Human resource management in the project-oriented organization

Introduction

The management of project-oriented organizations generally (Turner & Keegan, 2002), and specifically of human resource management (HRM) issues therein, has attracted increasing attention in recent years (Keegan & Turner, 2003; Söderlund & Bredin, 2006; Huemann, Turner, & Keegan, 2004: Huemann, Keegan, & Turner, 2007). The conditions under which HRM emerges in the project-oriented organization differ from those associated with mainstream HRM, (Schuler & Jackson, 1996; Flood, Gannon, & Paauwe, 1996). Project-oriented organizations adopt project-based ways of working in response to their customers' demands for bespoke products or services (Turner & Keegan, 2001; Gareis, 2005) and use temporary organizations in the form of projects and programs and associated temporary work processes, to deliver its products and services to their customers. The temporary nature of work processes has implications for the HRM configuration of these organizations and arguably also for the roles played by HRM practitioners and other managers within them.

The changes in HRM service delivery taking place in project-oriented companies cannot be strictly separated from those taking place in organizations more generally. Generally speaking, it is now commonly accepted that expectations about the roles of HRM practitioners are changing as organizations are striving to make the HRM function leaner and more “strategic” (Francis & Keegan, 2006; Beer, 1997; Mohrman & Lawler, 1997; Whittaker & Marchington, 2003). Of particular note is the “business partner” framework developed by Ulrich (1997) who proposes two core dimensions along which HRM roles can be conceived: a focus on strategy versus operations (dimension one) and process versus people (dimension two). Combining these two dimensions produces four roles that HRM practitioners can (and should) play: strategic partner (focus on strategy and processes), change agent (focus on strategy and people), Administrative Expert (focus on operations and processes), and finally employee champion (focus on operations and people). These distinctions reflect a tendency in the prescriptive HRM literature to urge HRM practitioners to take on a more strategic role in organizations and to reduce the time spent on administrative and regulatory HRM activities (Beer, 1997; Mohrman & Lawler 1997). The idea that HRM practitioners take on strategic roles is not new of course (e.g., Tyson & Fell, 1986, Legge, 1978) but has recently gained widespread support in the prescriptive HRM literature and is increasingly coupled with recommendations for widespread changes in how HRM service delivery is configured in general. For example, the issue of who carries out HRM activities, and whether these activities are kept in house or outsourced, are now common.

In these discussions, the role of line managers in HRM service delivery is an important issue. The division of HRM responsibilities between line managers and HRM specialists is an important aspect concerning major structural changes for the HRM function (Schuler, 1990; Brewster, Larson, & Mayerhofer, 1997; Larson & Brewster, 2003). Recent studies suggest devolving HRM tasks to line managers is both increasingly common and not without problems (Francis & Keegan, 2006; Hope-Hailey, Farndale, & Truss, 2005). Based on a longitudinal study of HRM and performance in a retail bank, Hope-Hailey et al. (2005) caution that while it is possible for the HRM department to become more important strategically, “the human factor of people's everyday work experience may deteriorate” (2005, p. 64). Torrington, Hall, & Taylor (2005) asked whether urging HRM practitioners to become more strategic might not distract attention from the importance of much operational HRM work that continues to be important for organizations and employees, while Renwick (2003) suggested that the pressures on line managers to deliver HRM activities may result in their gambling with employee well-being, as they struggle to carry out HRM activities while receiving insufficient support from their organizations.

These issues are further complicated in the project-oriented organization because work is not carried out in the line, but in projects, and so for the sake of project team member motivation and cohesion many of the HRM functions need to be conducted in the project, (Huemann et al., 2007). However, line managers often retain line management responsibility for project team members, and so expect to continue to perform many of the devolved HRM functions. So that raises several questions including:

1. How are HRM functions split between lone managers and project managers?
2. What is done to ensure that those functions are mutually compatible and supportive as suggested by Wood (1999)?

In order to answer these questions, 15 organizations were interviewed to identify how roles for HRM are shared between project managers, line managers, and HRM managers and report the results of that study in this paper. While most attention has been paid to the devolution of HRM roles to line managers (Hope Hailey et al., 2005; Whitaker & Marchington, 2003), this paper contributes to knowledge in this field by extending the discussion to consider the devolution of HRM tasks to both line and project managers in project-oriented organizations.

Methodology

In order to examine how roles for HRM are shared between project managers, line managers, and HRM managers, we conducted semi-structured interviews in 15 companies. We performed qualitative single and group interviews with HRM managers, line managers, project office managers, project, program, and portfolio executives, and project managers from project oriented organization in different countries and industries. The interviews are summarized in Table 1. The names of the companies are kept anonymous. The companies (units) interviewed varied in their maturity as POCs, but they mainly had a relatively high maturity. To make the results of interviews comparable and to ensure a transparent and high quality interview process, all interviews were conducted using a semi-structured interview guide (Patton, 1987). Overall, we found that there is a tendency to retain responsibility for the implementation of HRM practices in the line and not delegate them to project managers. While we think this is right for some practices, we do believe that more responsibility could devolve to project managers for the sake of motivating project team members and cohesion in the project team, as the project management literature has been suggesting for 20 years (Graham, 1989; Turner, 2008). In the following sections, we report our findings on the roles of the three sets of managers in turn.

