Human Resource Management in Transition. The Polish Case

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1 Human Resource Management in Transition. The Polish Case Edited by Aleksy Pocztowski Przełożył Tomasz Duda Warszawa 2011

2 Table of Contents Introduction...9 Aleksy Pocztowski Chapter I. Transformation of the HR Function...13 Development of the HR function...13 The context of HR function changes...14 Positions and roles of the HR department...18 Computerisation and virtualisation of the HR function...23 HR function fragmentation...25 Final comments...28 Joanna Purgał-Popiela Chapter II. Cultural Context of the HR Function...31 The multidimensional relationship between organizational culture and HR function...31 Changes in the sociocultural environment...32 Stability and diversity in the organizational culture of Polish enterprises...41 Final comments...50 Aleksy Pocztowski Chapter III. Strategic Human Resource Management...53 The development of strategic HRM...56 Strategy types...59 Strategy formulation...61 The fit between HRM and the company s strategy...64 Final comments...68 Tomasz Sapeta Chapter IV. Recruitment & Selection...69 Work analysis and employment planning

3 Table of Contents 6 Recruitment sources and techniques...74 Organization and tools of selection process...77 Induction of new employees...82 Beata Buchelt Chapter V. Employee Appraisal...85 Appraisal objectives...91 Actors of employees appraisal system...95 Appraisal criteria, tools and methods...98 Challenges of appraisal systems in Poland Aleksy Pocztowski Chapter VI. Remuneration Remuneration determinants Remuneration strategies Total reward structure Impact of the economic slowdown on remuneration Pay diversification in Poland Alicja Miś Chapter VII. Career Management Introduction Career in the organization approach evolution Career systems in organizations Final comments Alicja Miś Chapter VIII. Talent Management Introduction Talent essence, characteristics and structure Talent management process Talent identification and acquisition Talent development and retention Talent separation diagnosing the reasons and applying preventive activities Final comments Tomasz Sapeta Chapter IX. Managing Redundancy Redundancy as a challenge in HRM Actions undertaken to reduce dismissal scale Voluntary resignation...158

4 Table of Contents Lay-offs for organizational reasons Redundancy costs Outplacement as a tool to mitigate redundancy effects Beata Buchelt Chapter X. Human Resource Management in Mergers & Acquisitions Introduction Reasons for mergers and acquisitions M&A strategies and process The M&A process and HRM Preparation Combination phase Integration Challenges for HRM during organizational marriages Beata Buchelt Chapter XI. Trends in the Labour Market The changing supply and demand relations in the Polish labour market Unemployment Labour market institutionalization Final comments Literature List of tables List of figures...227

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6 Introduction Human Resource Management (HRM) has a past 1 and present as well as prospects for development in Poland, both as a field of scientific research and in terms of its practical application. The last 20 years, i.e. the period of system transformation in Poland, have been particularly significant for the discipline. During that time, traditions have frequently clashed, challenges have arisen, scientific research and the consulting services market have developed, and many businesses have undergone a dramatic change in thinking and action in relation to their HR functions. Most importantly, however, a certain professional environment has come to exist, with experts studying how people function within an organization. This book is an attempt to reflect on HRM in Poland between 1989 and It is based on the theoretical studies and empirical analyses undertaken by the Chair of Human Capital Management at the Cracow University of Economics, as well as on the results of other empirical research available on the market. The intention of the authors, who are all researchers at the Chair, was above all to capture the principal changes that have taken place in the field of HRM in Poland. Due to the unprecedented scope and the fast pace of the changes, analyses of the same issue have often led to disparate results, depending on the time when they were performed, the sector they were related to, or the sample selected. In that context, it was both interesting and difficult to examine the manner in which the theoretical concepts prevailing in the world at the time managed to find their place in Polish reality, at a time of economic and social transformation. 1 These issues are discussed in the relevant study [Zarządzanie, 2007] showing the origin and the development of HRM at the principal research centres in Poland and the current stage HRM is at, as well as trying to determine the development trends. See also [Listwan, Pocztowski, Stor, 2009]. 9

