THE HR FUNCTION AND THE CHANGE MANAGEMENT PROCESS: NEW TEMPLATES AND POSSIBLE LESSONS FROM BRITAIN’S

NATIONAL MAPPING AGENCY

Francesca AndreescuSchool of Management

University of SouthamptonHighfield, Southampton

SO17 1BJ, UK

Phone: 44 (0)23 8059 7995Fax: 44 (0)23 8059 3844E-mail: afa@soton.ac.uk

A paper prepared for the Fourth Conference on HRD Research and Practice across Europe 2003, May 23-24, 2003, Toulouse

Stream: Boundaries of HRD: interface with HRM, changing roles and social partnership

THE HR FUNCTION AND THE CHANGE MANAGEMENT PROCESS: NEW TEMPLATES AND POSSIBLE LESSONS FROM

BRITAIN’S NATIONAL MAPPING AGENCY

Francesca AndreescuSouthampton University Business School

afa@soton.ac.uk

AbstractFollowing years of management reform, change management has recently become an imperative in the UK public sector. In this paper, the author draws on the findings of a doctoral study to explore the changing roles of the HR function in a commercialising public organisation and to show the role of HRD in managing change. The study reveals that the HR function’s contribution to the process of change management in this organisation situated ‘halfway’ towards the private sector lies in its ability to configure the organisation’ human resources over time and to create an environment where change and learning are embraced and diffused throughout the organisation. It also shows that, in the context of the changing public sector, the distinction between HRD and HRM is no longer absolute, and, as a result, these two areas should be seen as forming a continuum, with HRD activities and programmes reinforcing HRM systems and policies, and building the organisational capabilities required for successful change.

Key words: organisational change, human resource management, public sector.

Introduction and Research Idea

In recent years, public sector organisations in the United Kingdom has been moving away from old principles and traditional arrangements and many of them now find themselves, in effect, halfway towards the private sector: state owned yet managed in a commercial manner.They fit neither in the strictly public realm of state action nor in the strictly private realm of commercial relationships. They are expected to function like businesses – to be efficient, customer driven, and client oriented – yet they perform tasks that are inherently public.

The new competitive reality facing public sector organisations calls, therefore, on newand different capabilities. How can one create an organisation which adds value to its customers, partners and employees? And how can the HR function help to realise this? When the importance of flexibility and efficiency is emphasised, what contribution does HR function make to the management of change?

The literature of organisational development and change has grown rapidly during the past decade. While most of the change models and theories proposed in the literature discuss how change may be managed, there is little empirical research to explain whether the Human Resource (HR) function itself has a role to play in managing change. However, human resource management (HRM) is widely recognised as a vital means of developing that capacity that all organisations need for successful change. As Hendry and Pettigrew pointed out:

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‘organisational effectiveness depends on the ability to integrate a variety of activities that are frequently compartmentalised, getting people to address a number of key performance criteria simultaneously, and linking operational and strategic activity… Companies practising strategic management must create the conditions for employees to relate their activities to one other, and this in turn requires the adoption of the HRM as an holistic approach to the management of people…Human resource management embraces the management of change. This includes the continuing process of adjusting personnel systems to organisational needs, and also the complex processes that integrate strategy-structure-culture change’.

(Hendry and Pettigrew 1992: 137)

There is already much published research on the management of radical change in largeorganisations within the United Kingdom and the human resource management implications of the organisational transformation. Most studies have focused only on private-sector entities or have dealt with managing changes in particular public policy areas – such as healthcare, education or community services (city councils, police service). By contrast, little research has been carried out in commercialising public organisations in relation to the changing role of the HR function and the adoption of new HR strategies, policies and practices to respond to the need to become more focused on performance and accountability in a commercialised environment.

Human Resource Development (HRD) roles are often subsumed within the human resource management or personnel department (Mankin, 2001; Swanson, 2001). Does this mean that HRD lacks its own identity as an organisational and management concept? Is the contribution that HRD can make to business performance and organisational development at a secondary and tertiary level only?

