Human Resource Management (HRM) is of key and strategic importance to the project-oriented organization. Every time a new project or program is started, the human resource (HR) configuration of the organization changes. Within this dynamic environment, different and additional practices are required from the traditionally managed organization. However, in spite of this, the needs of HRM in the project-oriented organization have not received great attention in either the HRM or project management literature. We are undertaking a research project with the aim of identifying the needs for HRM in the project-oriented organization and describing the practices adopted. We have formulated an initial set of hypotheses and conducted a pilot study to test them. In this paper, we report the results of that pilot study. We have found that HRM is a core process in the project-oriented organization that needs to be more invasive, with greater involvement of the manager at the work interface than in the classically managed organization. However, that the opposite tends to be the practice. It requires different application of traditional HRM process as well as additional processes. All of this requires the HR department to develop different and additional policies, standards, rules, and guidelines for HRM in the project-oriented organization, and to work in greater partnership with the project management professionals at the work interface, while operating on a principle of subsidiarity, as is common elsewhere.
Introduction
A change towards a project-oriented society is observable (Gareis and Huemann, 2001), with projects becoming more widely used (Lundin and Söderholm, 1998). In addition to traditional contracting projects, other types, such as marketing, product development, and organizational development, have gained in importance. Further, project management is being established as a profession. The Project Management Institute estimates that there are about 16-million people worldwide who consider themselves working in the profession of project management (Gedansky, 2002). In project-oriented societies, there is a trend for individuals to get temporary assignments, as they work on successive projects and programs (Huemann, Turner, & Keegan, 2004).
Within the project-oriented society, organizations are increasingly using temporary organizations such as projects and programs to perform business processes and achieve strategic objectives (Turner and Müller, 2003). Turner and Keegan (2001) define the project-based company as one in which “the majority of products made or services offered are against bespoke designs for customers.” Gareis (1990; 2004) takes a more proactive view where the project-oriented organization makes a conscious choice to be so. He defines it as one which:
- defines “Management by Projects” as an organizational strategy
- applies temporary organizations for the performance of complex processes
- manages a project portfolio of different internal and external project types
- has specific permanent organizations to provide integrative functions
- applies a “New Management Paradigm”
- has an explicit project-management culture
- perceives itself as being project-oriented.
The project-oriented organization has specific processes for managing temporary organization structures. These include: assignments of projects and programs, project management, program management, quality management of projects and programs, project portfolio coordination, networking between projects, organizational design of the project-oriented organization, and human resource management in the project-oriented organization (Exhibit 1).
Exhibit 1: Specific processes of the project-oriented organization
Thus, human resource management designed to meet the needs of the project-oriented organization is a core process. However, it has not received great attention in the research community (Keegan and Turner, 2003; Huemann et al., 2004; Gareis and Huemann, 2004). The human resource management literature gives greater attention to management in routine organizations, and project management professionals steeped in the systems approach to project management give greater attention to tools and techniques for managing the “iron triangle.” We are undertaking a research project, which, for now, aims to identify the needs for human resource management in the project-oriented organizations, and describe the practices adopted, with a view later to formulating requirements for policies and practices.
In this paper, we describe our progress. We have proposed a set of hypotheses, and conducted some initial interviews as a pilot. From those, we have revisited the hypotheses as a basis for the central part of this research. In this paper, we describe the results of this pilot study. We explain the set of hypotheses and the methodology we have adopted for our research. Then we describe the initial interviews and analyze the results obtained. From that we draw conclusions for the remainder of our research project.
Initial hypotheses
The research is based on the following initial hypotheses:
H1: Human Resource Management (HRM) is a core process of the project-oriented organization
Project-oriented organizations use projects and programs to perform business processes. These are temporary organizations (Turner and Müller, 2003) and so impact on the human resource practice in the organization. Every time a new project or program is developed, the human configuration of the organization must change. Thus we expect HRM to be at the core of the management of the project-oriented organization.
H2: There are differences between Human Resource Management in classically-managed (functional) organizations and in project-oriented organizations.
