the processor with

activities and goals that cam hopefully b aligned with all other subsystems.

Interfaces with outer extended system

It will be noted in Figure 2-1 that a dashed line has been drawn around the central

system to indicate its boundary. Outside of this boundary line is the system’s

environment. It should also be noted that the line is dashed implying openness to

external force and is drawn through the inputs and output, since these input are drawn

from the environment and outputs of other system. General motors requires the input of

steel a material which constitutes the output of Bethlehem Steel. General motors

produce the output of automobiles, which in turn is the input of the Avis car rental

organization.

All of the eight listed members if the outer environment can bring forces to bear

upon the central organization. The forces exerted by government and labor unions upon

personnel programs are very apparent and will be discussed throughout this text. The

public is typically less well organized but there have been many instance where

treatment of selected groups iof employees or potential employees.

The phrase “Everything affects everything else” is a true one but ir is of little

assistance in defining and delimiting management processes. How wide and far

reaching into the outer environment should the extend systems viewpoint take the

manager? There is no arbitrary rule or guide to follow. The extended system boundaries

are likely to be vaguely defined and to undergo alteration as knowledge expands

concerning the importance of various environmental groups. If the central system is

significantly dependent upon other systems for its survival and success. They must be

included in a concept of a more extended system. Labor union were heavily ignored

until the 1930s, when they expanded their membership fivefold. Government was either

ignored or manipulated until the Depression of the 1930s, when social demands led to a

rash of social legislation which is destined to continue. In the distant past management

was inclined to look almost exclusively toward the legal owners the stockholders. In

some instances, where they have gained control over election to boards of direction,

they reduce their dependency and thus their extended system viewpoint. Hired

managers, as contrasted with owner managers, are more inclined to expend monies in

directions other than dividends. One study revealed that owner-manager firms returned

75 percent more income on investment than did firms managed by hired, professional

managers. “The latter were investment funds in employee welfare, contributions to

private schools, employing the hard core unemployed, and perhaps, stockholders would

contend, in more inefficient administration of processor activities.

As any one of the members of the extend outer environment acquires power to

affect the firm’s processes, management must modify its decision processes. It may first

attempt to contain the forces, thereby trying again to close the system. For example

public relations programs are undertaken to convince the public that the organization is

“good” in its various actions. Advertising programs are developed to persuade the

customer that this company’s products are best. Earnings are retained to lessen

dependency upon financial institutions. Multiple sources of supply are developed so that

no one vender will have too much influence. Stockpiles of finished goods are created to

enable the firm to withstand strike threats from labor union. Lobbyists are hired to
contact members of government as well as to manipulate appointment of friendly people

to various regulatory commissions. Stockholder proxies are avidly pursued by managers

to control board of director elections. To some many of these actions designed to

reduce central system dependencies are antagonistic to a broader view of social utility.

However two points can be made. First the basic requirements of all social system

involve this movement toward control and predictability. The efficiency and

effectiveness of the scientific management school, which had much to do with

developing the high American economic standard of living rest on this movement toward

create rationality. The fact that certain individual managers may become “power mad” is

incidental to the requirementsfor rationalizing organizations. Second we must again

emphasize that there is no way that the system can be entirely close and made

completely rational. Though they may try, managers will never be able to eliminate the

contingencies (What might they do?) and constraints (They will not allow it!) imposed by

members of the outer environment. The decision process is often one exemplified by, “if

clients (customers) are willing to wait while the changeover is being made, and if the

shareholders will accept reduced dividends this year, the production line will be

automated if the supplier will make certain modifications in the design of the equipment

and reduce the last quotation.” And one might also add other ifs, such as “if the labor

union will permit it” and “if the firm can find other jobs for the displaced personnel.”

Finally the concept of an ever changing extended systems view can also be

applied to personnel within the central system. As noted in Chapter 1, research has

indicated the employee’s spouse can have a significant impact upon effectiveness of

operation in overseas assignments. Thus a system view would require managerial

extension to include interviews with and education of the spouse as well. On the other

hand some purely domestic firms have sought to extend the view to require approval of

the spouse prior to promotion. This has often been socially rejected and the boundary

push back on the basis that it is none of the firm’s business and constitutes an invasion

of privacy. Some firms have attempted to extend the system to included disciplining

employee’s for undesirable off the job behavior, e.g., slugging one’s supervisor in a

local bar or pub. The court system helps to define the legal system limits in many such

cases. In one instance the firm was allowed to discipline the employee for hitting the

supervisor it was deemed necessary to maintain the hierarchy of authority the backbone

of the processor. When one slugs a fellow employee in an off the job location however

courts have determined that is none of the firm’s business.

In sum the social system approach to personnel is part and parcel of a larger

system approach to management. Research has demonstrated that is is often possible

to develop personnel programs that can simultaneously satisfy the needs of individuals,

groups, managers, and the total organization. In other instances, research has also

shown that total integration of these multiple interest cannot be effected. Open system

analysis and development of strategies characterized by discussion, confrontation,

negotiation, and compromise will be required to manage conflicts that inevitably

develop. This task is further complicated by the forces that can be brought to bear by

significant others in the outer environment. These forces seem to become more

numerous and powerful as time goes by. The net result is that modern management as

well as personnel management, is an exceedingly difficult and complex task. There are

no easy prescriptions. We must examine each proposed and operating program on the
basis of its functional and dysfunctional effects upon ensure a home run every time we

come to bat it is highly likely to improve our batting average.

Summary

In many respects one can consider personnel management to be a relatively new

function in American business. Few staff personnel departments existed prior to 1920,

and many that were begun during the era of paternalism were eliminated by the

Depression of the thirties. The growth of unions the greaterinjection of government into

the field of labor management relations and World War II all combined to remake the

face and content of the personnel function. Thus our history is short, and the

development pace is rapid.

Yet as is emphasized in this chapter many of our modern personnel problems

are in reality quite old. The mechanical approach fostered by the factory system created

many of these problems. That they were so long ignored in business managements

does not deny their existence. Improper handling of these problems has worked to the

disadvantage of the business firms, because authority and freedom have been lost to a

considerable degree to government and labor unions.

PERSONNEL MANAGEMENT FUNCTIONS

The personnel manager has both advisory and service responsibilities to fulfill for the

organization. Two major areas in which specialized and expert advice is sorely needed

are (1) the social obligations of the private firm (Chapter 3), and (2) the design of the

total organization structure for the enterprise (Chapter 4). The major continuing service

obligation is of course to establish and manage the operating personnel unit (Chapter
5), whose basic goal is to provide an able willing work force to the organization (parts

three through seven).

TOWARD THE SOCIAL ROPLE OF THE BUSINESS FIRM

In recent decades there has been growing concern about a redefinition of the proper

role of the business firm within our society. This concern has usually been discussed

under the label “social responsibility.” Obviously every component of a society owes

some obligation or responsibility in return for its rights and privileges. Traditionally the

responsibility of the business firm has been to produce and distribute economic goods

and services in return for a profit. Because of the increasing size and complexity of

society’s needs this narrow defination or role is no longer tenable. Decisions concening

the direction and operation of the economy and its business entities have social

consequences that can no longer be ignored.

Successsful performance of the economic role has ceased to be the only kind of

socially responsible behavior which society requires of the business firm. Beyond this

we have become increasingly concerned with the preservation and enchancement of (1)

out physical resources on this planet and (2) our human resources. Concerning the first

it has water are being seriously threatened by and uncontrolled pursuit of economic

goals. Thus ecology and pollution abatement of the 1960s, society members have

demonstrated their marked interest in the utilization and enchancement of human

resources, particulary those characterized as minority groups, culturally disadvantaged,

handicapped and female.

The personnel manager of a business firm has an important and inescapabale

responsibility in helping the firm’s management to recognize define and fulfill this

enlarge concept of its social role. Management capability in terms of abilities to direct

the firm toward economic goals is no longer sufficient. Today the concept of “every man

to his last” does not hold up. The modern manager in our complex society cannot

enclose heself or himself in a “cultural economic cocoon” imprevious to the pressing

noneconomic needs of society.

Surveys of public opinion have revealed a growing antibusiness feeling among

members of the general public. In one such survey conducted by the Opinion Research

Corporation, the share of the public expressing low approval for business has climbed

from 47 percent in 1965 to a clear cut majority of 60 percent in 1972. A part of this

feeling can be altributed to not knowing the fact; e.g., the piblic believes that after tax

profits of corporations average 28 cents on a dollar of sales as compared woth an

actual figure of about 4 cents. But more is due to the relicatance of business firms to

take on added social responsibilities in the physical and human areas. A PR (public

rekations) job will not take care of the problem.

Inasmuch as the human resources portion of social repojnsibility is of

direct and relevant cncern to personnel managers they will be called upon to conribute

to the “social conscience” of their firms. In this chapter we shall briefly examine the

background material necessary for understanding this enlarge social role as well as

devote specific attention to the societal requirements of utilizing equitably the talets of

such special groups as the culturally disadvantaged the minority groups and the
handicapped. Finally the ppersonnel manager’s role in the execution of a periodic

systematic audit of social activities undertaken by the enterprise will be discussed.

UNDERSTANDING THE SYSTEM

To understand the social role of business the manager requires knowledge in addition

to the technical and economic. He must have some acquaintance with history, politics,

government, sociology, psychology, and philosophy. The requirements for a university

degree in business administration have been increasingly expanded to include these

elements in the potential administrators background. The manager must come to

inderstand that though one may operate within the economy with profit as a stimulus

one does not own the economy with unfettered freedom to do with it as one please. The

United States has move into a “postindustrial society” where business is no longer the

focal point but rather take its place as a subsystem of a complex whole. As one writer

suggests the purpose of a free economy is not production but freedom.

Though the list of significant discipline s long we shall concentrate here upon

three major conceptal foundations underlying our social system, (1) freedom of

assembly, (2) pluralism, and (3) constitutionalism. Understanding of these few concepts

should assist in understanding the business subsystem role.

Freedom of assembly

Freedom to ssemble and form groups and association is a civil right that is protected by

the First Amendment to the United States Constitution and made applicable to the

states by the Fourteenth Amendment. Such freedom can exist only in a open

society .this freedom enables us to form business organizations labor unions fraternites
professional organizations, and the like. Rather than have all needs met by a monolithic

government and open society permits the invention and utilization of all types of

organizations to meet the complex ad changing needs of society. “the genius if america

has been its capacity to sustain and foster those intermedary associations that develop

the sense of participation in a meaningful community.” The United States has often

been characterized as an “organizational society.”

No freedom is absolute and it may be modified by society for its general welfare.

At one time in our history, it was illegal to form labor unions. Currently in some states

that have so called “right to work” laws, it is illegal to require memberships in a union. In

other states the wrker cannot disassociate himself from the union if he wishes to retain

his job. Men and womern are relatively free to form an association called “marriage.” To

dissolve this association, most states have set up certain restraints. Again, if the society

is truly open, citizens are relatively free to move in and out of all types of associations.

The restraints placed on this freedom are deemed necessary to the long term welfare of

society.