While there is a large and ever-growing reservoir of material on human resource management and a variety of models, less has been written in relation to human resource development in the public sector. Commercialisation has provided the catalyst for transforming UK public sector, but our understanding of the transformation processes which occur internally is still poor. There is still little known about the changing role of HRD in those public sector entities operating in a commercialised environment. How have public sector HRD professionals responded to the new pressures of commercialisation and increased efficiency and what implications do these have on their role, influence and contribution within changing public organisations?

In this paper, the author draws on the findings of a recent doctoral study to explore thechanging roles of the HR function in a commercialising public organisation within the United Kingdom and to show the role of HRD in managing change in a public sector context. The findings indicate that the role of HRD in the public sector has become more multifaceted and complex and that HR professionals must be ‘partners and pioneers’ in guiding, facilitating or delivering change.

Drawing on a rich seam of qualitative data, the case study describe how HRMinterventions and the structure of the HR function itself are used as change levers to support the transition toward a market-oriented, customer-focused and self-financing organisation. It reveals that the HR function’s contribution to the process of change management in this public organisation situated ‘halfway’ towards the private sector lies in its ability to configure the organisation’ human resources over time and to create an environment where change and learning are embraced and diffused throughout the organisation. It shows, furthermore, that in the context of the changing public sector, the distinction between HRD and HRM is no longer absolute and that both areas should be rather seen as forming a continuum, with HRD activities and programmes reinforcing HRM systems and policies, and building the organisational capabilities required for successful change.

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Theoretical background - the role of HRD in managing change

The literature on human resource development argues that there are two ways in which HRD plays a central role in managing organisational change. First, by responding to a succession of externally driven changes at an organisational level, and to subsequent shifts in strategic direction, each of which has significant effects on development-orientated practices in the workplace. Second, HRD can have an influential role internally by developing and shaping the appropriate competencies, practices and attitudes that will help the organisation deliver its products and services. The key role of HRD is, therefore, to link HRM systems and policies to the competitive capability of the organisation (Thomson and Mabey, 1994).

Nevertheless, the resource-based view of human resource management points out thatHRM has an important influence on the development of organisational capabilities needed for sustaining organisational change and on the firm’s performance (Lado and Wilson, 1994). The HR system has the potential to facilitate or inhibit the development and utilisation of organisational capabilities (De Saa-Perez and Garcia-Falcon, 2002). These capabilities may be expanded, upgraded and maintained through a HR system that emphasises flexibility, productivity, innovation, learning and skill development. Furthermore, HR management can play a significant role in stimulating change and ‘ start a process that that results in a more extensive tapping of the organisation’s hidden reservoir’ (Mueller, 1996: 777). The HR system is an ‘invisible asset’ that creates value when it is so embedded in the operating systems of an organisation that it enhances the firm’s capabilities (Becker and Gerhart, 1996). Thus, human resource management has an important role to play in building the underlying organisational capabilities required for effectiveness in continuous change.

Change affects a complex web of interrelated elements within an organization, andtrying to introduce change by addressing only one element in isolation, without taking account of its wider context and its impact on the organization as a whole, as well as of the associated HRD activities deriving from that change, is only likely to lead to benefits that cannot be sustained in the long term. Therefore, even if the imperative or the stimulus for change comes from the organization’s outer context (external environment), the success of any subsequent changes depends equally upon the inner context of the organization. This refers to an organization’s capability to change (in the form of leadership, organization structure and culture), the values and attitudes of the workforce, the personalities of key people, the effectiveness of political processes and the adequacy of current competencies and practices to deliver the mission.

HRD can have a major impact on these inner capabilities for change, both in the ‘softer’areas of motivation and attitude, as well as the ‘harder’ areas of skill levels and management expertise. HRD as a whole can contribute in the successful implementation of change through the integrated use of organisational development, career development and training. However, these HRD areas are closely related to a number of HRM systems and policies that constitute essential underpinning to the HRD activities and programmes: human resource planning determines the organisation’s major human resource needs; performance management systems ensure individual and organisational goals are linked through appraisal and assessment procedures; selection and staffing attempts to match people and their career needs with available jobs and career paths; and reward strategies ensure fairness and constituency in the administration of compensation and benefits.