7 Introduction The book consists of eleven chapters. The first chapter illustrates the evolution of the HR function. It pays particular regard to the position and role of the specialist units taking care of HR issues in organizations, and also considers the factors determining the said changes. Some of the most important determinants of the practices applied in the area of HR are sociocultural in nature and they are discussed in the second chapter of the book. The tendencies of the changes that have taken place in Poland are outlined with reference to selected theoretical concepts in the field of cultural studies and are based on the results of empirical studies. The third chapter of the book is dedicated to Strategic HRM. The development and current state of theory and practice with regard to the strategic aspect of HRM are presented, with reference to specialist literature and to the results of empirical studies. Significant changes have taken place in terms of the sources and instruments of employee recruitment and selection, i.e. two of the basic HRM processes. Those changes are presented in the fourth chapter. Chapter V addresses the issue of employee appraisal. It discusses the changes in approach as regards the shaping of the individual components of employee appraisal systems: appraisal objectives, criteria and techniques, as well as the appraisers. Chapter VI presents trends related to remuneration. Some of the changes discussed here relate to remuneration structure, the most frequently applied pay components and the underlying strategies. The principal factors causing the diversification of salaries and wages in Poland are also indicated. The next chapter, dedicated to professional careers, outlines the individual and organizational aspect of career development, as well as describing practical approaches to career management in Polish companies. Chapter VIII presents the issue of talent in organizations, which has become the focus of attention for many entities. Theoretical aspects and results of empirical studies related to talent management are discussed in this part of the book. One of the main challenges in the area of HR after 1990 was related to redundancy one of the aspects of the wider context of company restructuring. The related issues are discussed in the ninth chapter of the book. Particular attention is dedicated to the reasons for having excess staff. Furthermore, the typical measures undertaken by companies are described, including outplacement programmes, which have developed in the period discussed. Many of the changes taking place in the HR function area in Poland have been related to merger & acquisition processes. That issue is the subject of another chapter, discussing specific HR issues arising at the individual stages 10

8 Introduction of the merger or acquisition process. The final chapter concerns trends on the labour market that have provided the context for the changes taking place in the HR function. HRM in Poland has reached a stage of maturity, inducing one to reflect on its identity and development potential. The new management paradigm, taking into account the socio-economic challenges of the 21 st century, leads to a reorientation in thinking about the role of human capital and of the resulting implications for practice. A clear opportunity is taking shape here for scientific research, theoretical reflection and practical application. It remains an open question, however, whether the features of the new approach will make it fit within the concept of HRM, or rather become the basis for the development of a new attitude, involving the substitution of the resource-based view with human capital logic. Moreover, the key role played by HR as a business partner is going to transform into HR as a part of business, with the prospect of HR becoming a leader of change. Aleksy Pocztowski

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10 Chapter I Transformation of the HR Function Aleksy Pocztowski Development of the HR function Generally speaking, the HR function 1 involves all the activities related to how people function within an organization. It includes regulatory, executive and consulting components which can be examined by focusing on the tasks (processes), institutions (actors and structures) and instruments (tools). The shape assumed by the HR function in an organization is the outcome of internal factors, such as the respective company s strategy, structure and corporate culture, but it is also influenced by external agents found in the company s immediate, as well as more remote environment; therefore the evolution of the HR function is clearly characterized by continuity and change. On the one hand, theoretical reflection and practical solutions continue to focus on the same or similar problems related to the acquisition, appraisal, remuneration and development of employees [Pocztowski 2007a, p. 141]. On the other hand, however, the approach to solving these issues has been changing, mostly due to the altering technical, economic, legal and sociocultural conditions determining HRM. Despite the different historical development of the HR function in various countries, sectors and individual organizations, a general trend can be 1 In the past in Poland, the HR function was referred to more frequently as the personnel function. Practically speaking, the term HR function is also used more restrictively to refer to the area of activity of the organizational section taking care of HR issues in a company. For the concept and scope of the personnel function, see: [Armstrong, 2005], [Zarządzanie zasobami, 2006], [Zarządzanie kadrami, 2004], [Pocztowski, 2007], [Funkcja, 2007], [Antczak, 2005]. 13

