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If the interviews are to be effective and are to produce the data needed, the consultant must work in an ethical manner. The rules must be established with the client prior to the work starting. Generally, ground rules are established that all data gathered will be merged and individual sources will not be revealed. If the client agrees, then the consultant can indicate this to the individual respondents when arranging interviews. If a respondent is still hesitant, this could indicate a low level of trust in the organization.

The results of the human resource audit should, if necessary, point out the need for definition, refinement, or rewriting of organizational policies. Similarly, a review of the organization’s regular practices may suggest improvements to facilitate conversion of policies to actual procedures. Inadequate or totally absent data indicate that urgent attention is required. The principal result of an effective audit is a set of conclusions as to what needs to be improved in one or more areas of HRM. These areas are reviewed in the following sections. However, the audit may also reveal other significant problems, such as missing links between staff training and the business development strategies pursued by the company.

The client may be satisfied with the audit and convinced that enough guidance has been received to implement the conclusions without further help from the consultant. Or the consultant may be requested to assist in planning and implementing the changes that are required.

18.3 Human resource planning

The purpose of human resource planning is to make sure that the organization has the right number of people of the right profile at the right time. Many organizations do not discover the importance of this until they face a major problem – either the shortage of competent people becomes an obstacle to expansion or technological change, or the organization employs more people than it can afford and has to retrench.

In many cases a management consultant will be called in, once the problem has manifested itself, to help identify emergency measures to be taken if, for example, there is an acute shortage of competent staff, or if significant redundancies are anticipated. However, an emergency situation provides an opportunity to demonstrate the advantages of human resource planning treated as part of, and coherent with, strategic corporate planning.

The consultant will be able to help the client in combining various human resource planning techniques. If enough detailed information is available on the structure of production or other processes, it may be possible to define and describe all necessary job positions. This implies that a detailed job description is worked out for every job. This is particularly appropriate where the organization and the environment are stable. Increasingly, detailed lists of jobs cannot be established with accuracy, or units have rapidly changing functions and need to adapt readily to new conditions (this is typical, for example, in jobs with a high

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technology or knowledge content). In such conditions, organizations are tending to work with broader technical profiles of the kinds of people who will be needed, describing their educational background and experience; or with annual targets for individuals (output oriented), rather than defining tasks (input).

Here again, relevant interfirm comparison and benchmarking techniques may be of help, but they should not be used mechanically. The consultant must be able to show the client the numbers and profiles of staff in comparable organizations that achieve similar or better results, and the reasons for the difference. This underlines the relationship between the planning of human resources and of productivity and performance improvement.

18.4 Recruitment and selection

The consultant may be asked to provide advice on how to improve the recruitment and selection of various categories of personnel, including management personnel. Arguably, getting the right people into the organization is the most important issue in HRM: if that is done well, most other problems are easily soluble; if it is done badly, the resultant problems will multiply.

Recruitment

Recruitment is the process of attracting applicants for jobs within the organization. Here the consultant can help with advice on specifying the details of the job and the person required, and can clarify the means of advertising the vacancy. This may well include the most common and cost-effective method – using word-of-mouth channels – but might also involve the use of government or private employment agencies, or advertising in the local press or radio. Increasingly, organizations are using the Internet for recruitment. This has the advantage of getting the advertisement out cheaply to a potentially worldwide audience, though advertisements are often ethnocentric in nature, thus reducing their appeal in many countries. The downside of such methods is that they can attract considerable numbers of applications, which will need careful screening and processing.

Executive search

Executive search (“head-hunting”) is a special service offered by some larger management consulting firms, or by consultants who are specialized in this function. It is used by a number of business and other organizations to fill important managerial or specialist positions. The advantage of using an executive search specialist is that such a person can develop information on potential sources of recruitment and undertake a systematic search and objective selection in a way that is usually outside the capabilities of a line or personnel manager.

Business firms turn to executive search specialists if they do not want to advertise a job publicly, or if they are seeking candidates in areas where

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advertising does not work. Most candidates also find executive search useful: some of them are glad to learn that they could have a more challenging career with another employer, while others appreciate a confidential discussion on alternative job opportunities, particularly if in their current position it is difficult for them to make the first contact or show interest in another job.

The executive search function involves: the building up of files and contacts needed to identify potential candidates and recruitment sources (an international search firm may have thousands of names of potential candidates in its computerized files); assistance to clients in analysing the job to be filled and defining the ideal candidate; active and methodical search for candidates (by direct approach, search through various business contacts, in some cases advertising, etc.); contacts with candidates for the purpose of interviewing them and ascertaining their interest in the job; evaluation and preliminary selection of candidates; arranging interviews for the client with preselected candidates; and follow-up contacts with the selected candidate and the client.