Table 1: Companies interviewed

Roles of HRM Managers

The nature of the HRM Department

In most of our respondent organizations, the responsibility of the HRM department is to set policy and provide guidance, but the exact nature of the HRM department varies widely depending on the size of the company.

The HRM department of company 5 considers itself as a business partner and change agent to support the project orientation of the company, as it sees very strongly the benefits of projects as possibilities for the development of personnel and motivation. As one of the central persons, there is a project office manager; there is a clear understanding of what project management is, and what projects and project personnel needs. Company 12 has a network of HRM departments, with a center at the head office, and then a department in each division. They view the HRM department operating in a matrix type structure, where managers in the HRM department offer help and guidance to managers at the same level throughout the organization. Company 14 also has a central HRM department and a small number of HRM personnel in each business unit. For a quasi-project business unit, such as that for the London Olympics, a small number of HRM managers will be assigned to it, effectively giving the project or program its own HRM staff. Companies 8 and 9 are both subsidiaries of the same American parent. The American parent has a central HRM department overseeing a network of regional and local departments. The Dutch and Irish offices are both in the Europe, Middle East, and Africa (EMEA) region. The Rotterdam office is also part of a Northern European Division of the EMEA region which it manages, but also has its own Dutch group. The Irish office is part of a division covering the United Kingdom and Ireland, but has only 1.5FTE HRM personnel for an office of about 200 people. Company 10 is also a subsidiary of an American parent, which operates a similar structure. In both cases the American parent sets the overall policy, structures, and guidelines for HRM, but allows considerable flexibility for the local offices to adapt the guidelines to match local laws and culture.

With the smaller companies, there are much smaller structures. Company 6 has an HRM department of just two people for a company of 300 consultants. In company 11 the MD of the French office is the HRM department of the French office. But he works within the policies set at the head office in Britain, but also has the flexibility to adapt the practices to suit French law.

Setting Policies, Guidelines, Rules, and Standards

In all our respondent organizations, the central HRM department defines how HRM will operate. In companies 8, 9, and 10, the American parent defines how HRM will work, which means an American culture pervades both organizations. But as we have already noted, they allow sufficient flexibility locally to deal with local law and culture. Both organizations maintain a computer system for annual appraisal, which reminds managers at an appropriate time when they should fulfil their duties. The system collates all the data, merges it into a global assessment, and determines bonuses based on the central calculation. Both organizations also operate an intranet to guide managers about HRM policies and practices, which all managers can access. In company 6, the HRM department of two determines how HRM in the company will work, and provides guidance to managers.

Some of our project management respondents report dissatisfaction with the role of the HRM department, citing policies, for example, in recruitment and selection that are simply inadequate. As a result, project management personnel have developed various “rat-runs” to circumvent the policies established by the HRM. A reason given is the mismatch between the timescales required to follow policies established by the HRM and client and project demands for increased personnel resources. In some cases the HRM department was framed by respondents as ‘remote' and unhelpful. In others, the contribution of the HRM department to the effective carrying out of project work was as rated as poor. Finally, respondents also claimed that the HRM department fails to protect the well-being of employees, being too passive in terms of promoting worker well-being in the face of business demands.

Providing Consultancy and Advice

In line with global trends, many of the organizations we studied have witnessed structural changes in how HRM operates. From an integrated HRM function where all activities, both administrative and strategic, are centrally coordinated, we have seen the introduction of forms of business partnership, shared services, and e-enabled HRM systems. Many organizations operate an intranet where managers can seek information about how HRM practices operate. Some also operate a call center where managers can gain information. We also asked how employees could find information on how the systems operate. In most organizations with an intranet, the employees can also interrogate the intranet, but in some organizations the employees are not able to access the call center.

Advice and consultancy on projects is also present in our sample. Company 12 has created a Center for Program Management and Council for Program Management to oversee the development of project and program management within the organization. The council has responsibility for:

1. Ensuring that best practices are developed and shared across the company
2. Ensuring best use is made of expertise within the company, including the development of project management personnel
3. Ensuring standards are deployed as appropriate
4. Promoting professionalism through recruitment, development, training, and reward
5. Sponsoring good teamwork

The activities of the center include the following contribution to HRM:

1. Coaching, mentoring, lecturing, and training
2. Supporting career development by:
   • attending recruitment events
   • helping in competence development
   • assessing course content

1. Making and sustaining links with others in the profession to aid professional development
2. Establishing relationships with universities for recruitment and research

The company also maintains a network of development cells for ensuring the development of competence within the organization. The cells are responsible for identifying the development needs of individuals and ensuring that they are met. They also have the role of ensuring that managers do not Bogart or keep all of the good talent to oneself, holding on to it to the detriment of both the individual and company. Potential candidates for development are identified and developed to both the benefit of their careers and the benefit of competence development within the organization.

