A common phrase uttered by managers in the modern business world is that ‘people are our most valu...

1. INTEGRATED PEOPLE IN ORGANISATIONS
A common phrase uttered by managers in the modern business world is that ‘people are our
most valuable asset’. Twenty years or more ago, the opposite seemed to be true. Businesses
appeared to run despite the best attempts of’the workers’ to take high wage increases
in return for less and less work. The business world was characterised by an attitude of’them
and us’.
Since then, massive changes have taken place in a short period of time. They cover a wide range of
topics connected to people in business organisations, such as:
motivation
communication
labour relations
job design
workplace design.
People management is perhaps changing more rapidly than any other area of Business Studies. Old
assumptions are quickly being overturned. Today’s workers are developing different
expectations in their working lives which need to be fulfilled if businesses are to operate effectively.
The implications of accepting the phrase ‘people are our most valuable asset’ as a
basis for decisions are wide ranging. They can be costly to firms and threatening to managers and,
perhaps, workers as well. The changing style of personnel management is one that goes to the very
heart of any business and its corporate culture.
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Graphics: With respect to layout, it’s advisable to engage in a more regular solution for any
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The content: Keep the content easy-to-read .
Distribution: Through knowing your customers comprehensively, you will be able to calculate the
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How ARE PEOPLE MANAGED IN BUSINESS ORGANISATIONS? People in business organisations
can be treated by managers on a variety of levels.
At its simplest, there is the mechanistic function involved in administrating the working lives of all
the firm’s employees, such as payroll, contracts and so on.
On a second level, the personnel department can be involved in the preparation of the workforce for
their jobs through induction, training and appraisal.
On a higher level, the work of the personnel department can be a key ingredient in the
establishment of the culture of the whole organisation. Management styles, the organisation of the
workplace and lines of communication can all fall within the range of work covered by this
department.
Of course, the work of managing people must form a single part of the whole jigsaw that makes up
the work of a business. Nevertheless, it can be argued that the way a business treats its workers sets
the tone for all the activities in the business. Levels of service to customers, relations with suppliers,
levels of worker efficiency and commitment can all be traced back to people management.
A GRADE PEOPLE IN ORGANISATIONS
The study of people in business organisations is made up of several distinct areas, each of which has
its own body of theory and empirical evidence. Motivation, communication, employee relations and
the internal organisation of the business are often treated as separate topics. Better students are
able to go beyond these separate areas and develop arguments that follow key themes through each
of the areas. A question on changing management styles may have implications for the motivation
techniques used and therefore employee relations, which may in turn require different lines of
communication, and so on. Adopting an approach such as this demonstrates overall understanding of
the subject and a full grasp of its integrated nature.
A common distinction between ‘A’ grade writing and answers that attract lower
grades lies in the approach undertaken to personnel issues. It is possible to argue for empowerment,
job enrichment and so on because they seem to be the ‘right’ or ‘nice’

3. thing to do. Better answers will relate the relevant theory to more tangible benefits. The key effect
of motivation, for example, will not be a happier workforce, but one that has a higher labour
productivity as shown by concrete calculations. ‘A’ grade people in business
organisations requires a grasp of big underlying issues such as those that follow. These are areas of
discussion for case study conclusions. They represent ways of evaluating the wider significance of
the concepts covered in this area.
Has tne management of people improved in recent years? Most research suggests that it has not.
The pace of organisational change has been compounded by frequent changes to personnel
practices. Human resource management (HRM) was supposed to give personnel issues a bigger
strategic voice. In fact HRM has often been a banner under which labour flexibility has become
associated with insecurity and uncertainty.
A key feature of modern firms is the huge gulf between personnel approaches. Some firms are far-
sightedly developing staff through extensive training and interesting initiatives in consultation.
Other firms are creating atmospheres of fear and mistrust. A recent survey of 1,300 managers was
run jointly by UMIST and the Institute of Management. It showed the negative view of recent
changes held by many managers -especially those working in the public sector.
What has been the effect of organisational change?
PERCENTAGE SAYING THAT: ALL PRIVATE SECTOR PUBLIC SECTOR Decision making is faster
29% 31% 25%
Morale has decreased 64% 53% 81%
Motivation has decreased 49% 39% 65%
Sense of job security has decreased 65% 52% 80%
The adoption of’ modern personnel management techniques has followed a seemingly logical
course. In the 1970s UK firms were losing out in competition with rivals from Japan. One reason
identified for the better performance of Japanese firms was the production techniques used and the
way in which workers formed an integral part of the production process. It seemed clear that kaizen
groups, quality circles and the like were the way to compete in the international market.
How long will this trend be followed? For every firm that has successfully adopted these techniques
there are examples of other firms that have tried and failed. Adding to the unease on these
‘miracle’ techniques is the growing economic crisis in Japan and its Far Eastern
neighbours. Time will tell if the current push for these ‘modern’ management
techniques will prove themselves as reliable tools, or if the management gurus will develop new
ideas that will take centre stage in the future.
Are people the main assets of a business?
A simple answer to this must be ‘yes’. Without people there would be no business.
However, people on their own could not produce efficient productive units making highly complex
technological products, so capital machinery can be seen as being equally important. The argument
can follow, then, that all aspects of business are equally important.
This line of reasoning, however, neglects the crucial fact of personnel management. The work of the