Methodology

Britain's national mapping agency is regarded as a shining example of a public sector organisation responding to the New Labour Modernising Government agenda. The

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organisation was considered an appropriate research site primarily because it represented a public sector setting within which the changing role of HRM/ HRD could be explored. It was confronted by commercialisation pressures to improve organisational performance under the New Public Management, which led to considerable organisational flux and restructuring. It has been also provided with the opportunity to operate and compete commercially and to adopt features of the commercial environment under the wider Modernising Government agenda in the United Kingdom.

Recognised as a leading participant in the geographic information industry, within which it is forging partnerships with key private sector companies, it was engaged in radical internal change from various perspectives. A more flexible structure marked by adaptability and customer orientation was emerging; business processes were being rethought; and commercial, technological and cultural transformation was taking place.

The new competitive landscape has forced the organisation to increase its exploration of new opportunities by managing knowledge creation and sharing as one of the most strategically significant activities and by treating organisation form as a 'new strategic variable' (Grant, 1996). Following the implementation of a new e-business strategy - in line with the wider Modernising Government agenda for the public sector set by the government - the organisation has moved from a highly centralised and bureaucratic model to a decentralised structure, with cross-functional and cross-boundary teams, characterised by a dynamic management style.

The fieldwork was carried out during 2002 and 2003, in the organisation’s head-office in Southampton and in two field offices. Data sources consisted of a combination of 50 interviews (with senior managers, line managers and members of the HR function, including the HR Director), focus groups within the HR function staff, HRM-related meetings and forums, analysis of documentary evidence (Board minutes, strategy documents, reports of the steering committee, project teams, minutes of follow-up meetings, business plans, agendas and minutes of HRM-related meetings and forums) and non-participant observation.

Results of study

Background information

Ordnance Survey, Britain’s national mapping agency, is recognised as a leading participant in the geographic information industry, within which it is forging partnerships with key private sector companies. The organisation currently employs some 1850 staff, 1350 of whom are based at the Head Office in Southampton whilst the rest – cartographic surveyors and territorial sales representatives – are dispersed among a network of 80 local offices around the country.

Ordnance Survey’s principal activities are twofold: the maintenance of the National Topographic Database by recording and storing measurements of new roads, houses and so forth; and the creation of products from it, such as paper map series and digital datasets used in geographic information systems (GIS).

Key facts about Ordnance Survey an independent Government Department and Executive Agency reporting directly to a

Government Minister; underpinning £ 100 billion of economic activity in Great Britain; embedded location information; modern data collection using the Geographic Positioning System (GPS); delivering through partnerships;

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has operated as a Trading Fund since April 1999. This provides a greater degree of commercial flexibility and increased responsibility for its business planning and finances. As a Trading Fund the business has to make a profit but does not receive a subsidy from the taxpayer;

a potential change in status towards a Government-Owned Plc. status was proposed in 2002 and rejected because it did not deliver the necessary benefits to the organisation. However, enhanced financial freedoms and flexibilities has been granted by the Government.

External context

The New Labour Modernising Government agenda has provided Ordnance Survey with the opportunity to operate and compete commercially while allowing government to retain ownership.

Ordnance Survey was one of a number of ex-Executive Agencies to be given TradingFund status in 1999. A key aspect of becoming a Trading Fund was to move towards performance targets and a culture of measuring, and rewarding achievement linked to the business vision. Likewise, the E-government Strategic Framework (April 2001) set out a series of guiding principles built around a common framework and requiring public organisations to innovate by buiding services around citizens choices, making government and its services more accessible electronically, managing information and knowledge in more efficient ways to ensure easier on-line access and more effective use of all services.