Executive search consultants often have their own professional associations (as in the United States) or are members of national associations of management consultants. Codes of ethics for executive search have been adopted in several countries. For example, such codes forbid charging fees to the candidates or accepting any payment from them; the cost of the search operation is charged to the client according to an agreed scheme (as a rule, 30 per cent of the annual salary of the candidate recruited).

As in other areas of recruitment, executive search is being drastically affected by the use of the Internet and a lot of these activities are likely to develop this way in the future.

Selection

Selection is the process of choosing between applicants. Some basic principles should be followed: the pool of candidates should not be restricted by irrelevant criteria such as sex or nationality; references should be checked; recruitment interviews should be properly conducted against prepared criteria by people who know about the job. In some organizations the problems faced are delicate. Political, ethnic or other criteria may prevail over technical competence, or trade union membership may be required as a condition of employment.

The consultant’s professional responsibility requires him or her to advise the client on what should be changed in the best interests of the organization. But the client will be unlikely to follow advice that is deemed unrealistic because of political or other constraints that are not under his or her control.

In most instances, however, improvements in selection and recruitment will be feasible. The consultant may identify a more objective procedure and more precisely defined criteria, or may suggest and carry out a training programme for staff responsible for selection.

Some consultants assist clients with testing and assessing candidates for managerial or technical jobs. This is done through such procedures as

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interviews, dexterity or psychological testing, assessment centres and careful checking of references.

Retention

Given the increasing shortage of skills in some sectors and countries, an important role for the consultant is often to focus the organization on retaining staff rather than just recruiting them. An analysis of turnover rates (recruitment and terminations of employment), retention rates and employee flows through the organization is a good way of highlighting the problem. Organizations in the high-technology sector frequently find themselves in “bidding wars” for new staff, while simultaneously their employees are leaving them in considerable numbers. It is cheaper and more effective to design programmes to keep those employees within the workforce: training and development, interesting work, profit or equity sharing can all have a positive effect. The simple assumption that the problem is uncompetitive pay levels is sometimes right; but often the situation is more complex. The management consultant should get the organization to consider introducing exit interviews aimed at finding out from those who leave what is causing them to make that decision. Exit interviews are best carried out by someone other than the immediate line manager and have to be handled sensitively.

Termination and outplacement

One unfortunate consequence of the competitive situation in industrialized economies throughout the world has been a huge growth in recent decades in terminations of employment. Many consultants now provide specialist advice on this subject, ranging from policy to practical support. At the policy level, consultants can help an organization determine how many people should be retained and how many should go, how to ensure compliance with relevant laws and collective agreements, and how to announce the resultant policy. At the practical level consultants are often called in to provide outplacement services – giving psychological, career, retraining and financial planning assistance to those who will be leaving the company. The concern for the welfare of the individuals who are made redundant can ease the process considerably, and a skilful and caring consultant can do a lot to make a difficult situation more bearable.

18.5 Motivation and remuneration

Motivation

Every organization aims to achieve certain economic and social objectives, but the resources at its disposal are limited. It tries, therefore, to motivate its personnel towards the achievement of a range of goals, which may include

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societal, organizational, group and individual goals. An HRM consultant may be requested to assist in determining what motivational tools and strategies should be used. This may include, for example:

●The improvement of the overall organizational climate (the psychological and motivational environment of the organization). This climate strongly affects the motivation of people at every level in the organization to work and to achieve. It is determined primarily by the people management practices of senior managerial staff, by the employment and working conditions, and by the encouragement given to individual and group initiative, innovation, creativity and self-development.

●The enrichment of job content, where, by changing the structure of the work to be performed, the consultant endeavours to assist in creating intrinsic job interest and increasing job satisfaction, and developing a more flexible and efficient workforce. There is evidence that increased team working, increased autonomy for teams and employee involvement generally have a positive motivational effect.

●Reward systems, where the appropriate behaviour is shaped as a result of certain rewards, particularly financial and material ones. This requires a feedback system, so that the incentive used (e.g. pay) is tied as directly as possible to actual individual or group performance. However, the role of non-financial rewards or incentives is important and must not be underestimated when trying to enhance staff motivation.

These methods do not operate independently, but affect separate components of the motivational process and call for different levels of intervention on the part of the organization and of the consultant. Consultants commonly face complaints by clients about the lack of motivation of the managers or their staff for achieving higher performance in organizations where people are relatively well paid. A thorough study is needed to determine the weight of various factors affecting staff motivation. The study may reveal that the client assumes that a good salary is a stronger motivational factor than it really is. It may be that the salary level is taken for granted by the employees concerned, that the client and the employees differ in their views on what salary level is adequate, or that certain adverse factors in the working environment negate the effect of good salaries. For example, employees often regard interesting job content and real prospects for future career development as more important for job satisfaction than the level of their salary.