4. personnel department sets the tone for the whole culture of the organisation. A happy, content and
committed workforce will be more productive than one in which workers feel oppressed and under-
valued. On the sporting field and in armed conflicts, victory has often gone to the side that was more
committed and unified in its aims than the one with the better individuals or better equipment.
In a competitive environment staff motivation and effectiveness can make the crucial difference
between success and failure.
Modern Trade Unionism
In March 1998, British Vauxhall car workers were warned by the US owners (General Motors) that
one or more of the factories faced closure as a result of a fall in demand for Vauxhall cars across
Europe. Other General Motors plants on the continent such as Russelsheim in Germany and Antwerp
in Belgium had been assured of their future. The British factories were said to be vulnerable because
of overcapacity and low levels of productivity. The low productivity levels were made worse by the
strength of the pound. This made British-produced goods more expensive abroad.
Vauxhall’s trade unions responded to this threat in a cooperative manner. The Transport and
General Workers Union spent weeks in negotiations with the management to arrive at a compromise
deal to avert the closure of the Luton plant and the loss of 4,500 jobs. The deal comprised a three-
year package with an initial pay rise of 2.5% (just below the rate of inflation) followed by rises in line
with inflation for the next two years. In return, workers would adopt new work practices aimed at
boosting productivity.
A week later, with workers still discussing the deal, Vauxhall’s chairman and managing
director, Nick Reilly, vowed to give up his salary for one year if the deal were accepted. He would
forego his basic salary of £160,000 while eight directors would take a pay cut and 25 senior
executives would have their pay frozen. Mr Reilly’s gesture was designed to demonstrate to
workers that the problems of the company were being shared by everyone involved. This might help
break down ‘them-and-us’ barriers between management and workers.
However, workers remained sceptical. Mr Reilly was giving up his basic salary, but would still
benefit from bonuses which would increase if productivity improved. The previous year he earned
about £90,000 in bonuses, compared with an average assembly line wage of £17,000,
including overtime. One worker said: ‘He is president of five other companies – is he
giving up those salaries too? No-one is particularly impressed by this offer. If he couldn’t
afford it, he wouldn’t do it. All we know is that we earn so little that we couldn’t afford
to give up one penny.’ 1
MODERN WORKING LIFE
A recent study on the UK labour market, entitled ‘Different Jobs, Different Lives’,
forecasts significant changes in the types of jobs available and the type of person needed to fill these
posts. Traditional manufacturing jobs will shrink to 3 million by 2006. Growth will come from the
‘creative professions’ such as the music business, design or professional sport. It is
thought that by 2001 there will be 4.5 million managers, 2.6 million professionals, such as doctors
and lawyers, and another 1.9 million ‘associate professionals’, such as legal executives
and computer programmers. These are the highest paid categories, with average earnings ranging
up to £569 per week for a male manager. These occupations also demand the highest level of
qualifications. Four-fifths of professionals and a third of managers and administrators have degrees.