The tradional view of the association termed a “corporation” is that it is a creature

of the state. It is set up with permission to accomplish certain purposes designated in its

charter, with the implication that the charter can be revoked or modified if society’s

welfare requires it. The increased power that has accrued to a relatively few large

corporations in America and the world has led some to believe that this “concessin

theory” is no longer valid that there is in these vast economic machines a power that

devolves from their very great accomplishments. The multinational corporation that

transcends international borders, with the assistance of budgets greater than the
budgetsof most countries of the world has posed a considerable challenge in defining its

social respnsibility to a nation or the world.

Pluralism

The right to form associations leads to the formation of a pluralistic society. In a “free

enterprise” economic system we have multiple competing associations producing the

same good or service with the citzen consumer presumably benefiting by freedom of

choice in the market. We utilized a pluralistic form of govenment when we deal with city

county, state, and national govenments. Pluralism is deeply embedded in the very fabric

of american society.

Americans favor pluralism in their society for at least two reasons: (1) ti ensures

diffusion of power among many organizations, and (2) it promotes the greatest amount

of inovation and creativity. Americans are quite suspicious of any concentration of

power, wherther in their government or in the multiplicity of private organizations. They

have taken to heart Lord Acton’s famous phrase, “Power tends to corrupt and absolute

power corrupts absolutely.” The Sherman Anti-Trust Act is directed toward large

concentrations of economic power. Despite contentions that largeness begets

economies of scale and efficiency we nevertheless do not rest easy when any one

person or association possesses great power. Pluralism issuing from rights of free

association helps to maintain freedom and liberity.

Pluralish also suggests that we should be suspicious of any claims of

omniscience. No one person or organization is deemed to have the irrefutable truth. We

feel that if many organizations and human minds are grapppling with a problem we are
more likely to come up with a more innovative and effective solution. Behavioral

management theorists feel that this concept so widely utilized among our multiplicity of

organizations should also be applied within any one organization by encouraging

widespread employee participation in solving business problems. Pluralism also

connotes competion among associations which may have some favorable effects in

enhancing productivity.

Again total pluralism would be chaotic in effect. Some concentrations of power

are conducive to maximim societal welfare. Like most social concepts, the extrems are

objectionable and often dysfunctional. Citizens and associations continue to grapple

with the problem of the appropriate mix between the values issuing from largeness and

those obtained from many small locally controlled units.

Constitutionalism

Constitutionalism also issues from the fear of excessive concentrations of power and its

possible misuse or abuse. It is characterized by specific restraints imposed upon the

holders and user of power. With respect to government, a constitution establishes both

a grant of power and a limitation upon the use of that power. Specific constitutional

devices in use in this country are those of judicial review to make the constitutional

limits effective and “due process of law” to ensure that the human rights of life liberty,

and property will not be transgressed unduly.

In our national government we have purposley divided the powers among the

executive, legislative, and judicial branches. As indicated by various events involving

President Nixon, we are still in the process of ascertaining the specific limitations of the
pwers of each branch. Thus we have a combination of pluralism and constitutionalism to

ensure that human liberties are protected and enhanced. We have even imposed

territorial (state, city, and county) and chronological limitations (election for limited

periods) upon the wielders of power.

Of what interst is this to a personnel manager? There are strong indications that

the concept of constitutionalism may enter the internal operations of the firm,

particulartly the large corporation. When a management has the power to affect a great

many lives to a high degree, concern grows for limiting the power or at least the manner

in which such power will be exercised. With respect to the decision to hire, transfer,

promote, discipline, pr discharged. “Due process of law” or procedure for the business

employee is a form of corporate constitutionalism. The employee does not give up his

societal citizenship when he enters the corporation. Perhaps the foremost branch of

corporate government is the executive, but legistative functions are being undertaken to

some extent by labor unions and judicial functions by government arbitrators. Rather

than attck these growing restraints on the power of the executive as totally objectionable

on the grounds of efficiency, the modern manager will understand the much broader

and basic concept upon which this attack is based the constitutional protection of

human rights within the firm.

The social responsibility of the business firm

If one grants that the business firm si a subsystem of the economy, which in turn is a

subsystem of the total society, it still remains to determine the nature and extent of that

firm’s societal obligation. Normative statements of what business ought to do with

regard to social responsibility will not ensure that action will be undertaken. There are a
number of rationales or theories upon which social action can be based. Among these

are:

1. Long-run profit maximization and social responsibility are substantially similar

concepts.

2. The changing ethics of business managers are concordance with the changing

norms of society.

3. Firms should strive to maximize social utility rather than profits.

4. Firms will prepare a list of goals in order of priority with noneconomic socual

values being included.

5. Firms will be socially resoinsible to the degree they percieve power threats in

the environment.

With respect to the coincidence of a long-term view of profit and social responsibility, it

has been stated. “The longer the range a realistic business projection is the more likely

it is to find a sond ethical footing.” When Henry Ford II explained Ford’s extensice hard

core unemployed hiring and traiing program to stockholders, i was justified on the basis

of preventing future riots in Detroit. When insurance companies undertook extensice

investments in slum reconstruction they explained to their stockholders that they were

opening up future markets for life insurance. When money is contributed to provate

educational unstitutions, stockholders are told that the firm’s management is helping to

develop professional employees for the future. All of thes implications are logical but

exclusive benefit to the spending firm is difficult to prove. In addition the actions of the

money and stock markets are often typically baased on short run rather than long run
implications of management decisions. In many instances this rationale for social

spendng is often just a rationale for a decision made on other grounds.

The sociological view of a movement toward greater business social

responsibility rest upon the impact of changing cultural values upon the firm’s

managers. It is contended that as concern for physical and human resources spreads

throughout society, individual managers’ consciences and codes of ethics will lead them

to make more socially responsible decisions. One negative note is sounded by a survey

and comparison of codes of ethics of practicing marketing managers and yound college

students in both business and liberal arts fields. In asking over 1500 student and

businesmen their views on questionable actions in twenty hypothetical situations, there

were no significant differences in the answers from the three groups: businessmen

averaged 34 percent approval, business student 36 percent, and liberal arts students 33

percent. Lowest average approval was for an action involving hiding your wife’s

expenses on a report of a recet business trip (4 to 8 percent), while highest approval

was given to using “long-distance” telephone calls from nearby cities to reach busy

executives (81 to 88 percent). Using hidden tape recorders in conducting personal

interviews received approval by approximately a third of all respondents. It has also

been observed that business managers will understake decisions when thinking

organizationally (for the benefit of the firm) that they would reject as personally

unethical when thinking individually (for the benefit of themselves). Thus, a profit-

motivated system may perpetuate some antisocial actions despite changes in personal

codes of ethics.
 A more optimistic note is provided by the study of 72 corporations from

Fortune’s list of the 500 largest industrial firms arranged by sales in this country. It was

found that the net income to net worth ratio was 75 percent higher for owner controlled

corporations than it was for those managed by hired professional managers. It is

suggested that the owner manager tries to maximize profits while the hired managers

are reducing profit in order to expend monies in the environmental or human resources

areas, then their codes of ethics are leading to more socially responsible decision

making. One can still worryt about the areas in which they are electing to invest this

“surplus.” Some shudder at the though if a few appointed business leaders determining

what is good for society as a whole.

The third basis for socially responsible action requires determination of the social

utilities of managerial decisions. Decisiions concerning whether to build or close a plant,

promote or fire an employee, or raise or lower a product price have social implications.

In deciding whether to shut down a copper smelter that is polluting the surrounding air

to some measurable degree, one must balance the societal gains from cleaner air

against the societal losses of a reduced number of jobs in the area. Such precision of

measurement, ignoring the real problem of determining lesser and more important

values, makes such an approach to social responsibility extremely difficult to apply. The

closest activity to this process is the systematic social audit a subject that will be

discussed at the end of this chapter. Of course moving from a profit-maximization

philosophical stance to a social utility maximization view of decision making will require

changes in either codes of ethics or total system pressures upon the executive.
 A more usable basis for injecting a greater measure of social responsibility into

business decision making is the lexicographic approach. The manager is induced to

accept thefacttht the firm has not one goal, but many objectives to achieve. These are

then placed in an order of priority. Once the first priority has received a reasonable

rather than maximum, amount of achievement, efforts are direted toward goals of the

firm, he or shestrices to obtain a satisfactory level of profits rather than tries to exact the

last possible dollar out of each decision. One place on the list such values as hiring and

training the physically handicapped or locating new plants in underdeveloped ghetto

areas. The new plant may not make a profit for the first few years, but this is not as

important if sufficient profits are being generated by other activities of the firm, in the

meantime there is a social contribution in the form of providing jobs in a depressed

area.

The final basis is considered by many particularly the more cynical, to be the only

viable approach to social responsibility. It is based upon a combination of intelligent

selfishness and relative power analysis. There are significant and powerful

groupsoperaing in the environment of the business firm. Labor unions and government

units are perhaps the most powerful. Consumer groups led by such men as Ralph

Nader are working to increase their power. Special purpose groups such as the Urban

League and the National Organization of Women, try to bring pressure upon the

managements of private business firms. Managers will assess the power of each group

and its potential threat to organization activities. They will pusue what they deem to be

the primary goals of the enterprise but always with a weather eye out for constraints

imposed by others. When managers go too long without responding or when they
fundamentally disagree with actions demanded, they risk the possibility of new

legistlation. At the minimum, socially responsibile action is that of conforming to the laws

of society. As wl be demonstrated in a later section the number of laws govening the

utilization of society’s human resources is steadily increasing. This is evidence that

business management either did not read the cues thrown out by society or wited too

long to voluntarily comply, thereby ensuring the creation of governmental agencies to

monitor business behavior.

OBLIGATIONS OF THE PERSONNEL MANAGER

Thus far we habe been speaking generally of the social obligations of the firm. We turn

now to the specific responsibilities of a personnel manager in regards to this subject.

These can be classified as internal and external.

Many would propose that just as survival and profit are goals of first priority for

the firm the personnel manager’s first concern is to assist general management achieve

its goals through procuring, developing, compensating, motivating, and maintaining a

competent labor force. Certainly if these are not accomplished to some reasonable

degree perhaps neither the personnel manager nor the firm will be around for long. With

regard to added social responsibilities, the personnel manager occupies a unique

position. He or she is primarily responsible for seeing that the human reasources of

society utilized in this firm are protected, preserved, and enchanced. We would also

suggest that the personnel manager will be increasingly concerned with human rights

as the movement toward corporate constitutionalism continues. In this regard there is

much to be accomplished. Surveys indicate that managements too often make

decisions of supreme importance to employees with little or no consultation with them.

The “quality of life” within the firm can stand improvement in many areas. Beyond

adequate compensation and a safe and healthy work environment, there will be growing

demends in the areas of providing challenging and interesting jobs, developing human

capacities according respect for personal privacy, tolerating dissent, and permitting

greater degrees of individualism in such matter as dress and life style.

Though varying styles and degree of dedication will result in a diversity of internal

corporate govenance forms on the external side fovernment will introduce a measure of

uniformity. Each year a greater obligation is place upon the personnel manager to

ensure compliance with a host of laws and government rules concering the hiring

training, compensating and utilization of various special groups in our society. As

suggested in Chapter 1 personnel management is increasingly becoming a legalistic

process as society has become impatient with voluntary social action by private firms.