The environment in which the organisation operated is characterised by emerging opportunities for the rapid expansion of the digital market and, in particular, location-based services offered via the Internet. That sits alongside its activities in the mature market for traditional paper-based mapping. The severe market competition and threat of product substitution through the mass expansion of digital information and the new status of Trading Fund acted as drivers for revenue maximisation and placing greater emphasis on increasing the utilisation of geographical data.

Internal context

With the appointment of a new Chief Executive Officer (CEO) in September 2000, Ordnance Survey began the first phase of the commercialisation process, by changing its organisational and reporting structures. The CEO immediately set about transforming the organisation with a new vision: ‘Ordnance Survey and its partners will be the content provider of choice for location based information in the new information economy’.

This mission statement was developed into a new e-business strategy by a dedicated project team. Seven implied critical success factors were identified: Delivering excellence in all aspects of our business, employing e-business principles to

achieve and exceed customer expectations; Identifying, developing and maintaining effective strategic partnerships; Ensuring that our business strategy is clearly understood by our staff, customers, partners

and the wider community; Establishing Ordnance Survey as the centre of excellence for innovation in location-based

information; Establishing a winning culture within Ordnance Survey; Developing a business of progressive people with skills appropriate to an e-business; and Building on the new Ordnance Survey culture.

Once identified, the critical success factors were mapped against existing business

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processes and a range of projects were identified that would exploit e-business technology and approaches to improve performance. A vast programme of structural and cultural change was designed, having as key milestones: The implementation of a series of 21 investment projects, grouped into five strategicinitiatives: Putting the customer first, The strategic alliances, The new Ordnance Survey, Developing the market and The enabling infrastructure; The development of a more flatter and more flexible structure marked by adaptability andcustomer orientation; and The rethinking of business processes, and the commercial, technological and culturaltransformation of the business.

The organisation had a long history of public service culture and organisational systemsand processes. Similar to other public sector entities undergoing public sector reform in the form of commercialisation, the efficiency and effectiveness of management processes were major challenges. The change programme set up from 2000 onwards was designed to transform a strongly introspective technology-oriented organisation into a customer-oriented one. One of the most significant reviews undertaken in 2001 by the top-management team identified that the problem of achieving Ordnance Survey’s corporate goals resided within its structures and work practices. While traditional organisational structures and practices have emphasised size, role clarity and formalisation, greater emphasis was now being placed on organisational practices that emphasise speed, flexibility, innovation and boundaryless integration. A key strategic objective of the new arrangement was the reduction of structural and process complexity and the rethinking of how the organisation provides value to its customers. There was thus a strong need to move the organisation from a highly centralised and bureaucratic model to a decentralised structure, with cross-functional and cross-boundary teams, characterised by a dynamic management style.

Impact on HR

Not unexpectedly, the internal transformation of the business had a significant effect on the HR function. Senior managers and managers from the other business groups began to recognise that traditional models used in the organisation were fast becoming inadequate. This discomfort accelerated when the business re-organisation planned by the top- management team began to be put into practice and there was an urgent need to rethink HR roles. As new standards of organisational performance were established, the HR function felt pressure to justify its existence and demonstrate added value.

The traditional model of personnel in Ordnance Survey had focused on theadministration of personnel processes and practices, and employee advocacy. Personnel function was regarded as ‘the police’ of the organisation, with personnel policies being vigorously enforced. Business groups’ managers were used to be told by HR officers which policies work and which don’t, and most of these policies were not linked with what the business was actually doing. There was a neglect of people management issues by line management and the personnel function was perceived to be ineffective.

As the organisation started to pursue its turbulent journey, management expectationsbegan to change. Business managers wanted their Business Groups to compete on a level playing field, which meant rethinking the notions of ‘uniformity’ that permeated personnel activities organisation-wide. Impatience grew with the old administrative model of the HR function and with its tendency to say ‘no’ to innovation and differentiation.