5. At the other end of the scale, demand is expected to grow in some lower paid jobs as well. The
report foresees 2.7 million people in occupations such as health care and catering. The number
working in childcare is expected to rise significantly to half a million by 2006.
Such figures suggest that not only is working life changing, but also the structure of companies is
changing too. For some time company chairpeople have said that ‘people are the most
important asset of a business’ and that ‘knowledge workers are the way
forward’. Now organisational structures may be changing to match these trends.
Studies show that some firms are developing corporate structures based on people rather than
physical assets. This involves the creation of a business without a recognisable centre. Instead, there
is a network structure with a core in which the various elements are connected through internal and
external alliances. Such an organisation has leaders throughout its operations who focus on themes
such as people, values, strategy, customers and learning.
The function of the ‘global core’ as differentiated from the centre of an organisation is
to create a sense of purpose, creating a context for growth. It sets the tone rather than dishing out
orders, and aims to add value rather than overheads. The functions of the core are:
identifying the organisation’s strengths
encouraging business units to build on those strengths
providing strategic leadership
minimising the cost of capital
exercising control on behalf of the board and shareholders.
For this decentralised structure to work, a different kind of organisation must be developed. It must
be flexible and capable of working effectively with the various units and outside organisations who
are linked via strategic alliances.
CHANGING TIMES
After 35 years as managing director of his family firm, Sir John Jackson was able to look back with
some pride at his achievements. He and his family had built Jackson’s Ales Ltd into one of the
most highly regarded small brewers in the North of England.
The last decade, though, had not been kind to the business financially. The workforce had to be cut
back, though fortunately through natural wastage rather than redundancy. Costs had to be cut at
every opportunity. In a highly competitive market, customers had switched from premium priced
beers to cheaper, mass market products.
Sir John and the other directors were following a policy of focusing on the higher priced end of the
market, hoping to achieve high profit margins on limited sales. At the start of the 1990s the firm
began to run into serious difficulties with an ever decreasing market share.
The workforce, many of whom had been with the business all their working lives, were becoming
disheartened with future prospects. The loss of jobs and weakening performance of the firm were
worrying signs. Though THE excellent relations with the Jackson family meant the workers

6. continued to trust Sir John’s leadership.
In 1993 it was decided to employ a non-family member as a manager to control the day-to-day
running of the business. The firm took on Sam Beckett, a business graduate. She had already
developed an excellent reputation for herself as production manager with Whittingtons, one of the
major mass market brewers.
Sam persuaded the family to reposition itself in the marketplace. While retaining the traditional
Jackson’s Ale as a premium product, she also wanted to launch Quantum Ale as a more
mainstream product. The estimated sales meant there would have to be an increase in output from
the firm’s one brewery. Sam was confident the existing staff could make the necessary
adjustments to meet the new production targets.
In particular, Sam was convinced output could be increased without adding to the firm’s
overheads. More efficient organisation within the workplace and an emphasis on getting the mix of
ingredients right first time should lead to large increases in productivity.
By 1996, Sam had implemented the changes to her satisfaction. A small but significant foothold had
been gained in the mass market by Quantum Ale. The firm had begun to take on workers again. the
table shows how the output of the firm changed between 1991 to 1998, along with the number of
workers employed by the firm.
DATA FOR JACKSON’S ALES, 1991-1998
Year Output (’000 gallons) No. of workers 1991 37 37 1992 38 32 1993 33 32 1994 29 30
1995 35 32 1996 41 34 1997 43 36 1998 45 38
The workers in the factory, although wary at first, warmed to Sam over time. One worker, who had
been with Jackson’s for 30 years, was heard to remark: ‘When she first came here, she
seemed to be full of the latest jargon. Always wanted to change things just for the sake of it. She
wasn’t very popular when she tried to change things the Jacksons had always done. They
would turn A blind eye to us leaving the shop floor for an occasional smoke, but she was very strict
on that kind of thing. On the other hand, old Mr Jackson knew what he wanted and how he wanted
it. He didn’t take kindly to suggestions from the workers. Now Sam has these workgroup
meetings where we can put forward our own ideas. I was really pleased when she changed the
sampling process after I made a suggestion.’
Another worker who joined the business in 1996 from a rival firm was astonished with the attitude of
the workers: ‘When I first arrived, I was amazed at everyone’s enthusiasm to get the
product right. They all seemed to take it very personally if something went wrong with a particular
batch.
And yet if something did go wrong, the manager would talk about it being a learning experience. Not
like at the other place. You were for the high jump if you made a mistake there.’
Not everyone, though, was happy with the way things had gone. Most resistance came from
Sam’s fellow managers, some of whom felt marginalised by the changes. One said:
‘She seems to be getting results, but for how long? You can’t have a business being
run from the shop floor without things going seriously wrong. She doesn’t seem to want to
make real decisions without consulting the workers first. It seems like the workers do all the
thinking, and she goes along with what they propose. I mean, what is our job now that decisions are

7. being made at the bottom of the hierarchy?’