Brief coverage of these external pressures will be presented in the following section

followed by discussion of special groups selected for protection. As one personnel

manager stated, “We do our best and pray a lot.”

DISCRIMINATION AND THE LAW

Though approximately forty states of the Unitd States have passed law raleted to the

prohibition of discrimination in employment, discussion here will be confined to

significant pieces of federal legistation and executive orders. Perhaps the most

pervasive controls affecting the personnel manager and the firm are: (1) the Civil Rights

Act of 1964 as amended by the Equal Employment Opportunity Act of 1072, and (2)

Executive Order 11246, covering actions of government contractors. In addition there is

the Equal Pay Act of 1963, the Age Discrimination Act of 1967 and the Rehabilitation

Act of 1973.

The Civil Rights Act of 1964, as amended applies to state and local government

employers and labor unions with fifteen or more employees, and private and public

employment agencies. In brief it prohibits discrimination in hiring, firing, pay, or other

conditions of employment because of race, color, religion, sex, or national origin. The

Equal Employment Opportunity Commission the administering agency is charged with

the responsibility in this area for all federal employees. In administering the act such

prohibitions as the following have been forthcoming: no preference for sex can be

placed in advertisement; there may be no segregation or classification of employees in

any way that deproves them of opportunities or status; there may be no whire and black

union locals; there may be no separate seniority rosters by type: and there may be no

use of selection devices without proper validation. The law does not require an

affirmative action program to redress imbalances in the work force but various courts

have required preferential treatment to overcome a perpetuation of discrimination, e.g.,

one company was required to base promotion on company-wide seniority to overcome

the continued discrimination which would have followed using job seniority. In another

instance the EEOC prevailed upon the Federal Communications Commission to refuse

a rate increase for the American Telephone and Telegraph Corporation until it effected

improvement in employement percentages for females and selected races. As a result,

AT&T increased its number of black employees by 44 percent and its Spanish

surnamed employees by 93 percent while increasing its total work force only 14

percent. The company also agreed to place 7000 women in jobs traditionally held by
men and 4000 men in positions usually held by women. On occasions companies

haveagredtp pay compensation for past docromination practices, e.g., nine steel firm

agreed to over $30 million back pay for 45000 workers to reflect differences in earinings

of minorities for a two and one half year period.

Contractors of the federal government are covered by Executive Order 11246,

which is administered by the Office of Federal Contract Compliance. This control goes

further than the Civil Rights Act in that the government can require affirmative actions

programs to redress work force imbalances. An example of the such plan is shown in

Figure 3-1. One specific rder of the government has been widely publicized as the

“Philadelphia Plan.” Contractors in the construction industry withminimun size contracts

are required to work toward specific percentage goals of blacks in employement. For

example the range of acceptable employment for ironworkers in 1970 was 5 to 9

percent this increased to 11 to 15 percent in 1971, to 16 to 20 percent in 1972, and to

22 to 26 percent in 1973. Some fifty fice cities have bariations of the Philadelphia Plan

for the construction industry at the present time. Affirmative action programs are also

required by the Federal Civil Service Commission. Under such programs the

percentage of blacks employed by federal government move from 4.2 percent in 1940

to 15 percent in 1970. In 1970 blacks constituted 11.2 percent of the total population.

Larry E. Short, “Nondiscrimination Policies: Are they Effective?” Personnel Journal, vol.

52, no. 9 September 1973. p. 790

Figure 3-1 Affirmative action plan

Purpose:
It is the continuing policy of the company and its subsuduaries to ensure equal

employyment opportunity for the utilization of all individua;swithouit regard to race,

color, religion, sex, age, or national origin.

The following Affirmative Action Plan is being aopted to further this poclicty and to

complu with the requirements of the Office of Federal Contract Compliance under

Executive Order 11246.

Responsibility:

The Personnel Manager is charged with the responsibility for carrying out the

Company’s Affirmative Action Plan, and will modify this plan as needed to maintain its

timeliness. All individuals with super visory authority are responsible for carrying out this

policy in their respective areas.

Dissemination:

All recruiting sources will be informed of the Plan. They will be instructed to actively

recuit and refer minority applications. Minority organizations, agencies, schools, and

community leaders will be notified of the Plan. A civil rights clause will be contunued in

the labor agreement.

Recruiting:

The com,pany will activel seek out qualified minority applicants. Advertisements will be

placed on a regular basis in newspapers known to have high readership among minority

groups. The phrase “An Equal Opportunity Employer” will be used in all advertisements.

Placement:
Affimative efforts will be made to place minority individuals on all levels in all

departments. Hiring goals will be established to maintain a correct blalance in the work

force.

1. By January 1, 1977, the nuimber of minority individuals will increase by at least

59 or 50 percent of the number necessary to achieve full utilization.

2. By January 1, 1979, the remaining 50 percent or 59 individuals will be employed.

Training:

Employees will be given equal opportunity for participation in all Company sponsored

and outside training without regard to race, religion, sex, color, age, or national origin.

Promotion:

All qualified employees will be given equal consideration. No job categories are closed.

The Company will periodically review the qualifications and progress of its minority

employees to ensure that the Plan is fully implemented.

General:

All employees are encouraged to participate in all Company sponsored activities. All

work areas cafeterias, restrooms, lounges, and recreational areas will continue to be

maintained on nonsegregated basis.

Compliance:

The Personnel Manager isresponsible for ensuring that this policy is complied with and

for informing management as to the degree of compliance. A report of the results of the

Plan will be compiled annually in March, and the program updated as necessary.
 The Equal Pay Act is an amendment to the Fair Labor Standard Act, which is

administered by the Wage and Hour Division of the Department of Labor. It requires

equal pay for equal work without regard to sex. The Age Discrimination Act also

administered by the Department of Labor, protects workers between the ages of forty to

sixty five from arbitrary age discrimination in goring, firing. Job referral, and the granting

of fringe benefits. The Rehabilitation Act requires affirmative action programs for the

handicapped by federal contractors. Finally a summary of pertinent legislation under this

subject could include the National Labor Relations Act, under which a board certifies

particular labor unions as exclusive bargaining agents for employees. Unions have been

decertified when discriminatory acts have been proved. Certification and protection of

union organizing rights provide another possible governmental avenue to enforce

prohibition of discriminatory practices.

SPECIAL CULTURAL GROUPS

As the laws and orders discussed above indicate there are certain selected special

groups which society feels should be specifically protected from continued

discrimination. The groups that will be briefly discussed are (1) female employees, (2)

racial groups, (3) religious and nationality groups, (4) The aged, (5) The handicapped,

and (6) The culturally disadvantaged.

FEMALE EMPLOYEES

In the past few years the activism displayed by various groups fo women in bringing

pressure to bear upon employers has increased significantly. Approximately 40 percent

of the work force is compose of female employees.

 The fact substantial discrimination against the female employee does exist in our

society is undeniable. On the average they receive slightly over 60 percent of the

compensation accorded males. For females employed year round in full time jobs,

median earnings in 1972 were $8925 for those with a called degree, $5770 for high

school graduates, and $4305 for those who did not complete elementary school.

Comparable earnings for the men were $14,660, $10075, and $7575, respectively.

These lower compensations are caused not only by a general allocation of women to

lower paying jobs and industries, but also by receipt of significantly less pay in the same

job. Because of early role differentiation in our society, females constitute the majority in

such industries as medical health (nurse the sick), personal services (cook and serve

food), and education (teach children). Female intensive industries have significantly

lower pay levels that those withheavy preponderance of males.

With the assistance of the Civil Rights Act, Equal Pay Act, and group pressures

there are indications that chamfers are being slowly effected. The ratio of earnings of

women to earnings of men has risen from 61 percent in 1959 to 64 percent in 1969. The

percentage of women enrolled in professional training has significantly increased

during the period 1960 to 1972: from 6 percent to 13 percent in medicine, from 4

percent to 14percent in veterinary medicine, from 4 percent to 12 percent in law, and

form less than 1 percent to 3 percent in engineering. Needless to say there still

reaming’s much to be done. In a survey of 150 companies by the American Society of

Personnel Administrators it was found that though females constituted in excess of 10

percent of the total employment in most firms they held significantly less than 10

percent of the professional, technical, andanagerial positions. And though 20 percent of

the AFL-CIO membership is female only a very few women hold top level jobs in

American labor unions.

The fundamental causes of discrimination on the basis of sex lie deep within our

culture. From early childhood, codes of behavior and interests are taught by parents

concerning what is “right” for “little girls” and “little boys.” The impact is so pervasivethat

it has entered our language. Militant members of women’s rights groups contend that

“Ms.” should replace “Miss” or “Mrs.” That perhaps “chairman” and “spokesman” should

give way to “chairperson” and “spokesperson” and that personnel managers should

substitute “human resources management” for “manpower planning programs.” Foxe

attitudes have developed among managers concerning the expected behavior of the

female, e.g., women employees will get married and quit mothers with small children will

have high absenteeism rates, female employees will not accept transfer to other cities

because of the husband’s jobs and women in general are more undependable

emotionally. Concerning these attitudes, some are based on inadequate statistical

information, while others display cultural lag in being unaware of significant changes in

our society.

With respect to studies of turnover and absenteeism it has been concluded that

sex cannot be isolated as the single major contributor to these problems. When

corrected for type of jobs, age or person and education and background the sounder

managerial approach is to avoid general stereotyping on the basis of sex. Concerning

absenteeism caused by illness, the Department of Health, Education, and welfare

reported that females lost an average of 5.9 days in 1968 compared with 5.2 for males.

However workers of both sexes over age 45 lost more days, those with less than 9
years’ schooling had twice the rate of those with 16 years, whites had 5.1 days while

nonwhites had 8.1, workers from families earning less than $3000 had 7 days lost as

compared with 4.4 for those earning above $15000 had 7 days lost as government lost

6.9 days, those form private employment 5.4 days, and the self-employed 5.0 days.

Turnover studies of such specific occupations as chemist and lawyer show no

difference in the rates for males and females. A survey of 664321 employees in

California revealed that females constituting 36.68 percent of the labor force, accounted

for 34.4 percent of the quits and discharges. The conclusion again was that separation

rates for men and women of similar age and skills in similar jobs are about the same.

With rest to possible cultural lag in beliefs about the female role, there are

indications of changes in life-styles among the younger segments of the population.

Forty percent of the female work force are mothers, one third of whom have children

under the age of six. Household responsibilities are increasingly shared, with less

division on the basis of “woman’s work” and the “man’s job.”

Some employers are beginning to move in the direction of decreased

discrimination on the basis of sex. Elimination of traditional job allocations on the basis

of sex as well as race must be effected. The on significant item of difference that of child

bearing, can be adapted to through pregnancy leaves day child care centers and

flexible working hours. Court decisions are increasingly striking down arbitrary practices

with respect to leaves and benefits for maternity. The Supreme Court has upheld a

lower-court ruling that a pregnant schoolteacher could continue to work as long as

physically able. A district court has found General Electric Company guilty of sex

discrimination in dyeing disability benefits to pregnant workers. There is no portion of

the personnel program that will remain unaffected by societal pressures to reduce

discrimination.