The HR function was expected to make a contribution in the following two areas:

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Its strategic mission of delivering integrated HR strategies and systems to build organisational capability for the business, with a long-term impact on corporate performance;

Put in place those activities necessary for increasing organisational performance: new structures, work processes, mindsets, roles, competencies and leadership.

The contribution of HRM

Two major stages could be identified in the transformation of the HRM function in Ordnance Survey.

The first one was initiated in 2001 and involved aligning HR processes and policies tothe new business model and linking them to the new business drivers. A major programme called ‘ New Ways of Working’ addressed issues associated with the current organisational structure, people, culture, communication and the way employees work. The clear target was to make these elements more streamlined, adaptive, responsive and customer-driven.

Eight clusters of initiatives have been introduced in the area of HRM to support the shiftin business strategy: The introduction of a new vision and values – ‘What kind of values, behaviours and

culture do we need to make this business a success?’; Redesigning those HR policies which touched staff’s motivation and behaviour; the refining of the performance management system; new Pay system (move from pay bands to seven job roles); re-design resourcing, selection and career development; Developing leadership capabilities; Recruitment of new managers; and Management development.

The following sub-projects were considered in this context: Create a new digital business stream – with new skills and new working practices; Implement a new performance management system – including consistent and

meaningful performance measures and the necessary management skills to successfully apply them;

Create a networked organisational culture – learning the skills needed to transform the organisation by working with the leaders who will drive change from the top; and

Implement new reward systems – by defining and implementing an appropriate pay system and tailoring soft rewards to individual requirements.

Vision and values. The vision and values intervention was an attempt to change thestrong supportive civil service culture, rich in custom and practice , develop a new culture in line with the new direction of the organisation and encourage creative and innovative behaviours. The core values were identified as ‘customer focused’, ‘quick’, ‘working together’, ‘able to take some risks’, ‘interested and excited by challenge’, ‘personally accountable’, ‘commercially oriented’ and ‘rewarded for results’. Line managers gave feedback on the appropriateness of the senior management’s development of the vision and values in a series of workshops, and the entire package was shown to staff at a set-piece event – OS Experience – in December 2001.

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Performance management. The aim of the managing and appraising performanceprocess was to link the organisation’s strategic objective to the goals of each employee. The major change in the process was the introduction of a Skills and Competency Framework developed to take into account the vision, as well as the current and immediate future business objectives, into the evaluation and development needs analysis process. There was a set of six core competencies (commitment to results, commercial orientation, customer focus, contribution management, decision making, working together and functional competency). Employee’s performance was then measured each six months against the targets and competencies set by the framework.

Although the Contribution Management was designed to encourage people to comply with the desired new behaviours and goals, in practice the implementation of the new system proved to be problematic. There have been a number of criticisms about the implementation of the values, namely that there has been insufficient preparation and training offered to line managers and employees in order for them to understand how their job contributes to the achievement of the vision. In addition, most of the process and management issues associated with the new Contribution Management were dealt with by line managers, with the HR function having a role to play only in the design and implementation of the training modules and in acting as a ‘help point’ where issues could not be resolved directly by line managers. However, line managers found extremely difficult to define the specific targets of their area and link these targets with the performance requirements, while achieving the ‘line of sight’ of employee’s individual goals with the overall strategic objectives proved to be a very messy process.

Developing leadership. The organisation needed new competencies and skills among existing managers, so that they could drive forward the change programme. Current management capabilities were characterised by excellent technical abilities but poor people management skills especially in terms of managing change and risk. It was considered that, in order to change the culture of the organisation, leaders and management teams had to develop themselves in readiness to embrace the new challenges and opportunities facing Ordnance Survey. Therefore, ‘Creating a network organisational culture’ initiative was designed to help leaders understand how they could influence the culture of the organisation, identify the competencies and skills required in leaders and set in place a programme which could develop the behaviours supporting those competencies. Two training programmes – a Leadership Training and Development Programme and a Management Development programme were implemented, engaging all senior and middle managers. In parallel, new managers with commercial background were recruited externally.