Acting as Arbiter

It is a legacy of HRM's foundations in the welfare function of companies at the start of the 20th century that one of its core roles is to act as arbiter between employees and management. However, the idea that the HRM department should act as arbiter between employees and managers is one that is not shared across the companies we studied. Company 9 had an HRM staff member whose job was to guide and advise employees and managers on HRM issues. But if a dispute arose between manager and employee, this HRM staff member would act as arbiter. Also, if an employee had a problem, which required specialist advice, then they could raise it with this person.

In other organizations, the respondents stated that if an employee had a problem, he or she could raise it with their line manager. We asked what happened if the problem was with their line manager, for instance, they were being harassed. The response was they could raise it with their project manager or manager's manager or some other manager in the organization. We believe that having to raise the issue with another manager could be a difficult step to take, it could be interpreted as disloyalty, or the two managers may be golfing partners. That may result with employees putting up with abuse longer than necessary. He or she may find it much easier to turn to an independent arbiter. In some companies respondents seemed unwilling to accept HRM's role as arbiter and continually reinforced the importance of line managers and employees working out their problems. The question of employee's need for arbitration, and the potential imbalance of power between management and employees, remained unanswered at the conclusion of many of the interviews. One reason is the insistence in some of these companies that HRM is a business function, that the employment relationship is largely framed as one between employees and managers, and that HRM should not interfere.

On the other hand, an interviewee in company 15 described a situation where it seemed to work very well with adult discussion between people. The interviewee was deputy project manager on a development project. He initially had a problem with his working relationship with one of the work area managers on the project. He did not have an issue with his competence; they just did not seem to be able to work together. So he raised the issue with the work area manager's line manager, and the work area manager was replaced. It did not reflect badly on the work area manager, it was just accepted that the two could not work well together. Then one of the engineers had a problem with the new work area manager and approached the deputy project manager. The engineer and the work area manager did not agree about the technical solution. In this case the deputy project manager sided with the work area manager and the engineer was replaced. But again it did not reflect badly on the engineer, and he transferred to another project. So the issues were resolved without the involvement of HRM. Perhaps that may reflect a difference between Americans and Europeans, or it may reflect the management style in that work environment that was very flat and open. Another division in the same organization has a very hierarchical structure, and it may not be possible to resolve the issues in the same way.

Responsibilities of Line Managers

In almost all of the organizations we interviewed, primary responsibility for appraisal, development, and reward remains with the line manager. By and large we believe this is the correct approach. Projects are temporary organizations which come to an end. Projects are stepping stones in a career; but each project does not provide a career. Decisions about development especially have to be taken over a timescale longer than an individual project, and so they have to be taken in the line.

Company 6 had an appraisal and budgeting practice that reinforced this view. The appraisal process was integrated into the annual budgeting cycle. The annual budgeting cycle included twice yearly appraisals of individuals. The departmental manager in developing the annual budget for the department would develop an annual budget for each individual that would include their regular pay, their bonus, and money for their development. Each individual's development budget would then be delegated to him or her on a use it or lose it basis. The individual would need to identify courses to achieve their personal development objectives set at their appraisals and could spend money up to the budget.

Companies where responsibility for appraisal was transferred to project managers were ones undertaking large projects:

• In company 12, some projects would last years. Individuals would be seconded onto the project and the project manager would take responsibility for annual appraisal over the life of the project.
• In company 5, contracts of employment require people to be transferred onto projects if the project lasts more than one year. This practice is a remnant of their days as a public company. The project manager will then conduct the annual appraisal and set development objectives for individuals.
• In company 14, people will be transferred to the quasi-business unit managing a large project or program, and then managers in the quasi-business unit will conduct their appraisals. Even in the cases where somebody is only formally seconded to the quasi-business unit, the project manager on the project may still conduct their appraisal.
• In company 15, some of the people working on the project come from the project's department, and some from the technical or scientific department. The project manager conducts appraisals for the deputy project managers, the deputy project managers for work area managers from the projects department, and those work area managers for technicians from the projects department. Appraisals for engineers and scientists working on the project are conducted in the line, even though individual projects or programs can last for years, sometimes more than a decade, and somebody can work on a project or program for several years. There is a clear distinction between people from the projects department and engineers and scientists.