Racial groups

Because of the energy with which their leaders have attacked the problem of

employment discrimination, black would constitute a good sing illustration of a special

racial group. The success that has met their efforts has encouraged more activity on the

part of such groups as the American Indians and Mexican or Spanish-Americans.

A review of various economic data will reveal reasons for the degree of activity

by black leaders in regard to employment discrimination. Blacks’ rate of unemployment

is ordinarily about double that white’s. Approximately 60 percent of the white labor force

have high school diplomas, as compared with 40 percent of the black. In reviewing the

changes of the past decade, some improvement in conditions has been noted. The

median family income of blacks has increased from 51 percent to 61 percent of that of

whites in the period 1960 to 1970. During the 1960s, black employment rose 22 percent

as compared with 19 percent for whites. Black employment in white collar jobs, crafts,

and machine operation jumped 72 percent while that in professional and technical areas

actually double. Despite these gains, black still hold most of the lower paying jobs 37

percent of all black men work in service and labor occupations as compare with 17

percent of all white men. In 191960, 38 percent of young blacks had completed high

school, white in 1970 this had risen to 56 percent.

When a management wishes to introduce a special racial group into the

enterprise it is wise to be aware of possible human relations difficulties. However,

studies have indicated that mnost managements are overly fearful of the reactions of

the white majority and that careful advance planning and preparation can do much to

smooth the transition.

The first essential of such an introductory programs is the adoption of a definite

policy by top management. This serves the same purpose for the firm as law does for

the community. If trouble does arise supervision are given more confidence by the

existence of an explicit directive from top management. If persuasion fails they can use

the policy to force at least a minimum degree of acceptance.

The communication of the policy is of central importance. All managers must

understand that the policy exists. As has been suggested previously, attitude changes

are effected more readily through processes of discussion and conference than through

orders and commands. The philosophy and toques of group dynamics can serve to

develop supervisory understanding and acceptance of minty group members. Willing

acceptance is always preferable to forced obedience. However, subordinate managers

must be assured that top management mean what they have said and promulgated.

Employment agencies and the union must also be informed and convinced. As usual,

action in hiring and upgrading will mean far more than a planned publicity campaign

alone.

A key issue is the pace with which members of the special group are introduce

into the firm in terms of number, time, and degree of concentration. Many enterprises

prefer the “Jackie Robinson model” of selecting a single outstanding employee and

allowing him or her to pave the way for others to follow. Clack leaders contend that this

leads to “tokenism” and long delaying tactics that perpetuate economic and social
discrimination. Though quotas are resisted by employers, various black groups view

them as the fastest way to correct past discriminatory practices.

If the firm is serious about improving significantly the percentages of blacks

employed special efforts such as the following will have to be forthcoming in the area of

recruitment: (1) Pacific Telephone and Telegraph Company uses walking employment

offices Spanish and recruiters go to people’s home, barbershops, poolrooms, and bars;

(2) Michigan Bell sends recruiting tailors to the ghetto areas; (3) Westinghouse Electric

provides one-day plant orientation sessions for students from predominantly black high

schools; (4) General Electric took legal steps to open up housing for a newly hired black

engineer.

On a continuing basis, the Department of Labor reports that illegal advertising

with respect to age requirements is the most common violation of the law. Almost 2000

such instances were discovered during 1973. Discrimination on any basis other than

qualifications to perform the job is costly to society. Research concerning older workers

usually indicates that they are the equal of the younger in terms of quality and quantity

of output. Older employees also offer maturity derived from experience. Older workers

are less prone to accidents than the younger; caution and experience may compensate

for loss in agility and dexterity. They are also usually superior in terms of turnover

inasmuch as they are, ironically, fully aware of the discrimination that exists and thus

more appreciative of the job they now hold. Perhaps the greatest bar to the hiring of this

class of employees is fear of excessive fringe benefit costs in the areas of retirement

pensions, insurance, etc.

The handicapped
The employment of the physically handicapped rests upon economic as well as

humanitarian grounds. Research has demonstrated that when property placed these

employees are equal to or better than unimpaired employees in terms of productivity.

They demonstrate even better records in terms of absenteeism, turnover, and

accidents. Some additional company effort must often be undertaken with regard to

analysis of jobs, re-engineering of jobs to fit selected disabilities, and modifications of

entrance and service facilities. These investment will usually return good dividends in

the form of dedicated workers.

In 1973, the Rehabilitation Act required government contractors and

subcontractors to take affirmative action in the employment of qualified handicapped

individuals. Contractors are required to make reasonableaccommodation to the

limitations of the handicapped, unless they can demonstrate that such accommodation’s

would impose and undue hardship. To be covered by this law individuals must have

their handicaps certified by an agency of the Department of Labor. Written complaints

will first be the Secretary of Labor. Sanctions available are the usual ones that can be

applied to contractors, e.g., withholding payments, termination of contracts, judicial

review for relief from breach of contract, and blacklisting.

The culturally disadvantaged

Though no national laws require that currently unqualified personnel be hired and

utilized by private business firms, the federal government has attempted to encourage

help for the culturally disadvantaged through various forms of subsidies. There are in

our society a number of persons whose consideration for employment on to basis of

current qualifications would lead to their exclusion with little hope for change in the
future. Perhaps the more commonly used label for this group would be the “hard-core

unemployed.” In the group of ninety-eight so identified by the Lockheed Aircraft.

Months after being placed upon job. Of the multitude of variables correlated, only

the degree of organizational supportiveness perceived by the trainee distinguished

between success and failure on the job as measured by supervisory ratings. Measures

of motivation, vigor, past experience, and education did not identify the successful

trainee. It was also concluded that the major difficulty with trainees lay in therir higher

work was comparable to that of other regular employees. This also suggests that when

trainees find the work climate nonsupportive they cope with this frustration through

avoidance activities such as absenteeism and turnover. In a study of varying

organizational levels and their attitudes toward such support it was discovered that pre-

and post-program measures for top management moved from neutrality to positive

while those of foremen and rank and file moved from positive to neutral. This highlights

again the considerable challenge and difficulty of preparing the regular organization

members to accept the culturally disadvantaged. The supervisor who obtained her or

his promotion as a result of long and arduous effort will require a new social perspective

to accept and cooperate with more externally oriented top managers who have agreed

to a JOBS effort for the enterprise.

SOCIAL AUDIT

Even if the personnel manager is not given the central responsibility for preparing the

social audit, he or she will have a significant role to play because of concern for the

firm’s human resources. One should first not that social auditing is only in its infancy

with very few firms undertaking this systematic appraisal process. A social audit is
defined as “a commitment to systematic assessment of and reporting on some

meaningful, definable domain of a company’s activities that have social impact.” Its uses

are to provide external information to the public in response to pressures upon

enterprise to be socially responsible.

Four possible types of audits are currently envisage: (1) a simple inventory of

activities, (2) compilation of socially relevant expenditures, (3) specific program

management, and (4) determination of social impact. The inventory is generally the

place where oe would start. It would consist of a simple listing of activities undertaken

by a firm over and above what is required for ordinary operation. For example one firm

itemized the following social activities: (1) minority employment and training, (2) support

of minority enterprises, (3) pollution control, (4) corporate giving, (5) involvement in

selected community projects by firm executives, and (6) a hard-core unemployed

program.

A step forward in sophistication would be an attempt to itemize the costs incurred

in these socially oriented activities. Such expenditures would be more impressive to

external publics but more depressive to internal managers without some indications of

offsetting benefits. One utility company determined that it had spent $30000 in one year

in the human resources area with an additional $90000 being allocated to pollution

control. Further documentation was provided in such areas as (1) emission levels of

particulate matter, sulfur oxides, and nitrogen oxides for coal, oil, and gas used, (2)

temperatures of water received and discharged from the pant, (3) workdays lost due to

employee injuries and illnesses, (4) number of minority and female employees hired and

trained, and (5) charitable contributions.

 In the program management approach, each separate project is researched to

ascertain not only its expenditures but also its outputs, in terms of specific management

objectives. In the Bank of America, for example, the Small Business Administration

Minority Enterprise Program is evaluated in terms of additional costs incurred for this

type of loan, compared with a projected goal of new successful minority enterprises

established. The Student Loan Program would involve a comparison of the cost of the

lower rate of interest received with a goal concerning numbers of young people financed

in college. This “Management by Objectives” approach permits managerial

determination of the degree of success without invading the issue of the impact of goal

accomplishment upon the welfare of society.

The ideal social audit would involve determination of the true benefits to society

of any socially oriented business activity. Obtaining data for this ultimate impact not only

is extremely difficult but involves decisions requiring value judgments. What is the value

of a hard-core unemployed program to the community? Is it grater or less than the value

of a program to promote minority business enterprise? Program management evades

this issue by accepting a program as generally good on the basis of logic or pressure,

and then evaluating it against specific program objectives. This does not deal however,

with the development of an overall, balanced, and integrated program that could issue

from an analysis of social impact. Given the embryonic stage of development in which

we find the social audit, management should be willing to settle for less than this

ultimate form. In searching for outside help, the company will be hard pressed to find

very many consultants with experience in the area. In any event, the personnel
manager will have an important part to play in the accomplishment of any type of social

audit conceived by top management.

SUMMARY

Every business decision has an impact upon society. Successful performance of the

economic role is no longer sufficient in and of itself. The modern business manager

must understand the nature of the total societal system and the social role accorded the

economic enterprise.

FOUR ORGANIZATIONAL DESIGN

Organizations are systems of relating resources that will make possible the

accomplishment of specified ends of goals. They are social and technological devices

made up of people and physical factors. With the aid of technological implementation,

these people execute functions, or task, that lead to the accomplishment of rationally

determined objectives. Organizations are processing units which transform certain

inputs from the environment into specified outputs desired by society; e.g., a hospital

transforms ill patients into healthy people, and a manufacturing firm transforms raw

material into usable products.

Every manager has the responsibility of organizing subordinates into patterns of

interactions that will facilitate accomplishment of init goals. However, the basic, overall

design of the total organization has always been the responsibility of the chief

executive. As the organization grows in size, its complexity increases at an even more

rapid rate. Consequently, in the larger organizations, there have been evolved

specialized people and units to advise and assist the chief executive in this organizing
function. One survey indicated that 100 of the nation’s top 500 companies had

established specialized staff units for the purpose of assisting in organizational design

and development.

There is growing evidence that the personnel department is the one that will be

responsible for the organizational design unit, at least until the unit merits separate

status under the chief executive. The study cited above revealed that most of the 100

existing departments in large companies, 82 percent had been given general

responsibility for organization planning. In those companies placing the unit outside of

department

William F. Glueck. “Where Organization Planning Stands Today.” Personnel, vol. 44,

no. 4, July-August 1968, pp. 19-26.

Allen R. Janger, Personnel Administration: Changing Scope and Organization, National

Industrial Conference Board, Studies in Personnel Policy, no. 203, New York, 1966 p.

23.

It was usually grouped with such personnel activities as management development and

human resource planning. A third survey of 245 companies indicated that organization

planning and design was the fifth-ranked major concern of personnel executives, being

listed behind labor relations, departmental administration, personnel techniques, and

personnel policies.