Traditional human resource management practices are designed for the classically-managed organization (Keegan and Turner, 2003)--for the factory mass-producing routine products where the job requirements are well defined and stable. Projects and programs are temporary organizations (Turner and Müller, 2003) and so entail greater uncertainty, creating a more dynamic environment with more discontinuity. Thus we expect different HR process to be required than in the classically-managed organization as traditionally adopted.
H3: There exist specific requirements for the HRM processes in the project-oriented organization.
We expect the core processes of HRM in the project-oriented organizations to be similar to those applied in the classically-managed organization (Torrington, Hall, & Taylor, 2002). A very simple model of the core processes includes four steps (Huemann et al., 2004):
- recruitment
- development
- leadership
- release
However, we expect there to be requirements for additional processes such as assignment and reassignment to projects and programs, leadership on the project, and dispersement at the end of projects.
H4: There exist specific HR practices as applied in project-oriented organizations
Based on Hypotheses 2 and 3, we expect the practices adopted to apply these processes to be necessarily different, to reflect the transient and uncertain nature of the work in project-oriented organizations.
H5: The role of the HR department needs to be different from the classically-managed (functional) organization.
Based on Hypotheses 2 through 4, we expect the role of the HR department to be different from classically-managed organizations, and closely linked to the role of the project management office and the manager of the pool of project management professionals.
Methodology
The methodology of research follows a qualitative approach based on a systemic-constructivist-paradigm (Luhmann, 1995), which is conducted in a cyclic approach. The research methodology is expressed in the following working plan:
- Development of initial hypotheses relating to human resource management in project-oriented organizations: The initial hypotheses stated above were derived based on the existing work of the authors (Huemann et al., 2004; Gareis and Huemann, 2004; Gareis and Huemann, 2003; Keegan and Turner, 2003; Keegan, 2002; Huemann and Eskerod, 2001)
- Initial interviews, and development of the working hypotheses: Initial interviews have been conducted and will be developed from these working hypotheses for the research.
- Information gathering: Data will be gathered by a search of existing Human Resource Management and Project Management literature, and an analysis of documentation and interviews.
- Development of models regarding the HR processes, practices, and the roles adopted in project-oriented companies: We plan to identify specific methods of HRM in project-oriented companies. Comparisons will be made with HRM processes, practices, and roles in classically-managed (functional) organizations
- Conducting case studies for the application of the models in project-oriented companies: Case study research will be undertaken to further test specific models; for example, the model of the recruiting process and methods for recruiting project personnel.
- Interviews for the further interpretation of the working hypotheses and the models: The models developed will be further tested and interpreted through further interviews.
- Communication of the research results in publications and conferences: The results will be published at research conferences, such as the Project Management Institute (PMI) Research Conference, and the Austrian pm days ’04, and in international research journals.
Interviews
In accordance with step 2 above, initial single and group interviews have been conducted. It has been requested that we keep the names of some of the companies anonymous. Therefore, we have decided to keep them all anonymous. Interviews have been conducted in seven companies, four countries, and a range of industries. Information about the companies interviewed is given in Exhibit 2.
Company 1: is a small consultancy based in Stuttgart, Germany, implementing aid-funded community development programs. They fulfil a program-management role, coordinating local people who undertake the actual projects. There are nine permanent staff, six of whom are program managers. As you can see, the actual project work is done by peripheral workers.
Company 2: is a small consultancy based in Singapore, but working throughout Southeast Asia, providing business process and technical consultancy to legal practices. There are twelve permanent staff, four of whom are partners and project managers, four software development and four technical support. They never use peripheral workers, having had one bad experience.
Company 3: is a small consultancy based in Auckland, New Zealand, obtaining planning consents for building and construction projects in the Auckland Area. Most of their clients are local government. They have 14 permanent employees, ten of whom are project managers, and four of whom are the owners. A typical project team will consist of two to fifteen people, and most of those will be freelancers. They maintain a stable network of peripheral workers.
Company 4: is a large property development company in Beijing, China, undertaking real estate and office development for government clients. They operate matrix management with a projects department, and a number of support departments, such as accounting and marketing. A typical project team would consist of a project manager and a number of people from the support departments--for example, an accountant. But the construction work itself would be done by sub-contract companies.