Responsibilities of Project Managers

The project management literature has suggested for almost 20 years now that project managers should be formally involved in the appraisal process for motivation of the project team members and for team cohesion (Graham, 1989; Turner, 2008). Graham argues strongly that the project manager should conduct project appraisals and feed those into the appraisal process in the line. However, in most of the organizations we interviewed, formal project appraisals were not conducted. In many the line manager informally contacted the project manager to seek his or her opinion on the performance of the individual being appraised, but it was not formally required. Whether or not formal project appraisals were conducted depends very much on the project maturity and HRM maturity of the organization:

• In companies 8 and 9, formal project appraisals are required, either on completion of projects or once every three months if the project lasts longer than that. The routine appraisal that is conducted twice a year in the line must then be based at least in part on those project appraisals. Do the project appraisals get done? They tend to receive the same dedication as “compulsory” end of project reviews (Turner & Keegan, 2002), honored more in the breach than the observance.
• In company 10, 360° feedback is formally conducted as part of the appraisal process. The line manager must seek the opinion of the project manager and other project team members, clients, and subordinates, if the project team member has them. In fact, the reports from these people must be entered into the company's computer system, which is designed to insist upon them. An appraisal cannot be closed until sufficient entries have been made. This company has very high project management and HRM maturity.
• In company 15, which is mature from both a project and HRM perspective, formal project appraisals are not conducted. However, the line manager will seek the opinion of the project manager or deputy project manager almost as a matter of course. So much so that the deputy project manager we were questioning perceived the requests as being formal.

Task versus People Orientation of Project Managers

The issue of task versus people orientation came out very strongly in the interviews with company 15. Project managers do in general tend to be more task oriented than people oriented (Turner & Müller, 2006). In fact, Turner and Müller report an interview with one project manager who said that in her organization project managers undergo a fundamental transformation as they are appointed. As project team members, they complain that their project manager is more task oriented than people oriented, but when they become project managers they become task oriented. In company 15, most of the employees are inspired by the science of what they do and the thrill of exploration, so they become highly focused on the task at hand. The deputy program manager we interviewed said this could have an impact on work-life balance. If the entire project management team on a given project was task oriented it could have a negative effect on the performance over the life of a project as people's health and family life suffered. So when appointing the three members of a project management team, they tried to ensure at least one of the three was more people oriented. The management team for a project consists of three people, a project manager, a deputy project manager (technical) and a deputy project manager (resources). In fact, the deputy project manager (technical) has the most man-management responsibility, being responsible for the work or all the project technicians, engineers and scientists. The deputy project manager (resources) has mainly contract management and financial responsibility. The deputy program manager said they tried to ensure that on a given project either the project manager or deputy project manager (resources) is people oriented. The project manager and deputy project manager (resources) we interviewed were from different projects and both were people oriented, which had given us rather a distorted image of the organization. However, the first person we interviewed was a deputy project manager (resources) who was highly task oriented, but also had a people-oriented project manager.

Conclusion

We have explored the roles and responsibilities of HRM managers, line managers, and project managers in implementing HRM practices in the project-oriented organization. We have found that in common with trends reported in the broader HRM literature, responsibility for implementing HRM practices in the project-oriented organization is devolved to the work interface, with HRM managers providing support in the form of setting standards, providing guidelines, and acting as arbiter. This is in accordance with the findings brought forward by Bredin and Söderlund (2006a, 2006b).

We also found that some of the HRM departments were acting as change agents and business partners, some even strongly supporting project-oriented working. We would argue that it very much depends whether there is an understanding in the HRM department, what the requirements of project-oriented working are. However, our data suggests that not all HRM mangers understand the requirements of project orientation, and project managers often struggle with HRM's contribution to the function of project based work practices.

Our key finding is that the project-oriented organization differs from the functional organization in that there are two managers at the work interface, the project manager as well as the line manager. This creates a more complex picture when it comes to the distribution of HRM roles and the delivery of HRM activities. Primary responsibility for development appraisal and reward remains with the line manager, because decisions have time horizons longer than the duration of projects. However, the project manager needs to gather the information used in the appraisal in the line. It is important that appraisals in the line are based on the appraisal of work on the project for motivation of project team members and cohesiveness of the project team. Some organizations have formal ways of doing this appraisal in the form on in-project appraisals or 360° feedback, but in most organizations it is informal, with the line manager informally seeking the project manager's opinion. We suppose that the HRM design and the distribution between role of the project manager and the line manager may differ according to project type. While the distribution of the HRM roles between line and project should perhaps be agreed when the project is designed, more research is needed to explore how HRM practice takes shape in projected-oriented organizations and to understand the implications for organizations and employees of the sharing of HRM roles.

Acknowledgement

This work was sponsored by the Project Management Institute (PMI^®) and the three institutions where we work. We are grateful for their support.