The above studies strongly suggest that the personnel manager should develop

a special interest and expertise in organization planning and design in order to provide

the service desired by the chief executive. This viewalso, salessense, considering the
nature of the operative functions of personnel. If the three key components of any

organization are people, jobs, and physical factors, the personnel manager has special

knowledge of the first two. Organizations are dependent upon the caliber of

personnelavailable, and it is no accident that organizational design is frequently

grouped with personnel activities like executive training and development and the

forecasting of human resource needs. The personnel unit also collects information

about job content which can be of material assistance in organizational design.

The function of organizing is basically a process of tying these key components

together and harnessing them so that they may be directed toward enterprise

objectives. Thus, a technical definition of the formal process of organizing would be as

follows: it is the process of establishing relationships (responsibility, authority, and

accountability) among key components (personnel, functions, and physical factors) for

the purpose of harnessing (line, line/staff, functionalized, and project structures) and

directing toward organizational objectives. Thus, experts in organizational design

require knowledge of such subjects as objectives, components, relationships, and

structures. If the personnel manager is to provide sound and effective advice in this

area, this executive must study the theory and practice of organizing as avidly as the

more traditional content of the personnel functions. Brief coverage of the major

elements of this definition will be presented in the following sections.

ORGANIZATIONAL OBJECTIVE

Inasmuch as organizations are intendedly rational devices established to achieve

objective, it is logical to begin a consideration of organization design with a

consideration of those objectives, one of the first things recognized by most managers
is that any organization has multiple objectives. One classification of goals of business

organizations has been established as follows:

I. Primary objectives

A. create and distribute a product or service

B. satisfy personal objectives of the members of the organization, such as:

1. Profits for owners

2. Salaries and other compensation for execitives

3. Wages and other compensation for employees

4. Psychic income for all, including:

a. pride in work

b. security

c. recognition

d. acceptance

C. meet community and social obligations such as:

1. Protection and enhancement of the human resources of society

2. Protection and enhancement of the physical resources of society

II. Secondary objectives

A. economy of operation in meeting the primary objective

B. effectiveness of operation in meeting the primary objectives

A careful study of the above outline should reveal much concerning the nature of

organizational objectives. Reasonable accomplishment of all is prerequisite to

managerial success, a fact that should create some appreciation of the difficulty of the

managerial task.

PRODUCT OR SERVICE OBJECTIVES

Every business organization must have as one of its basic purposes the creation and

distribution of some good or service. The tangible representation of this objective is the

automobile, refrigerator, can of beans, or haircut. The personnel engaged in the actual

creation, distribution, or financing of this product are performing the basic work of the

organization. They are carrying the ball. A assisting those in production, who are

creating the product, those in sales, who are distributing it, and those in finance, who

provide the funds for its creation and distribution. Thus, the goals of a personnel

department must be derived from the objectives of the entire organization.

Personal objectives An organization is composed of two or more people. These

people have carious and often conflicting personal objectives, which must be

reasonably satisfied or individuals will withdraw from the organization. Such withdrawal

can lead to collapse of the enterprise and failure to accomplish the product or service

objective.

These personal objectives are of two general types, monetary and nonmonetary.

In recent years, management has become increasingly aware of the nonmonetary goals

of people. When the wage or salary is somewhat reasonable other desires come to the

fore, and they form the basis of today’s human relations program. A particular individual

has been known to change organizations and accept a lower-paying position in order to

gain more prestige, recognition, security, or some similar psychic income.

 On personnel management rest a large measure of the responsibility for ensuring

satisfactory accomplishment of the personal objectives of employees. If the personal

objectives of all groups are not reasonably achieved, the basic objectives of the entire

organization will suffer. Consideration of the nature and techniques of fulfilling many of

these objectives constitutes a major portion of this text.

Community and social obligations Society has imposed upon business a number of

broad social obligations, which thereby become business objectives. It is apparent that

appreciation of superordinate societal goals, discussed in the preceding chapter, will

have considerable impact upon the design of complex organizations in the future.

Secondary objectives In labeling economy and effectiveness of operation as

secondary objectives one should not imply that they are unimportant. If these goals also

are not satisfactorily achieved all other goals will suffer. But again we are not in the

business of providing more activities in a vacuum. Some other objective must be the

basic goal which we hope to accomplish with a reasonable expenditure of money and

effort.

Primacy of product or service objective Aside from their multiplicity one aspect of the

outline of business objectives that seems unusual is the emphasis on the product or

service objective. The thesis of the primacy of the service objective can be defended in

three areas. The first might be labeled the political area. Society, through the

constitution, has granted us the right to own property and establish a business. The

right was not granted solely to enable an owner to make profit, rather the right to make

profit was granted in order to provide an incentive to produce the goods and services

that society needs. Profit is the personal motivation: the good or services is the end or
objective. Ours is known as the profit system, a system which is a means to the end of

creating the necessary and desirable goods. The service objective exists in other types

of economic systems where the profit objective does not. It is rather sobering for

business managers to realize that there is no unalterable guarantee of the continuation

of the right to make profits. Belief in the primacy of the service objective is essentially a

defense of the profit system, inasmuch as providing good products at a reasonable cost

is the best way to convene society that its grant of authority has been well handled.

The second defense lies in the area of organization. It is a principle of

organization that all members must have one common goal in order to secure

cooperation and coordination of action, as we have said above, the organization is

composed of various people with differing personal objectives. The product or service

objective is the only one in which all are immediately interested. Thus while the

objective of the business manager or owner of profit the objective of the business

organization is the product or services. Profit is a objective of one part of the

organization, though that part is admittedly very important. The principle of a common

goal designates the product or service objective as primary.

The last defense of this thesis is economic in nature. Under our competitive

system, there is substantial freedom of choice in the markets for goods and services.

The theory of the system is that resources will flow to the organizations that produce the

best product as the lowest price. In the political area a business may be voted out of

existence or hampered by means of legislation. In the marketplace if may be voted out

of or restricted by a customer’s dollar. Thus the rationale of our system is that

resources, income for profits and wages, will flow to the organization that creates the

best goods and services.

In the final analysis, the managers who is aware of the tremendous importance of

the product or service objective already being aware of the profit objective, will have a

philosophy of management that will not be too far wrong. An intelligent pursuit of profits,

with equitable consideration for labor and the customer will usually lead to the same

position as the principle of the primacy of the service objective.

FUNCTIONS

Objectives do not accomplish themselves. Work must be executed by people or

machines in order that objectives may be achieved. The word “function” can be define

simply as work that can be distinguished from other work. The function of production, for

instance can be defined and distinguished from sales, just as planning ba be separated

from control. In manufacturing concerns, three functions are considered to be primary or

organic: they are sales, production, and finance these functions contribute directly

toward the accomplishment of the basic objective of the firm that is the product or

service objective. Since these are primary they are generally referred to as “line”

functions.

In the one-person firm, all functions are bound up in one person. This person

produces, sells, and finances the product. As the volume of business increases a

process of functional differentiation occurs. This is essentially a separation of certain

function from the original performer and an assignment of them to other people who are

added to the enterprise. Functional differentiation takes place in two direction downward
and outward. The results of both direction of growth are the same, i.e., more functional

specialization.

Functional differentiation downward

Staying with the one-person firm for the moment, we see that as the business grows a

helper will be hired. Thus, a function has been differentiated, possibly in the area of

production and assigned to the second person, as shown in Figure 4-1. The process of

downward differentiation is under way, and we now have two levels of organization. As

volume continues to grow, additional personnel are added to the organization as

depicted in Figure 4-2. Perhaps one or two of the subordinates are engaged in this

function of selling. At some point in this process of functional splitting, the owner will

Ralph C. Davis, The Fundamentals of Top Management, Harper & Row Publisher

Incorporated. New York, pp 216-220.

Encounter a basic principle of organization known as the span of control. This principle

is basically a statement of human limitations; that is there is a limit to the number of

people and functions that one person can supervise effectively. Assuming that our

owner-manager has reached that limit we must psh down to another level of

organization. Once of our present employees is perhaps appointed a supervisor and

know this span of control can be utilized when we add other personnel to the company.

With further growth, there full levels will come into existence, as shown in Figure 4-3.

As the limits of anyone’s span of control are reached, we are force to push down

and create another level of organization. In organizations of several thousand members

there may be as many as fourteen different levels. Were there no such principle as the
span of control, there would be one manager to whom all others would report. This

concentration is obviously inconceivable in any except the smallest of organizations.

Let us examine this span-of-control principle more closely. What are the limits? The

number of function and personnel that one person can supervise effectively will depend

upon such factors as that person’s ability one’s subordinates abilities, the complexity of

the factionsperformed the similarity of the functions to one another, the degree og

situational stability, and the degree to which separate work assignments interlock. A

series of subprinciples can thus be devised as follows: (1) the greater the degree of

functional complexity, the fewer the functions that can be supervised effectively, and (2)

the greater the degree of dissimilarity of function, the fewer the functions that can be

controlled effectively. Research by Joan Woodward indicates that the type of technology

has impact upon spans of controls actually used in business organization. Classifying

technology on the basis of unit or small-batch processing mass production, and process

production with continuous flow, she discovered that the spans were largest in mass

production enterprises and relatively smaller in the other two. Jobs of those being

controlled were more routine and similar in mass production, thereby lengthening the

effective span.

Traditional managerstend to prefer smaller spans, which permit a higher degree

of control of communication and operations.Phycologists and sociologists on the other

hand, advocate broader spans which necessitate a greater degree of freedom for the

subordinate. It is apparent that there are no valid formulas that will indicate the

theoretically perfect span for any situation. The particular philosophy of management,
analysis of the limiting factors cited above, and a reasonable amount of trial and error

will all doubtlessly be involved in answering this question for each manager.

Functional differentiation outward

The lack of managerial specialization becomes increasingly serious with increased

growth in size of organization. This situation results from the effect of another principle

know sometimes as the law of functional growth. This law states that as the volume of

business grows, the complexity of the functions necessary for performance increases at

an even more rapid pace. For example the establishment of a wage and salary structure

for a shop f four or five people is considerably less difficult than the performance of the

same function for a concern of several hundred or thousand employees. The effect of

this principle is to emphasize the need for managerial assistance through specialization.

Certain activities are differentiated outward from the chain of command previously

established by means of downward differentiation. Secondary or staff functions are

established in areas other than production, sales, or finance. The objective of these

secondary functions is the assistance and facilitation of the performance of line function.

Thus a staff function is one that has been separated from the line for purposes of

specialization. Its separation is justified only so long as it is believed that the function

can be performed more effectively and economically by a specialist than by the line

from which it was evolved. All staff function come from the line and are returned to the

line in the event that economy and effectiveness are not produced.

The above description can be clarified by an example. Functional differentiation

downward of the three primary functions creates a pure line organization. All members

are producing, selling, or financing, or are in the direct chain of command above these
three functions. The production supervisor in Figure 4-4 has been having trouble

training new personnel because of the rapid growth of the firm. He or she has asked

that a line machine operator be assigned as a training assistant to assume much of the

responsibility in the area. Training done by the training assistant is a staff function. As

the business continues to grow, these may be more work than the training assistant can

handle alone. He or she is provided with a subordinate, which means of course that

functional differentiation is pushing downward within the staff function of training. This

movement results in the formation of a staff section, the training section. The process

illustrates the formation of a secondary chain of command within a staff function.