Company 5: is the Information and communications technologies (ICT) development activity of the New Zealand subsidiary of a large retail bank, operating throughout Australasia. ICT development is done not by one department, but each business unit maintains its own ICT department. The interview covered all ICT development work. By and large, projects use internal resources, but larger projects could involve people from several business units.
Company 6: is the network infrastructure development department of a data network operator in New Zealand. The data network operator is itself a subsidiary of an Australian telephone-operating company.
Company 7: is an Austrian telephone company. Most of the projects done are internal but some are done for external clients. The company maintains a project management office.
Exhibit 2: Organizations Interviewed
Analysis
H1: Human Resource Management is a core process of the project-oriented organization.
Our immediate thought on this hypothesis is that, as stated, it does not differentiate the project-oriented organization from the classically-managed one, because HRM is a core process in all organizations. However, our interviews made us realize two things:
- because the HR configuration of the organization changes every time a new project is created, and because project team members spend much of their time working on transient projects, HRM ought to demand much larger attention of managers at the work interface than in a classically-managed organization
- in spite of that, HRM is not yet perceived as a core process by many project management personnel, especially those schooled in a systems approach to management
Company 1: As a small company, this firm has up to now outsourced its personnel function (mainly the pay-roll). However, it is being forced to address a number of issues, but particularly the development of new competencies to attract new businesses. It is therefore being forced to recognize HR as a core process, and is just now adopting that view.
Company 2: This company is being forced to address a number of HRM issues, such as succession planning, assignment of staff to projects, and retention of existing staff. Therefore, it has recently come to recognize HRM as a core process. The CEO and interviewee put considerable effort into counselling staff, thus involving managers at the work interface.
Company 3: This company does recognize HRM as a core competency. A significant issue it deals with is maintaining its network of peripheral workers, and assigning them and core staff to projects. Again, managers are involved in counselling staff, who suffer abusive telephone calls.
Company 4: As a large company, this firm recognizes HRM as a core function, particularly in assigning people to projects.
Company 5: The bank itself recognizes that HRM is a core process. The bank is beginning to delegate the HR function to the business units and departments within them, with the central department remaining much more in a support role. The operating divisions and departments are accepting ownership of responsibility for HRM and recognizing its significance as a core process. They operate very much out of a principle of subsidiarity, with decisions made where they have the greatest impact.
Company 6: Again, the company itself recognizes HRM as a core process, but the interviewee says that his department still has too strong a technical focus, and so is representative of traditional project managers who do not see HRM as a core process.
Company 7: The company itself recognizes HRM as a core process, and the central HR department is discovering that HRM in the project management function has different requirements from other functions. Many of the functions of HRM are being delegated to the project management office, but many project managers themselves do not yet recognize the significance of HRM to their projects.
HRM is a core process in all organizations. We now suggest that what differentiates the project-oriented organization is that HRM is much more invasive than in the classically-managed organization. However, in spite of that, project managers have not traditionally recognized the significance of HRM to the successful delivery of their projects. So we would rephrase Hypothesis 1:
H1: Human Resource Management needs to be a core process of the project-oriented organization, with significant involvement of managers at the work interface, but is not yet recognized as such by project management personnel.
H2: There are differences between Human Resource Management in classically-managed (functional) organizations and in project-oriented organizations.
As we have seen, projects and programs are temporary organizations. So every time a new project or program is created, the HR configuration of the organization changes. That creates a dynamic, discontinuous environment. That is different than the stable, continuous environment of the classically-managed organizations, so different HR processes ought to be required. But this is not recognized by all project-oriented organizations, some of whom continue to apply classical approaches. In analyzing the interview results, we looked at whether the nature of the business requires different approaches to HR, whether that different need is perceived, and whether different approaches are used.
Company 1: is currently operating very traditional approaches. However, they have just recently realized that they need to do things differently; for example, in developing new competencies. They are in the process of making those changes.
Company 2: is operating fairly traditional approaches, but is finding that adequate for its needs.