Pay and Reward systems. A major aspect of the re-alignment of HRM was to change the content of performance appraisal to reflect many aspects of desired new behaviours in the new culture and to offer incentive and bonus rewards for those who made a real contribution to business achievement. The new Pay and Reward model was seeking to combine pay incentives and other benefits such as pensions, leave and flexible working patterns in an attractive package that could exploit the existing freedoms and constraints from central government over pay.

In the past, there was no relation between base pay progression and performance, and progression was uniform, whatever people’s levels of achievement and growth/development. The new pay structure implemented considered differentiated increases in pay for valued and outstanding contributors (as set by the new performance management system), in order to provide incentive for high levels of contribution.

Resourcing, selection and career development. These policies has been redesigned in order to ensure the organisation was attracting the right kinds of people with the right skills and competencies. The long-term aim was to devolve these functions to line managers and

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effort was being made to ensure that these functions are linked with the business needs of the different business groups.

With the implementation of all these initiatives, the HR function needed to extend itspower and influence in order to run the launching of the vision and values initiative and to implement the designed changes in HR policies. The function faced a major task as, in order to embed the cultural change required, they needed to shift the mindsets of the employees away from an obsession with procedures towards a culture fostering continuous improvement in achieving the business targets. It was also starting to move away from providing what was essentially a support role to one which stressed business partnerships with the other business groups within the organisation. However, in this first stage, the function kept its image of ‘service to the business’, as there has been little involvement of HR in the actual planning of change. The changes have been mainly top-driven, and the interaction between HR and the top management team could be described more as ‘facilitative’, with little involvement of the function in the development of change strategies.

In the second stage, starting with summer 2002, a major programme of structural changewas implemented, coupled with a voluntary early retirement and severance scheme which affected 300 staff. The main objective was to change the highly centralised and bureaucratic organisation with a decentralised structure, with semi-autonomous teams and a dynamic management style. A consequence of this restructuring was that a number of old divisions and functions were either eliminated or merged, in order to obtain a leaner, flatter structure and increase overall efficiency of the business.

The newly appointed HR Director (June 2002), recruited from the commercial sector,recognised the need for further changes within the HR department beyond the HR policy domain. She came in with a new vision of ‘re-conceptualising the HR role, exploring the ideas of strategic partnership and human resources as a competitive advantage’. She was also seeing ‘the structuring of the department around the business and its needs as vital’. HR roles in her view had to be described with words such as visionary, strategist, integrator, and change agent.

The function has been reorganised around key themes: business/customer focus,decentralisation, effectiveness (priorities and resources), role clarification, new ways to do work, and the emergence of new principles of organisation.

The structure of the HR function was split into teams organised around the following keyareas: Business Management – three business partners to work directly with the senior and line

managers from the Business Groups; HR Shared Services – HR Policies (remuneration, pay, recruitment, training, HR systems) Organisational Development – Knowledge management, succession, career planning,

talent management and Culture change; and Corporate Communications.

The creation of the new structure was one element within a range of interventionsdesigned by the HR director to build up the credibility of the department in the eyes of the staff:

‘We want to demonstrate quickly that we are making a contribution … we need to demonstrate that we are making some impact on quality and the bottom line through a host of initiatives’. (HR Director, 2002)

This reflects an awareness on the part of the director of the importance of the views ofother business groups within the organisation and a desire to achieve ‘reputational effectiveness’ (Tsui, 1984).

Among the initiatives to which the HR Director decided to devote her attention were

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establishing the key personnel processes, management information systems and developing an HR business plan that identified a set of core priorities for the function, linked in with the strategic objectives of the organisation. In addition, Business Partners were introduced in order to further improve the links between HR and the rest of the business.

Business partners were a key point of contact for each business group within theorganisation on HR matters. They had an understanding of the business deliverables of the group and related HR issues, and worked closely with managers in that group in the application of HR policies and good practice to help achieve the business objectives. They also provided feedback to people in HR, and worked with the whole HR team to evolve HR policies to ensure they are right for the business.

