Paradigms of people management: Human resource strategies during an economic downturn

: Since the Industrial Revolution, there has been an evolution in the paradigms under which the industrial worker is perceived and dealt with. These paradigms can be briefly listed in the order of their evolutionary stage as: the food-gatherer, the economic man, the social man, the resourceful man, and the enterprising man. Each of them is a combination of two basic paradigms in different proportions, namely, the outsider paradigm and the partnership paradigm. Obviously, the paradigmatic perspectives of management about their workers will have a significant influence on how they treat their workers, which may become especially conspicuous during recessions and other kinds of hard times. It was in this context that we designed a study to understand the human resource strategies of companies during a period of recession. Data for this study was collected through the content analysis of 46 published cases, wherein we developed the ratings of two sets of variables, namely: the external and internal environments of the company and the strategic actions taken by the respective managements. A surprising finding of the study is that the correlations between the environmental factors and the strategy factors were small and non-significant; moreover, the correlations involving the external environment were smaller than those involving the internal environment. Hence, it may be inferred that strategic actions are influenced primarily by the paradigmatic perspectives of management rather than environmental factors. In order to identify the different types of paradigmatic perspectives, we have further carried out a cluster analysis to develop a taxonomy of paradigms. The results showed that there are five sub-paradigms, which are: (1) Pacifiers, constituting 35% of the sample; (2) Modifiers, constituting 22%; (3) Molders, constituting 17%; (4) Enhancers, constituting 15%; and (5) Exploiters, constituting 11%. The limitations of the study and the implications of the findings are discussed in the concluding part.