While the above functional differentiation outward and downward is going on the

law of functional growth has forced other functions out of the line into staff assignments.

The production supervisor may have the usual subordinate line personnel but will also

have a multitude of staff engaged in such activities as training production control,

inspection, hiring, safety, and the like. To reduce the span of control, one may prefer to

regroup some of the staff sections to form a staff department. Thus the personnel

department may consist of the sections of hiring, training, safety, and other functions

deserving of specialization at this stage of growth. It should be noted in passing that it is

impossible to separate completely any staff function from the time. Some residual

responsibility has to remain for coordination purposes at the very least. In the personnel

area, it will be found that a very large proportion of the responsibility, because of its very

nature, simply cannot be removed from the line.

Functional differentiation outward can take place at any level in the primary chain

command. It may take place gradually and go through the above-described steps: (1)
assignment of the function to one person, a staff assistant; (2) creation of a staff unit by

adding personnel; and (3) creation of a larger staff unit by grouping with related

specialized units. In addition, with further growth the staff unit may develop an internal

support structure. For example, if the training effort becomes sufficiently large the

organization may be able to afford a training research subunit. Thus if production is

primary to the goal, and training secondary in that production is facilitated, then training

research is tertiary. In effect we have experienced functional differentiation downward in

training to create a secondary chain of command, followed by functional differentiation

outward to create a “staff-to-staff.”

The pattern of functional growth is universal first down in the primary or line

function and secondly out into staff functions. This can be summarized as follows:

Principle Process Result

Span or control Functional differentiation Operative specialization and

downward. added organizational level.

Law of functional Functional differentiation Managerial specialization and

outward. creation of staff.

Finally if the firm grows quite large, the staff function can be separated on

multiple levels from top to bottom in the organization. As shown in Figure 4-5, there can

be a personnel director for the entire organization, as well as personnel units for each of

the product managers. The top central unit serves as a clearinghouse for personnel

information and activities throughout the enterprise. It may also provide certain central
services, such as negotiating the master contract with the labor union. This parallel

functional development also acts as a specialized channel of communication and

constitutes a career promotion ladder. It should be noted that even though the staff

director is reporting directly to the president, and may even be accorded vice-

presidential standing, this in no way transforms the unit into line status. The incidence of

service toward primary organizational goals is still controlling.

Concurrent expansion in the number of staff specialist, this principle of single

accountability is placed in considerable jeopardy. Specialists seem to have built-in

tendency to give orders rather than advice. In addition at the upper levels of

organization, it is extremely difficult for one person to review closely all

recommendations and specifically approve them in order to convert them to personal

orders and thereby preserve the desired unity of command.

It has been suggested that a related concept, the principle of unity of command,

is more important than single accountability. Though a person has two bosses if those

bosses are coordinated, unity of command can be preserved dispute the loss of single

accountability. It may well be that future large-size organization will see the increased

introduction of “plural executive.” That is a number of executives operation as one

office. Single accountability should be preserved as long as possible to reduce the

danger of possible disunity. The more bosses the greater the opportunity for conflict,

poor coordination, and misplaced emphases. But single accountability can be sacrificed

when complexity demands multiple experts, provided that unity of actions is preserved.

This requires stability of membership within the “plural executive group,” as well as

reasonable specification of the various jurisdictions.

 To summarize the organizing process to this point, we started with a

determination of organizational objectives. From this a specification of necessary

function to accomplish these objectives was develop. When personnel are introduced to

execute functions, responsibility is established. On the basis of this responsibility,

authority is allocated to make accomplishment possible. Assuming sufficient authority

then accountability can be imposed. Thus, the logical derivation is in the sequence of

(1) objectives, (2) functions, (3) responsibility, (4) authority, and (5) accountability.

ORGANIZATION STRUCTURE

The immediate result of the organizing process is the creation of organization structure.

This structure is a framework of the formal relationships that have been established.

Some compare it to a harness that defines the position of the team members in relation

to one another and to the common objective. The purpose of the structure is to assist in

regulation and directing the effort put forth in an organization so that they are

coordinated and consistent with organization objectives.

There are several basic types of organization structure, any one of which may be

adopted. If responsibility, authority, and accountability are established in one way, the

result is line structure. If these relationships are set up in another way the line and staff

structure created. The third arrangement of relationships is known as the functional type

of structure. Each of these structures will be briefly described and the location of the

personnel functions noted. In addition the project structure will be briefly discussed to

indicate how activities can be fitted into this most recent structural adaptation.

Line organization structure

The nature of line organization structure has been largely described in the earlier

discussion of functional differentiation. Line structure is created by the functional

differentiation downward of primary or basic functions. In manufacturing these basic

functions are production, sales, and finance. Thus in the line organization, all personnel

are either producing, selling or financing, or are in the direct chain of command above

these three functions. There is no functional differentiation outward.

In the line organization, the personnel functions exist but are performed by line

development and integration in the workplace. He or she has no assistance in these

matters beyond what superiors can supply.

The advantages of this type of structure are (1) simplicity, (2) ease of

comprehension by all members, (3) rapidity of decision making and action, inasmuch as

there are few people to consult, (4) clear and inescapable accountability, and (5) the

possibility of developing general backgrounds for most personnel. The most outstanding

disadvantage is the increasing loss of effectiveness with growth, due to the lack of

managerial specialization. The law of functional growth will sooner or later force an

evolvement of certain functions from the line in order that they may remain competitive.

One of the decisions common to all types of structure is the selection of bases for

grouping divided activities. What has been divided must be combined, it possible to

effect coordinated and unified progress toward organization goals. Perhaps the two

most significant bases of grouping are (1) functions and (2) product or service. Line

organizations typically group on the basis of the first that is alt activities related to

production, for example, are placed in one unit while all those related to the selling
function are placed in another. This ensures specialization and requires the top

manager of the enterprise to coordinate the total task.

With increasing size, firms typically move to the product or service base. Each

unit has its own production and sales subgroupings thus leading to a seeming

duplication of activities throughout the firm. Each may be established as a separate

profit center designed to produce such values as a “whole” approach to each product,

more rapid decision making and greater development and motivation of personnel

responsible. Rarely, though are all functions given to a product manager. The General

Motors Corporation for example, is basically a product grouping but the finance function

and significant portions of labor relations are retained near the top level.

In addition to these two bases of grouping other choices available are (1)

geography, (2) customers, (3) time and (4) numbers. Recognition of the first will result in

territory managers. The second reflects recognition of peculiar customer requirements,

e.g., teenage shops and budget basements in department stores. Time and numbers

may call for multiple supervisors on different work shifts. Specific applications of these

possible bases will be discussed with reference to the personnel unit in the following

chapter.

Line and staff organization structure

Functional differentiation downward and outward produces a line and staff organization.

Most business organizations, except the very small have this type of structure. The

problems of management have become sufficiently complex so that presumably expert

attention will produce more effective results in selected areas. This expertise is
introduced into the organization in an advisory or facilitative manner. In theory line

managers are free to reject the specialized advice or service on the basis of overriding

in part for the vagueness and complexity of formal organizational relationships. Both

project managers and supporting unit managers must maintain an open mind and be

willing to negotiate. The typical role of personnel managers in project structures is to

provide supporting personnel specialist and be willing to share in their supervision.

JOB DESIGN

Moving from general groupings to the specific, the personnel managers should have an

even greater interest in the design and specification of individual jobs, within the

organization. Excessive specialization and concentration upon technical efficiency have

had an adverse impact upon the motivation of personnel responsible for executing

these narrow jobs.

The design of an effective work unit for an individual employee is a highly

complex task. It should not be left solely to the line supervisor, the union business agent

or the industrial engineer. The personnel manager has a responsibility to represent the

interest of the individual which hopefully will be reflected to some degree in the interest

of the total organization. Among the many factors that will affect job design are (1) the

proven values of specialization and repetitive operations, (2) changing technology, (3)

labor union policies, (4) abilities of present personnel, (5) available supply of potential

employees, (6) the interaction requirements among jobs within the system and (7)

psychological and social needs of human beings that can be met by the job.
 Specialization tends to lead to greater productivity as well as ease of manning

the work unit. The resulting unit work undergoes constant modification because of the

impact of mechanization and automation. Some jobs are eliminated, others created and

still others altered in content resulting in different specifications of educations,

experience, personality, and breadth of viewpoint. Labor unions are necessarily

involved and seek to retain both present employee security and union’s control of these

units of work. Thus, the firm may be required to respect jurisdictional lines of traditional

crafts or to delay alteration of job content despite advances in technology. Economic

and organizational values lost in job design may be recouped in part through enhanced

union cooperation.

Management must be concerned with the practical considerations of quantity and

quality of personnel presently available, both within the firm and in the labor market

generally. It does little good to design a job in terms of the ideal if the resulting unit

cannot be supplied with workers. Consequently, changes in job content may be made to

reflect particular characteristics of specific people available for transfer or hire.

It is apparent that the interrelationships among various jobs will levy an

interaction requirement upon job incumbents. Work systems should be designed to

minimize points of friction. For example, Whyte’s restaurant study found that when

lower-status personnel such as runners, initiated action for higher status personnel,

such as chefs the potential for explosions and dish breakage was increased. “He

hypothesized that work will flow more smoothly when those of higher status are in a

position to originate work for those of lower status. What appear to be personality

conflicts between two general objectives. Examples of specific guides for combining line
and staff activities of will be discussed in the following chapter with specific reference to

the staff personnel unit.

Functional organization structure

The adoption of the function form organization structure involves the violation of some

principles of organization previously cited. A functional relationship is established when

a staff function is brought directly to bear on line function with authority to command

rather than to advise. Thus the integrity of the line is broken and some personnel are

accountable to multiple superiors. If the personnel unit for example is set up on a

functionalized basis it does not recommend that a supervisor accept an applicant; it

orders that it be done. The unit can overrule lower line managers on matters of wages,

grievances, training, and the like thus in matters pertaining to personnel, the supervisor

must look to the personnel unit; in other areas, the supervisor looks to the appropriate

line superior.

No firms today are completely functionalized in all specialized functions. The

significance lies in the provision of a third alternative. Organizers can choose among the

following: (1) a function such as hiring can be allocated to the supervisor (line

organization); (2) it can be given to a specialized personnel unit with rights of advice

only (line and staff); or (3) it can be assigned to the personnel unit with rights of

command (functionalized). The third alternative should be used sparingly to prevent

distortion of basic general objectives.

Project structure
A variation of the functionalized form now coming into wider use, particularly in the

aerospace industry, is the project structure. If a management desires to emphasize

strongly a specific undertaking or project, a special structure can be created. Such

projects are usually unique and unfamiliar to the existing organization and complex in

nature. They request interaction among specialist and have limited time objectives. A

project manager is given authority to assemble temporarily the necessary talents and

facilities to accomplish an undertaking. In some instances the usual line and staff

departments do the work but the project manager specifies what effort is needed and

when it will be performed. The operating unit manager may decide who in his or her unit

is to help and how the work is to be accomplished. It is apparent that, though the unit

manager has line or command authority over personnel the project manager has

functionalized authority in connection with the work on the particular project. (“The Case

of Two Masters” at the end of this part provides an example of a personnel specialist

who was caught between the conflicting demands of his unit supervisor and his project

manager.)