One interesting point to emerge was the view of the HR Director that ‘having a well-written HR strategy was not equivalent with developing a strategic approach to HRM’. She also pointed out that ‘there is no sense of having an overarching HR strategy, if HR does not really serve the business needs’. Furthermore, she emphasised that the lack of an HR strategy did actually showed that HR activity was driven by the business needs rather than following their own HR agenda. As a result, she considered that the main priorities for HR were introducing organisational change in HR policy and practice, and adopting a strategy of involving senior and line managers, working groups and the unions with the aim of ensuring strategic fit and achieving buy-in from employees. The HR Strategy document emerged later in the change process, when the organisational development needs could be clearly established and linked with the future needs of the newly restructured business.

Lessons learned from the case study

What lessons can be learned from these findings for efficient implementation of the change management processes in commercialising public sector organisations?

Firstly, managing the transition from Government Monopoly to commercial organisationinvolves aligning the structure, systems, competencies and culture to the new business model and developing new managerial attitudes, skills and behaviours. The traditional bread-and-butter activities of the HR department (such as recruitment and selection, performance management systems, training and development) are important change levers because of their ability to create organisational settings which are supportive to change. Too little attention is paid in public organisations undergoing change to considering the necessary employees behaviours and attitudes that are necessary to create an enabling environment for change. Therefore, the organisation has to understand which HR activities touch staff’s motivation and behaviour immediately. In the case of Britain’s national mapping agency, the redesign of the performance management system sent a strong ‘signal’ to employees that only behaviours supporting the new business strategies are rewarded. In addition, the new training and development system and the reward system were designed to develop behaviours that are in line with the strategy.

Secondly, the case study demonstrates the efficiency of centralised rather thandecentralised HRM systems in achieving organisational change. Given the emphasis in the prescriptive literature on decentralising responsibility for HRM, this is a conflicting finding. However, with more transformational agendas within business strategies, certain advantages may be gained from the function regaining a more central role, especially in relation to building up the credibility of the department in the eyes of the staff from other business groups.

Thirdly, the findings confirm the necessity of achieving horizontal congruence between

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different HRM systems. In other words, any HR system must be aligned with the others, for example, reward systems with leadership development. This is important in addition to the necessity of vertical integration of HR systems with HR and business strategy.

Fourthly, the HR function has been found to play an important role throughout changeimplementation, as key enabler in implementing the reorganisation, changing the culture and managing communication. The human resource management interventions (the introduction of a new vision and values, the implementation of a new performance management system, the redesign of the organisational structure) and the structure of the HR function itself have been used as change levers to support the overall organisational transformation. The HR function was refocused towards playing a more strategic role in the organisation and the actions initiated by the newly appointed HR Director have been designed to change the role of the HR function: the creation of a new structure for the department, as well as the different HR interventions were designed to build up the credibility of the department, make the function more proactive than hitherto and change Business Groups managers’ perceptions that HR was not visible enough in the organisation.

Fifthly, an important issue emerging was the complexity of the roles enacted by the HRfunction. It was found that the increased demand for corporate strategic consistency and flexibility redefined the contribution of the HR function towards achieving the strategic goals of the business (strategic role) and towards implementing and managing change (change agent role).

Sixthly, the views of the managers elsewhere in the business (senior managers and linemanagers from other business groups) were in general positive. Some of them did not yet have a very clear idea of the kind of role they expected the HR department to play and the perception lingered that the HR function is reactive, playing a traditional, administrative role within the organisation. Throughout change implementation, however, there was an increasing recognition of the scope for a greater contribution to the business by HR, although there was a lack of clarity among managers of precisely how the HR function could help to solve specific problems that some areas of the organisation were facing.

Seventhly, it was shown that the HR function could deliver value within different areas,ranging from administration to strategy formulation and change management and that the perceived value of the HR function depended not only on the roles it fulfilled but also on the way in which the function was involved in the whole organisation. The case study also shown that effectiveness of the function – especially in terms of adopting a future focus, supporting the business strategic objectives, focusing on change management and being proactive rather than reactive- has increased throughout change implementation.