Company 3: recognizes the need to operate different approaches--for instance, in the management of its large network of peripheral workers--and is doing that.
Company 4: perceives the need for different approaches--for example, in assigning people to projects--but feels that they do not always do that well.
Company 5: had a traditional centralized HR department, but is in the process of delegating many of the HR functions to business units and departments so they can be closer to the operational need. By operating a principle of subsidiarity in this way, they allow the business units to be more responsive to different needs. They perceive an issue in assigning people to projects, and are beginning to deal with that.
Company 7: has until quite recently thought the project management HR function would be the same as all other functions, but have recently recognized that it has different needs, and is addressing those needs. For instance, project managers need additional training--not just different functional training, but additional training to deal with the dynamic nature of projects.
Thus we maintain hypothesis 2, but would add two corollary hypotheses:
H2A: Project-oriented organizations have been slow to perceive this different need.
H2B: Having perceived this need, project-oriented organizations adopt different approaches for HR management from classically-managed organizations.
H3: There exist specific requirements for the HRM processes in the project-oriented organization.
This hypothesis relates to the HR processes operated in the organization. To address this issue, we compare the very simple four-step process for HRM in classically-managed organizations (suggested above) to what we believe is the more complex requirements of project-oriented organizations. The simple four-step process for classically-managed organizations suggested is (Exhibit 3):
- recruitment
- development
- leadership
- release
The individual's career runs in parallel with this, and career means climbing the functional hierarchy.
Exhibit 3: A simple model of HRM processes of the classically-managed organization
In the project-oriented organization, several additional steps are required to deal with people's continued assignment and reassignment to new projects, dispersment at the end of projects, and the fact that they may have a task (project) manager and line (functional) management. Thus the steps in the process in a project-oriented organization are:
- Recruitment
- Development
- Assignment to projects
- Leadership (partly carried out by project manager, partly by line manager)
- Dispersement from projects
- Release from the organization
This process is much more cyclic (Exhibit 4). Again, career follows in parallel to this in process, but we often see that career development is learning new skills, so it is moving outwards as well as upwards.
Exhibit 4: A simple model of HRM processes for the project-oriented organization
Companies 1 and 2: Assignment to projects and the development of new competence areas are important.
Company 3: Assignment has the added complexity of assigning people from the large network of peripheral workers. Dispersement of those peripheral workers at the end of a project in a way that maintains their commitment to the company is also thought significant.
Companies 4 and 5: Assigning people to projects is an issue.
Company 7: recognizes the additional training in dealing with dynamics and complexity required by project personnel, not just the different functional training. Also, they run assessment centers for assigning project managers to projects. This is in addition to conventional assessment centers for recruitment and training.
Based on the interviews so far, we retain this hypothesis.
H4: There exist specific HR practices as applied in project-oriented organizations
This hypothesis relates to the way the HR processes are applied. Practices are required for the three new additional processes identified above, but we found that different practices may be adopted for the four traditional processes.
Company 1: For recruitment of permanent staff, this firm operates fairly traditional practices. However, to recruit peripheral workers for projects, it has to develop a network in each new community it starts working in. Training is done externally, but there is little training in project management processes. Line management has been typical of a small start-up company, but they are now recognizing that they have special needs as a project-based company. Release was not discussed in the interview, but the formal functions are undertaken by the firm to whom payroll is outsourced. It is the role of the program manager from the firm to assemble the project to undertake the necessary work. We did not discuss at the interview how those teams are disbanded, but we now see this as something that should be addressed in future interviews.
Company 2: This firm recruits people though advertisements and its network of contacts. Again, training is done externally. An interesting feature of this company is proactive mentoring by the CEO and the interviewee (also a director and owner). They make an effort to notice the demeanor of members of the staff, and react to any noticeable changes. They also operate a monthly group meeting of all staff to exchange information and views. However, both efforts depend on the small size of the company and the responsiveness of the directors, not on its being project-oriented. The company has recently acquired another company, but lost most of the staff. But we did not discuss how staff members were released. Projects are assigned to one of the four partners to manage, depending on their technical expertise, and the project manager then assembles a team from the permanent staff. Since they are always working with the same people, there is no need for dispersement practices.