Business managers have found the project structure supplement to be highly

effective in assuring the accomplishment of important goals. The project cannot get lost

between departments. It has been found that one person can work for two or more

“masters,” and that a “master” can effectively influence those over whom he or she has

no clear authority. The possibility of conflict and frustration is great but the opportunity

for prompt, expeditious, and effective accomplishment is even greater. The coordinative

power of the knowledge and expertise of the participating specialists makes up

individuals may actually be defects in job design which tend to go counter to the needs

and cultures of personnel handling the jobs.

Behavioral scientists have continually stressed the importance of designing jobs

and systems of work in a manner that will satisfy psychological and sociological needs

of people. One of the most commonly cited human relations problems in this area of job

design is employee dissatisfaction with jobs that are repetitive, narrow, meaningless,

and routine. Engineering efficiency has led to the creation of the production and

assembly lines. Such lines have proved themselves on the basis of the quantity and

quality of production that can be exacted from such a productive arrangement. The

major deficiency, however, lies in the human relations area, with such specific problems

resulting as the boredom of the worker, loss of pride in work insecurity and obsessive

thinking. These problems are compounded when a moving conveyor links all position

together. The conveyor is a “master” whose pressure never ceases.

Traditionally the solution to excessive specialization of job assignments has

involved some means of periodic rotation to provide variety, e.g., change task every few

hours, or work up the moving assembly line. In recent years considerable research has

been undertaken with respect to more unusual and seemingly risky changes in job

content. Among these are job enlargement, job enrichment, and sociotechnical groups.

Job enlargement

In response to criticisms concerning the dehumanization of work through excessive

specialization, an obvious suggestion would be to enlarge job content to utilize more of

the abilities of employees. If the additional responsibilities are of a horizontal nature

variety has been introduced and the process is termed “job enlargement.” If the

additional responsibilities are of a vertical nature encompassing self-control the process

is termed “job enrichment.” Job enrichment is the approach to job design most

recommended by behaviorists and will be discussed in the following section.

Variety can be produced by adding functions, thus possibly reducing monotony.

An added psychological value can be derived if the added functions make possible the

completion of an identifiable unit, thereby producing a sense of closure. As a case in

point, research reported by Louis Davis demonstrated that the breaking up of a

conveyorize assembly line is not necessarily disastrous in terms of output. The product

studied was a hospital appliance that was to be assembled by nine operators spaced

along a moving conveyor. Figure 4-6 part a shows the daily productivity index of this old

method at 100. Part b shows the results of the mere removal of the conveyor with the

work stations remaining as before. Production dropped to an index of 90, thus

demonstrating the power of the moving conveyor. Part c shows the record of a new

system of production, in which one worker performed all nine operations, thereby

applying the concept of job enlargement. Part d refers to the same system of work one

worker for all operation, but with the work taking place in the main production area

rather than in a room adjacent to the production floor as in the case of c. parts c and d

refer to the same system of production, and the increase of d over c reflects both an

increase in experience with the new system and a change in work location. It should be

noted that the production rate of the original conveyor was never reached through the

job enlargement methods. However the experiment covering parts c and d tasted for
only forty-three days. Production with the moving assembly line method of operation

had been going on for years.

Though quantity was slow in returning under job enlargement, quality was

immediately and significantly improved. The percentage of rejects dropped to one fourth

of the original total. When the accountability for proper performance can be effectively

determined for each employee, rather than divided up among the group quality usually

improves.

In a study of various assembly line jobs in a home laundry manufacturing firm

attempts were made over five-year period to increase the number and variety of tasks in

single jobs. For example a pump assembly line of six operators required an average of

1.77 minutes per unit. In moving to single operator work stations where the operator

would perform the full assembly, the time was reduced to 1.49 minutes. In thirteen other

similar job changes, there was an average decrease in quality rejects from 2.9 to 1.4

percent. However there was an average decrease in output efficiency from 138 percent

to 126 percent.

Regardless of the contentions of some business researchers it should not always

be concluded that all employees prefer an enlarged job assignment. In a study of 202

television set assemblers, 104 indicated a preference for smaller task assignments, 24

preferred job enlargement, and the remaining had no preference. When General Motors

attempted to increase the number of tasks assigned to personnel on the Vega assembly

line, the immediate reaction was a wild cat strike protesting the “speed-up” of work.

Though variety and a sense of closure are desirable elements of a mature job
assignment, they are often insufficient if not accompanied by elements introduced by

job enrichment.

Job enrichment

Enrichment of jobs would include not only horizontal enlargement, but also vertical

enlargement to permit subordinate participation in managerial decisions concerning

tasks assigned. Total freedom for the employee is not envisaged. However if one is

delegated the right to determine the method to be used (entailing elimination or

transformation of the motion study engineer into a resource consultant), the speed or

rate of output (suggesting elimination of the staff time study engineer), and the degree

of acceptable quality produced (eliminating need for the quality control inspector), then

a high degree of job enrichment has been introduced. Perhaps the foremost theorist

advancing the concept of job enrichment is Frederick Herzberg. He strongly believes

that self-management of job performance is the key to tapping tremendous motivational

potentials in human beings.

Concerning the practicality of such enrichment programs, various organizations

have undertaken experiments to determine possible effects upon performance. In the

imperial Chemical Industries Limited of Great Britain, the content of the laboratory

technician job was changed for members of an experimental group. The newly enriched

job provided for technician writing and signing of final research projects without

checking by supervision prior to issue, participating with superiors in work planning and

target setting for the job, requisitioning materials and equipment needed on one’s own

signature and conducting training programs for junior staff normally assigned.
 On evaluation of the quality of research reports written the fifteen members of the

experimental group received ratings of 5, 8½ and 7⅔ at the end of the first, eighth, and

fifteenth months. The control group of 29 laboratory technicians received corresponding

ratings of 4½, 6⅓ and 4⅜. It should be noted that the groups did not begin to diverge

until about the eighth month. When eleven members of the control group were

reassigned to the experimental approach their ratings rose from 6 to 8½ in a five month

period.

In another reported experiment involving outside sales personnel the newly

enriched jobs entailed self-determination of customer calling frequency, self-

determination of what customer information was to be passed on authority to make

immediate settlement of claims up to $250, authority to vary prices up to 10 percent,

and the right to buy back unwanted stock without prior approval. All of the above rights

were withheld from a control group of twenty-three salesmen. After the nine-month

study the experimental group of fifteen salesmen had increased their sales 19 percent

over the level of the preceding year. The control group’s average performance had

decreased 5 percent over their previous year. The managerial implications of such job

enrichment programs can be summarized in the form of the ideal job. Such a jov would

have (1) variety to allow use of multiple skills, (2) identity of task, thus permitting

psychological closure, (3) task significance i the eyes of the incumbent and others, (4)

feedback of task performance results, and (5) autonomy in selecting methods of work,

pace of work, and determination of acceptable quality.

There is evidence that the theory of job enrichment is far in advance of its actual

acceptance and practice on the part of management. In a survey of 125 of our largest
industrial firms, only 5 reported having formal job enrichment programs. However

almost 30 indicated having plans for possible use in the future. It should be apparent

that job enrichment is no panacea, but that specific analysis of each work situation will

be required to determine its practicality. Assuming that the firm’s managerial philosophy

is favorable to the sharing of management with subordinates, one still must consider

such factors as qualifications and desires of available personnel, degree of interaction

currently required with other jobholders, whether the job can be restructured to permit

identity and feedback of performance levels, and degree to which the work process is

dominated by inflexible and expensive technology. Job enrichment strikes at the

technological “guts” of the organization, requiring considerable investment in both time

and money. Finally when job enrichment has been tried the economic results have not

always been uniformly favorable. A systematic review of ten studies of situations in

which jobs had been enriched revealed an increase in work quality in all ten but

increases in work quantity in only four instances. Thus the decision making situation

involves the possibility but not the certainty of improvements in employee morale, a high

degree of certainty with respect to improved product quality and a substantial probability

of a decrease in quantity at least in the short run.

Sociotechnical groups

The interaction requirements of many jobs would call for “work group enrichment” rather

than job enrichment. Research in the British coal industry indicated that work divided by

the mining cycle rather than the shift made possible the formation of self-sufficient,

target self-managed work groups that were able to effect considerable gains in

productivity. Davis suggests that the sociotechnical approach would entail (1) identifying
a group task that can logically be self-regulated, (2) providing for the full range of

necessary skills, (3) delegating authority for group self – assignment of task and roles

(4) developing internal communication opportunities within the group, and (5) providing

for a group monetary reward system.

With the stimulus of research a few firms in the United States have experimented

with sociotechnical approach to team development. In one pet-food manufacturing

plant, all task were assigned to teams of seven to seventeen members. Each worker

learns every job performed by the team, and the pay rate rises as teammates decide

that skills have been acquired. There are no conventional departments or appointed

supervisors. Rather there are team leaders who work as equals with other members.

New employees are jointly hired by team members. Work teams have authority to solve

manufacturing problems, to deal with task redistribution caused by absenteeism, and to

perform equipment maintenance, housekeeping, and quality control. After eighteen

months of operation the results were favorable in economic terms: overhead costs were

33 percent lower than in comparable plants, absenteeism 9 percent lower, and turnover

and safety. Problems arising included some intra-team disputes over certifying

members as qualified, refusal of some members to take on greater responsibilities ,

inability of some team leaders to stop acting like bosses and the confusion of some

outside vendors who found themselves negotiating with operatives when they were

accustomed to mangers. It should also be noted that certain elects made this approach

possible the technology could be redesigned for team application. It was a new plant

isolated from other parts of the corporation the size of the work force was small, and

there was no labor union.

 In the automobile industry, perhaps the most publicized attempt to incorporate

sociotechnical designed work groups is that of Volvo in Sweden. The long final

assembly line has been broken up into multiple shorter lines, interspersed with storage

areas each line is under the control of a properly designed group with authority to alter

production speeds and assignments within imposed limits. The owners estimate an

increase in original cost of 15 percent over more typical plants but hope to derive values

in the areas of product quality and human relations.

SUMMARY

This chapter has ranged from the general to the specific, from the basic overall

objectives of an organization to the specific job content of an individual task. On the

thesis that the personnel manager will be increasingly called upon for advice and

expertise in the field of organizational design, knowledge must be obtained on such

diverse subjects as objectives, functions, relationships, structure, job enlargement and

enrichment, and sociotechnical teams.

Organizing is the process of establishing formal relationships (responsibility,

authority, and accountability) among key components (functions, personnel, and

physical factors) for the purpose of harnessing (line, line/staff, functionalized, or project

structure) and directing toward common enterprise objectives (service, member, and

social). Objectives govern the specification of functions, which tend to be differentiated,

both downward and outward, with increasing size of organization. Primary, secondary,

and tertiary contributions to the primary objective can be identified. If a production

manager does training research, the function has been allocated to the line. If a

personnel unit performs that research, it has removed to a secondary status of staff
service. If a specialized subunit within the personnel department performs that research,

its relationship to the basic general objective is tertiary. These analyses of objectives

and function are necessary for the understanding and design of basic instrumental

structures.