Eighthly, several factors emerged as important enablers or constraints to the increasedstrategic involvement of the HR function within the case study organisation. As enablers, the study identified: the government’s change agenda; the attitude of the senior management team; the ability of the HR function to deliver efficient services and to build credibility through the expertise and business knowledge of its members; the degree of power wielded by key department members; the will of HR department members; the personality, approach and focus of the HR director; the senior and line managers ’expectations of the HR function. The research identified the following constraints: the senior and line managers’ perceptions of the HR function of being purely administrative and lacking the necessary business knowledge for understanding what the business actually needs, the skills of the HR members, the resource limitations and the structure of the HR department itself which was generating inefficiencies and bureaucracy.

Finally, the culture change model of ‘message’, role-models, skills and rewards hasconsiderable success in starting the necessary culture shift and moving it along rather rapidly. The most important move in the culture was to bring in a new top management team from

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outside with commercial background. While there were many problems of credibility and acceptance of the new top managers, this step seemed to be necessary to send a fundamental signal to the rest of the organisation that a major shift in culture is taking place. The implementation of a new organisation structure and operating systems acted as a powerful force to ‘unfreeze’ people from the old culture, while the re-designed HRM systems provided an influential reward system to motivate and support people to adopt the new culture.

Conclusions

The literature appears to have not focused on the issue of how the transition from a ‘Government Department’ to a commercially driven, customer responsive and self-financing organisation can affect the change in roles of the corporate HR function. This case study has shown that significant pressure is exerted on the HR function to elevate its corporate relevance for the top management team‘s strategic leadership, increase its effectiveness as a ‘change agent’ in corporate transformation and better relate its output to the firm performance.

The implementation of change in public organisations is not a simple process, basedon rationality, which may be carried through without major consequences for the corporate HR function and its roles. The new roles of the HR function are different from its traditional organisational roles in administrating HRM programmes and processes involving the implementation of HR policies Specifically, the continuous, transformational change in public organisations has given rise to the importance of corporate role in the organisational context and its influence on strategic staffing and leadership development policies and practices. There is also an opportunity for the HR function to gain more influence within the organisation. This increased influence stems from a new set of the HR’s roles, characterised by blended political and strategic dimensions, which includes: the change agent of corporate culture; the top management team’s symbolic ‘communicator’ to other levels of the organisation; senior managers ’ mediator in development/ career planning opportunities; and corporate top management team’s and particularly the CEO’s reliable internal informal adviser.

With the increasing demands for strategic flexibility and leadership development in thechanging public sector, human resource development and human resource management becomes embedded in the policy and strategy of commercialising public organisations. Therefore, rather than trying to draw distinctions between the two domains, we should better try to bring them together in a more coherent way.

Implications for Practice

The findings of this case study of reorganisation, carried out over the course of a year, reveal a number of implications for HR practitioners within public sector entities. In response to the challenges facing public organisations, new roles and skills are necessary to make the transition a successful one. These new skills include business acumen, financial management, a focus on the bottom line, and technical and functional HRM skills. To add value to business, HR practitioners have to reposition their organisational roles, and move towards becoming strategic partners and change agents. Furthermore, as public organisations are facing reform that is transformational and continuous rather than simply incremental, the opportunity is clearly present for the internal HR department to move into the field of long term change agency and provide guidance in the management of change. The future of the internal HR department will lie in the areas of assisting the development of high performance work systems and in facilitating long-term continuous organisational change. The only

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question is how many current HR professionals are capable of fulfilling such challenging roles.

Contribution of the Research

In keeping with a number of recent calls to make organisational research and management theory more relevant to the world of practice, this paper presents a reflective account of the attempt of a public organisation to renew its business and its configuration. Its contribution lies in reflecting on the dilemmas in understanding and managing the complexity of change in the context of the changing public sector.

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