Company 3: This firm also recruits people though advertisements and its network of contacts. Employee morale is very high, so turnover is low and neither recruitment nor release is done often. Training is external. The high morale is attributed to the relaxed working environment. Because the nature of the work is not demanding, the teams take time to socialize together, for instance by playing golf. However, managers haved a significant support role. Members of staff receive a lot of abusive telephone calls from the public, which creates high stress. The managers need to counsel the staff to respond to that stress. When a new job is received, a project manager is appointed, based on expertise and availability, from among the ten project managers. That manager then appoints support staff from among the other permanent employees, and technical staff from the network of peripheral workers. We did not discuss dispersement in the interview, but in this organization the peripheral staff are included in the social activities, helping to bind them to the company.
Company 4: We did not discuss the four traditional processes in the interview. We did, however, discuss assignment. Project managers are assigned from the pool of permanent project managers depending on availability and location of the work. They then assemble support staff from the support departments. But the organization makes no attempt to balance the work of support staff across projects, or by location. The project manager assembles subcontractors for the technical work.
Company 5: This large, established company employs fairly standard practices for the four traditional processes, within guidelines set by the central HR department. The project manager is appointed from within the business unit most affected by the project. If the project is taking place within that business unit, all project team members are sourced from there as well. Problems arise if a project requires people from other business units because no pertinent formal processes exist.
Company 6: This large, established company also employs fairly standard practices for the four traditional processes, within guidelines set by the central HR department. The appointment of project team members from project manager down is based on technical expertise, not management ability.
Company 7: Once again, this large, established company employs fairly standard practices for the four traditional processes, within guidelines set by the central HR department. But it recognizes quite different needs for the training of project management personnel. We have already identified the need for additional content. Project managers are receiving internal and external training, coaching, and certification. They have also identified a career path for project managers. HRM functions are being delegated to the project management office, and project managers. Project managers are being made particularly responsible for project appraisals. But this is done within guidelines set by the HR department. Release is shared by the project management office and central HR department. The former debrief the member of staff departing, while the HR department looks after formal issues relating to terms and conditions of employment, and payroll. The company is working on the process whereby project managers are assigned to projects. It has been very political up to now. But they are trying to match the project managers’ pm competence much more to the needs of the job and are adopting assessment centers to do that. Dispersement was not discussed at the interviews.
Based on the interviews so far, we retain this hypothesis.
H5: The role of the HR department needs to be different from the classically-managed (functional) organization.
We have seen that, in the project-oriented organization, there are additional processes in HR management, as well as traditional processes which need to be applied differently. Furthermore, because the HR configuration of the organization changes with each new project, the HR practices in the project-based organization need to be much more invasive. Current practice is quite the opposite, with many project managers not paying much attention to it. Against this background, we proposed that the role of the HR department needs to be different from the classically-managed organization. We saw in the large companies in our sample that there was a tendency to delegate HR functions, even for the functionally-managed departments in the organizations. The HR department sets policies and standards, strict rules where they are required, and guidelines in other areas. Then the implementation of those practices is delegated to business units and departments within the business units. A principle of subsidiarity operates, and decisions are taken where they have the greatest impact, within the policies, standards, rules and guidelines set at the center. That practice is the same in both functional and project-oriented organizations.
To deal with the different application of traditional HRM processes, the HR department needs to ensure that the rules and guidelines where necessary are sufficiently flexible to deal with the different requirements of the project-oriented parts of the business. They also need to develop policies, standards, rules, and guidelines to deal with the additional HRM processes required by those parts. Thus it is not so much the role of the HR department that is different as it is the way that it implements that role. The two companies that vividly illustrate this devolvement of the HR function are Companies 5 and 7. Company 6 illustrates it to a lesser extent.
Company 5: delegates HR functions to business units and the business units to the departments. However, it does not develop any additional processes or give additional guidance to the project-oriented part of the business.