Wages and salaries

In some assignments, the consultant will be requested to assist in examining and reorganizing the wage and salary system. This kind of consultancy arises from the fact that increasing competition (or spending restrictions in the public sector) focuses attention on the costs of employment – a major operating cost

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for almost all organizations. In addition, the requirements of new technology and the consequent abolition or reorganization of tasks, or demands for flexible working practices, mean that pay systems have to be adjusted to fit a new reality. The challenge to existing and well-accepted structures is obvious and the importance of establishing acceptance of any new structures is clear.

In Europe and elsewhere this problem has been compounded by moves towards the “individualization” of pay (often in a non-union setting) and “pay for performance” (where individuals in the same job may receive different salaries depending upon managerial judgement of their performance). This has increased pay variability.

Variable pay presents major problems. First, there is the problem of establishing clear targets and monitoring performance against them so that managerial assessments are acknowledged to be fair and not arbitrary. Second, there is the issue of what percentage of pay is variable: too much and it threatens individuals’ livelihoods, too little and it fails to motivate. Third, the issue of guaranteed limits has to be addressed: if the organization is successful or people perform well, they receive pay increases – but what happens in other circumstances? Do individuals take a pay cut? These are all issues that well-prepared consultants can bring to the organization’s attention and help to resolve.

In the same vein, there has been a spread of financial participation in the success of an organization through stock options or profit-sharing, particularly in Europe and North America. Again, such systems can help to generate commitment and retention and are often seen as a fairer way to share the wealth that has been generated. There are often tax and other advantages that can accrue to the employees and the organization. A key question concerns whether the systems should cover just the senior employees (more usual in the United States) or all employees (more common in Europe).1

In most of the developing world, and still in much of the developed world, wages and salaries are fixed using a more traditional and clearly structured approach. The problem will be to develop a salary system that works efficiently and fairly from the point of view of both the organization’s management and its employees (and, where appropriate, their representatives). Logically, the consultant approaches such a problem by conducting a job analysis, followed by job evaluation and the building of a job structure so as to develop an equitable salary system and a plan that can accommodate periodic reviews, supplementary remuneration and appropriate fringe benefits. Obviously, the consultant cannot see wage and salary problems as purely technical ones and has to be well informed on legislation and industrial relations practices related to wages, especially on collective bargaining. The problems most frequently met in this area include:

●distorted salary systems (e.g. the wage differentials do not reflect the relative difficulty and importance of particular categories of jobs);

●no relationship, or a very weak one, between salary and real performance at work;

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●wage and salary differentials that do not motivate employees towards training and self-development or to seek promotion to more responsible and more rewarding jobs;

●obsolete salary and pay structures, which have not been adapted to the requirements of new technologies and to the changing structure of jobs;

●little or no flexibility in using individual and group bonuses and special rewards for encouraging high performance, and in demonstrating that such performance is important to the organization and is therefore properly remunerated by management;

●excessive secrecy in matters of salaries and other rewards, giving rise to various suspicions about the actual pay levels of certain individuals, and reducing confidence in the objectivity and fairness of management over questions of pay.

The sensitivity of pay issues, particularly in certain cultures, means that these problems are rarely easy to handle, although from a strictly technical viewpoint the solution may be straightforward. The consultant should be cautious in establishing, and assessing with the client, the feasibility of changes, and the way in which the necessary changes are to be announced, introduced and maintained.

Social benefits

There are other issues in the field of salaries and compensation which now attract considerable amounts of consultancy work, in particular those related to financial benefits other than pay: social benefits, tax and actuarial services, pensions and insurance. In many parts of the world there are specialized consulting firms (some quite large) whose task is to ensure that employers and employees obtain the maximum benefits from their investment of money in these areas. This often involves advising on the source and location of investment opportunities and on minimizing taxation. This type of consultancy requires a detailed knowledge of financial markets and the laws of the relevant country. It is often controlled by legislation so that only qualified individuals can offer such services. As financial and legal requirements become ever more complex, this is likely to be a growth area for consultancy.

Job analysis, evaluation and classification

Job analysis includes the collection, organization and examination of information on what people do in a particular job. Job analysis is used not only to produce job descriptions for recruitment and other purposes, as discussed above, but also for job evaluation, that is, determining job worth. Depending on the job in hand, the order of complexity of the job evaluation system usually moves from (1) whole job ranking schemes, through (2) job classification, to

(3) points evaluation systems, and (4) factor comparison methods. Worldwide,

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