11 Human Resource Management in Transition. The Polish Case observed in how it is exercised: random actions have been giving way to routine administration, and the latter to consolidation and reinforcement of the HR function as a fully-fledged area of management, performed both at the operating level and in strategic terms. The said tendencies can also be observed in Poland, where the HR function has undergone transformation since 1989, facing new challenges resulting from the fact that companies had to start functioning in a market economy. The history of the HR function in Polish companies is, however, much longer. In the period preceding the system transformation (starting in 1989), when the English term HR was not yet in use, the personnel function lacked a comprehensive systemic perspective and was characterized by the following features: the haphazard and temporary nature of the actions undertaken, politicization and the impact of third parties on personnel- -related decisions, a high level of centralization within organizations, the low competence of the people taking care of HR issues, insufficient tools used to solve personnel-related problems, and finally insufficient institutionalization or even its complete absence. 2 This caused the function s low ranking within an organization, over-staffing, high fluctuation and low effectiveness of labour [Listwan, 1999, pp ]. The problems which remained from the previous era had an impact on the way the HR function was managed during the period of system transformation, especially in the first years. During that time, old traditions often clashed with new challenges resulting from changes occurring in the reforming organizations environment as well as within the organizations themselves, in the process of redefining the place and role of the personnel function. 14 The context of HR function changes The context of personnel function transformations in Poland since 1998 has been highly complex and variable. The underlying factors have included changes in: the labour market, companies, working culture, value systems and working methods. It has to be emphasized at this point that in the period discussed unsolved issues still remained that 2 Regardless of the low level of development of the personnel function in the planned economy conditions Polish companies had to operate in, scientific centres in Poland conducted research concerning various aspects of HR management, producing significant output in the field [Zarządzanie zasobami, 2007].

12 Chapter I. Transformation of the HR Function had their origins in the 20 th century, such as: working conditions, health and safety, employment relationship protection, social justice in terms of remuneration for work, participation of social partners in the regulation of labour-related issues, and the place of women in the labour market [Borkowska, 1998, p. 30]. New challenges appeared alongside those mentioned above, deriving from the changes taking place in the world economy that Polish companies had become part of. These included the impact of globalization on the shape of the HR function, manifesting itself through such phenomena as the: increased significance of the ability to manage multinational teams, development of competent international management staff, looking for management styles appropriate for the respective cultures and overcoming communication barriers by training personnel in inter-cultural communication. Further phenomena included the: acquisition and integration of employees coming from different cultures, taking into account criteria determining the ability to work abroad in the process of personnel selection, as well as building remuneration systems taking into account the differences between various countries in terms of pay rates, labour costs, productivity, working time and social benefits [Funkcja, 2007, p. 17]. The aforementioned changes in the environment of Polish companies determined to a significant extent the internal context in which the HR function was exercised, defined by the strategic, organizational and cultural conditions in which Polish organizations had to function. In the period discussed, most of them had to face the need to comprehensively modify their business strategy or even to rebuild it from scratch. For some of them, the choice of the privatization method and its implementation represented strategic problems; for others, such problems were related to the consolidation of their position on the market or to their dynamic growth strategy. The impact of the said strategies on the HRM sphere can also be observed, in particular as regards the reorientation of the way people s role and importance in an organization are perceived: they are increasingly more often seen as an essential company resource that has strategic meaning. However, even though Polish managers started to make such statements with increasing frequency; practices related to the exercising of the HR function and to its consolidation within the company did not improve immediately as a result. To put it simply, the organizational determinants of the personnel function in companies can be brought down to a single big challenge involving restructuring: for 15

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