Company 7: is different in that last area. It is developing different training packages for project managers, recognizing that they need additional training to deal with the dynamic nature of project-oriented work. In addition, it has developed recruitment processes for project managers which have been delegated to the pm office. It has also developed a process for appointing project managers to projects, including assessment centers to assess their project management competence as opposed to technical competence. In the past, project managers have been appointed for political reasons, and so the organization is now trying to ensure that the best person is appointed. It has also developed a career path for project managers. There is an issue here about who is responsible for tracking individuals’ progress through their careers. It needs to be delegated to the pm office and managers of project managers. Turner, Keegan and Crawford (2003) reported that this is often done by informal committees. Linked to this, policies and practices are also being developed for project appraisals. The way that this is coordinated and the role of the HR department in is is something that Company 7 has yet to fully resolve. Company 5 is the only other one of the sample to have started down this road, and has not gotten anywhere near as far as company 7.
So it not so much the role of the HR department that is changing as it is how it applies that role. Therefore, we can change hypothesis five to:
H5: The HR department in the project-oriented organization needs to develop policies, standards, rules, and guidelines in traditional areas that are sufficiently flexible to deal with the different HR requirements, as well as policies, procedures, rules, and guidelines for the additional processes.
We can add a corollary hypothesis:
H5A: In the project-oriented organization, the HR department needs to work closely with managers to ensure that these policies, standards, rules, and guidelines are properly implemented to deal with the dynamic nature of the environment and the invasive need for HR practices
Conclusions
The seven companies studied so far have acted as a pilot study for the hypotheses that we have proposed. We have found that:
- HR management is a core process of the project-oriented organization, but also of the classically-managed organization. However, because every time a new project is created, the HR configuration of the organization changes, it is more invasive in the project-oriented organization. This is not yet recognized by many project management personnel.
- Because every time a new project is created, the HR configuration of the organization changes, the environment in a project-oriented organization is more dynamic and discontinuous. This creates different needs for human resource management in the project-oriented organization. This is not yet widely recognized, but where it is, different processes are being adopted.
- Thus the project-oriented organization needs additional processes for HR management, particular assignment to projects, project leadership, and dispersement after projects.
- Thus the project-oriented organization needs different practices for HR management; different practices within the traditional processes of recruitment, training, leadership, and release; and different practices within the additional processes of assignment, project leadership, and dispersement.
- The role of the HR department continues to be to set policies, standards, rules, and guidelines for HRM; to delegate their operation to those parts of the organization where the decisions have the greatest effect (under a principle of subsidiarity); and to provide support in their operation as necessary. But the policies, standards, rules, and guidelines need to reflect that different processes and practices are required.
We have identified three additional HR processes required in the project-oriented organization:
- assignment
- project leadership
- dispersement
Assignment: This is the process of assigning project personnel (including program managers, project managers, and project team members) to new projects and programs. It has similarities to recruitment of people to the parent organization, but also substantial differences, even when appointing external contractors to be peripheral workers on the project. Techniques such as assessment centers are being used for this process, (Crawford, 2003).
Project leadership: This is probably the most readily recognized of the three processes, and it has been said in the past that this process requires leadership of the task, building, and maintenance of the project team, and care for the individuals in the team (Adair, 1983; Turner, 1999). But what is now becoming recognized is that project managers have additional duties under the care of individuals, such as project appraisals and support for career development.
Dispersement: This is a process the need for which is not widely recognized. It has similarities to, but also substantial differences from, release from the parent organization. It is at the end of a project that core workers are most vulnerable to leaving the organization, especially if faced with a period of sitting on the bench. At the end of the project, core workers should be debriefed about their experiences, but also counselled about the future. If they do not have another project to go to straight away, they can do many things, including:
- Sitting on the bench
- Going through training or other personal development
- Going to the pm office to do technical and process development
These choices need to be made in consultation with the individuals, especially to avoid their leaving the organization. Peripheral workers also need to be counselled and debriefed. If they have performed well, you would like them to work for you again. The organization can advise them on training, even involve them in training activities, invite them to attend social activities, and work at keeping them with the network of potential peripheral workers.
These three processes need additional research.