FIVE

MANAGING THE PERSONNEL UNIT

It was stated previously that the basic functions common to all mangers are planning,

organizing, directing, and controlling. In this chapter we are assuming that a specialized

personnel union exists with a complex organization, and we shall examine the

managing task of its leader. Attention will be given to only three of the functions

planning, organizing, and controlling with discussion of the fourth, directing, delayed unit

coverage of the operative function of integration. The directing function is heavily

concerned with motivation of others to contribute to organizational objectives, a task

that is essential to integration. If the personnel manager is obligated to assist other

managers in this area, it would seem logical that this same expertise could be brought

to bear upon the immediate organization unit.

That more attention should be devoted to management of personnel activities is

substantiated by frequent and persistent criticism of personnel unions as uneconomical

and useless appendages to vital living structures of productive organizations. A former

chairman of the Avis Rent a Car Corporation recommended “firing the whole personnel

department.” Herzberg complains that the unit’s major goal is too often that of “peace,”

thereby calling for numerous hygienic programs to “clean up” the workplace and prevent
dissatisfaction. Though criticism of specific company programs is often justified, it is

undeniable that a considerable potential for value creation exists in specialized units

whose primary concern is the organization’s human resources. With increasing

pressures brought to bear by both government and labor unions, there is little danger

that the unit will be “fired.” However a professional personnel manager will not settle for

this protective, maintenance, and peacekeeping role and will search for approaches that

will simultaneously enhance values derived by people, organizations, and society. That

this is one of the most difficult task imaginable perhaps provides us with an excuse, but

ot does not serve to justify excessive absorption in relatively unimportant activities. Top

management can lead the way by insisting that personnel managers establish definite

goals for the personnel system that continuous planning be practiced because of the

dynamic nature of the subject, that more human resource information be made available

in a form that facilitates sound decision making, and that the multiple, splintered, and

technique-oriented operative activities be integrated into a coordinated system.

Opportunities do exist for personnel managers to act decisively and

professionally. In a survey of large enterprises, 126 of the 249 top personnel executives

carried the title “vice-president.” In a second study of 132 personnel managers in

business organizations, 71 percent had earned a bachelor’s degree, 21 percent a

master’s degree, and 8 percent a law degree. Almost all had taken college courses in

industrial psychology, principles of personnel management, labor problems, and human

relations. Approximately 35 percent had been in personnel work for their entire career,

the average tenure being fifteen years. Both the opportunity and the skills are available

in many organizations to make personnel a vital and value adding function.

ORAGANIZING THE PERSONNEL UNIT

Inasmuch as we have just completed discussion of the personnel manager’s

responsibility to advice in the area of organizational design, we shall discuss first the

same task with respect to the specialized personnel unit.

Bases of departmentation

As indicated in the preceding chapter, a manager can organize the department area on

a number of different bases. Perhaps the functional base in most common within

personnel departments. In the example shown in Figure 5-1 the basic grouping revolves

around procurement (employment), development (training), compensation (wage and

salary administration), integration (labor relations), and maintenance (safety and

employee services). The exact breakdown would obviously vary within the enterprise,

inasmuch as it is affected by such variables as size, abilities of personnel and top

management philosophy regarding the role of personnel.

One behavioral critic has suggested that most personnel time and budget have

been improperly spent upon hygienic activities designed to prevent employee

dissatisfaction. Though the importance and extent of such activities will not decline.

Herzberg contends that an even more significant activity should be undertaken that f

promoting employee satisfaction. As indicated in Figure 5-2 the first functional grouping

should be on the basis of purpose of service: (1) prevent dissatisfaction through

hygienic maintenance and (2) promote satisfaction through motivators. The functional

breakdown of the hygiene division would be similar to that in Figure 5-1. The suggested

breakdown of the new motivator division would be as follows: (1) an educational

function to convince all mangers that satisfaction comes basically from the job content

and not the surrounding environment, (2) a job design function to enhance interest and

pride in work (see preceding chapter), and (3) a remedial function involving training and

education to overcome technological obsolescence, poor performance of specific

individual and groups, and administrative mistakes in policy, practices, and assumptions

regarding the sources of motivation. Though a few enterprises are undertaking

programs of this type they are not usually allocated the stats suggested by Herzberg.

With respect to the size of the personnel department various studies have

reported the ratio of personnel employees to total employees. A survey of 107 member

firms of the American Society of Personnel Administrators revealed that the number of

persons on the staff the personnel department per 100 employees ranged from 0.15 to

4.76, with a median of 0.89. Approximately 60 percent of the firms had more than 1,000

employees. That this reasonably representative of average size’s is supported by a

second survey of sixty-three manufacturing firms in the state of Arizona, the average

rations tend to be larger in the smaller-size firm. Rations also tend to vary by industry,

with comparatively greater investments in specialized personnel unit in finance

manufacturing and government.

Line and personnel staff relationships

When a specialized staff unit is introduced into an organization formerly clear interunit,

relationships often become highly complex. In organizing what has been divided in

secure specialized expertise must ultimately be combined to secure unity of organized

action. Various guides or principles of line/staff relationships have been proposed as

means of effecting greater coordination and cooperation. Four examples will be given
the first two of which emphasize the primary status of line; the latter two defend the

necessary contribution of the personnel staff unit.

Principle of staff advice This is the most frequently cited principle in this area and

states that staff can only advise line what to do never command or order. The

wholeness or integrity of the line should not be broken. But what of the personnel

manager has recommended that a superintendent follow a proposal and the latter

refuses. According to the principle, personnel cannot force compliance. But the

personnel manager is convinced that the proposal is sound. The formal organization

allows appeal to a common superior, in this case the vice-president of production. If this

official agrees, the staff recommendation becomes a line order, which the

superintendent must follow. The integrity of the line been preserved but the personnel

manager may have difficulty in working with the superintendent in the future. Many staff

specialist feel that they can be more effective in their work by avoiding such actions as

this except in extremely important situations. They prefer to rely upon persuasion and

sometimes upon “politicking” to achieve their arms

In terms of specific grants of decision-making authority, research has discovered

a high degree of variability. Not only among different firms but also among different

personnel operative functions within the single enterprise. In interviews with seventy five

executives in twenty- five firms varying inside from 100 to 15.000 employees. French

and Henning discovered that the authority varied from little or none to unilateral rights of

decision making in some personnel functions. Over half reported that personnel

directors are particularly strong in terms of unilateral action in decision concerning the

use of psychological test, reference checks, and determination of bargaining strategy.

They play a weaker role in decision concerning the creation of new positions, maximum

bargaining concessions, and grating of unusual and new fringe benefits. They are most

authoritative in the procurement function and least authoritative in determining wage-

level policies.

PRINCIPLE OF LIMITATION OF STAFF ECONOMY

This principle emphasizes the service relationship of staff. It states that in order for the

line to operate at maximum economy and effectiveness, it is sometimes necessary for

the serving staff to operate with reduced economy. The line is to be saved by staff, not

vice versa. Sometimes the staff official may have to run his or her department in a

manner that is considered undesirable in order properly to serve the line. For example,

a company may be desperately short of machinists. There is some chance that if the

personnel department stays open at night some machinists may be encouraged to look

around for another job after working hours. Also this long hours may be extremely

unpopular with personnel employees, and the budget may take a beating, but the

hardship is necessary for the welfare of the line organization. Too often staff tends to

prescribe what line must do to adjust to its requirements. The tail attempts to wag the

dog.

PRINCIPLE OF COMPULSORY STAFF ADVICE

The first two principles stated above emphasize the importance of the line. If staff is

necessary in an organization, its contribution must be defended. Staff functions are

separated from the line and sometimes line resents this loss. There may be a tendency

in the line to ignore or refuse to utilize staff. In the hope that they will go away and leave
the line alone. If such is the case a considerable investment has been made in staff

personnel with little or no return. The line official is making all decision with no

assistance.

The principle f compulsory staff advice not compel a line official to accept and

follow the advice it compels the line person only to listen. For example, the personnel

union should be consulted when job are being redesigned by line managers. Too often

only engineers and line managers are involved, thereby leading to job contents that may

be technically feasible but humanly objectionable.

PRINCIPLE OF STAFF INDEPENDENCE

Staff may not only be ignored by some line officials but it may sometimes be dominated

by others. The principle of staff independence indicates that staff personnel should have

sufficient security to be able to five truthful advice to their superiors without fear of losing

their jobs. This is the opposite of the “yes man” atmosphere. If we are to profit by the

presence of expertness then that expertness requires a certain amount of freedom

within which to operate. If the staff specialist is merely to echo line ideas, the investment

is wasted and the function should be returned to the line, formally as well as informally.

As example of this concept has sometimes been observed with respect to

pending unionization of a firm. Research and study may lead the personnel manager to

conclude that cooperation with unionizing attempt, within the confines of the law may be

the long-run best interest of the organization. Recommendation of such a policy to an

owner-manager in some instances has been tantamount to immediate discharge. Again

line officials are not compelled to accept or follow the advice of expert specialist; but
they are exceedingly shortsighted if they refuse to listen at all, or if they punish and

reward in a manner leading to suppression of rational thought.

PLANNING THE PERSONNEL PRGRAM

Defined in its simplest terms planning is the determination of anything in advance of

action. It is essentially a decision-making process which provides a basis for economical

and effective action in the future. Effective planning sets the stage for integrated action

to take place, reduce the number of unforeseeable crises, promotes the use of more

efficient methods, and provides the basis for the managerial function of control thereby

assuring focus on organization objectives.

Decision making

The personnel manager, despite the nebulous and complex nature of the field, can

increase program effectiveness through more judicious decision-making processes. The

suggested sequence of steps in more scientific decision making would encompass the

following: (1) recognize and define a problem that calls for action, (2) determine

possible alternative solutions, (3) collect and analyze facts bearing upon the problem,

and (4) decide on a solution. Recognition of personnel problems calls for experience

and background that make it possible for cues and clues to be observed and

synthesized into patterns of probable cause and effect. In the personnel field, one must

be always alert to possible dysfunctional human effect issuing from many technical

programs promulgated in the name of rationality and profit; e.g., controls such as

budgets often stimulate internal warfare. In generation solutions, creative imagination as

well as interpersonal contacts will lead to generation of multiple possible answers.

“Brainstorming” and other artificial creative stimulants have been applied to personnel

problems on occasions. After imagination abates temporarily judgment takes over in the

collection and analysis of facts. Operation research and quantitative methods show

some promise of being able to assist the personnel manager in collating and

understanding gathered data. Ultimately, the essence of the manager’s position is

choice. One must extend one’s neck and commit time and talent to a program that one

figures will work. The manager must never forget, however that acceptance of the

program by those concerned is often as important as its technical quality; an 80 percent

“perfect” solution with 100 percent employee acceptance may be worth more that the

reverse.

Programs and policies