Paradigms of people management: An evolutionary perspective
It is common knowledge that people-management practices in the organized sector of work have undergone substantial changes since the Industrial Revolution, when mass production and consequently large-scale employment of people in the organized sector became a common practice.People-management practices in organizations are largely a reflection of the beliefs and assumptions that entrepreneurs and managers hold about work and the worker.Taking a historical perspective of the developments in the people-management practices of the organized sector, one can recognize five different patterns (call them 'paradigms' for the time being), each one reflecting a different set of assumptions about work and the worker.A brief outline of the major tenets of these five paradigms and the assumptions underlying them is given below: Paradigm 1: Managing the 'food gatherer': A major assumption about the workers during the Industrial Revolution was that they held a 'food-gatherer' mindset (Nicholson, 1998;Mohajan, 2019), that is, they would work only if they needed the money to buy food.Hence, managers believed that workers should be paid only a subsistence wage, which would keep them alive and motivate them to go to work every day!Increasing the wages even as a reward for higher productivity was unthinkable, as it was believed that the new-found 'affluence' might prevent them from going to work the next day.Workers also had their beliefs that restrained them from increasing productivity-they had a very 'physical' concept of work, so they feared that faster work would exhaust the 'pile' and make them out of employment sooner, and so they adopted a 'soldiering' attitude against any attempt at increasing productivity!Paradigm 2: Managing the 'economic man': The vicious cycle described above, militating against increasing productivity, was broken by the Scientific Management movement initiated by Frederick Taylor (Taylor, 1911;Cadbury, 1914), who believed that work would produce more work and consequently more employment, and therefore any increase in productivity is beneficial to the enterprise, its managers, and the workers.The assumptions of the 'economic man'-the belief that man is motivated primarily by money-gave rise to the piece-rate wage system that rewarded the worker strictly in proportion to his output.In order to ensure fairness in the system, Taylor also introduced a scheme for identifying the 'best practices' (to borrow a more recent terminology) and training the worker in such methods.This was admirably supplemented by the 'Time and Motion Studies of Frank and Lillian Gilbreth, with a view to developing the scientific method of work so as to eliminate wasteful efforts (Gilbreth, 1912;Gilbreth, 1921).The people-management paradigm born out of these experiments is focused on the 'management of the human individual' by giving him training on the specific task to be performed and by providing monetary incentives in proportion to his output.Paradigm 3: Managing the 'social man': As the monetary incentives failed to be effective in all situations, researchers and practitioners started looking for other explanations.The search for alternative models was prompted and guided by the serendipitous findings of Elton Mayo's Hawthorne studies that human individuals seek to fulfill their social needs at work.The concept of the 'social man' gave birth to the 'human relations' paradigm, where the major motivators are the attitudes and orientations of the group, opportunities to relate and interact with co-workers, and the benign and considerate treatment by the supervisors (Mayo, 1933;Mayo, 1945;Roethlisberger and Dickson, 1939).Paradigm 4: Managing the 'resourceful man': In the previous three paradigms, employees were viewed as external participants who were unwilling to contribute to the organization's objectives and so had to be motivated using money, job training, and relationships.The focus was primarily on what the organization needs rather than on what the employees can contribute.In other words, employees were not treated as 'in-house resources' owned by the organization but as 'hired hands'.Findings from behavioural science research showed that employees would willingly take initiatives for the organization, provided the latter was willing to recognize their competencies and empower them.Among the studies/theories that have contributed to the development of the human resources perspective, as well as the 'enterprising-employee' model discussed as the next paradigm, the most influential ones are the following: Maslow's need-hierarchy theory (Maslow, 1954); Herzberg's two-factor theory based on job content and job context (motivators/hygiene-factors theory) (Herzberg et al., 1959) (Drucker, 1954); and Weber's theory of ideal bureaucracy (Weber, 1947).This has led to the adoption of what may be called the 'human resource paradigm' by organizations.This paradigm recognizes people as versatile resources of the organization who have the potential to contribute much more than what they are currently hired for.The responsibility of the management therefore is to develop and empower these resources in their specified areas of discretion so that they could proactively contribute to the emerging needs of the organization that operates in dynamic internal as well as external environments.Paradigm 5: Managing the 'enterprising man': While the 4th paradigm raised the status of the employee from an 'outsider' to an 'insider', it did not fully address the issue of the dichotomy between the owners and the employees.The latter were still treated as a 'resource' in the hands of the former and not as 'doers' together with the owners.In other words, the model was to provide 'limited autonomy' to the employees within strictly defined functional boundaries and performance norms.What is proposed in the 5th paradigm is to provide full autonomy to the employees within the broadly defined vision, mission, and values of the organization so that they can act as 'doers' together with the owners.Such a system will promote and enhance employee commitment (Spreitzer, 1995) and performance (Huselid, 2005), organizational innovation and intrapreneurship (Gomez and Rosen, 2001), and organizational effectiveness (Conger and Kanungo, 1988), especially in large organizations (Spreitzer, 1996).While this model is in operation in certain types of organizations (such as religion, politics, social/philanthropic organizations, etc.), there are very few among the industrial and commercial organizations that are able to operate under this paradigm.However, the few who have experimented with this paradigm have found enormous success not only in terms of profits and growth but also in terms of innovation and entrepreneurship.

Paradigms of people management: Two broad categories
Based on the philosophical perspectives implied in the five paradigms discussed above, we can classify them into two broad paradigms, one that treats the employees as 'outsiders' to the organization, and the other that treats them as 'partners'.The latter paradigm, as opposed to the 'outsider' paradigm generally being adopted in commercial organizations, was identified in one of our earlier studies on Social Enterprises (Bhati and Manimala, 2011).As explained above, the underlying assumption of managers in Paradigms 1, 2 and 3 is that employees are unwilling to work and are engaged as external participants, who would perform only the minimum work needed for keeping their jobs.The managers' task therefore is to motivate them by manipulating the wages, providing training as well as incentives, and/or keeping good relations with them.The second category (the 'Partnership Paradigm') may be seen in the evolutionary paradigms 4 and 5, where the managers believe that the employees are an integral part of the organization and would work for it, provided they are sufficiently empowered.The managers' task in this case would be to develop the potential of the employees and create a facilitating environment for them to operate.It should be noted that, as in the case of biological evolution, the 'higher' paradigms may occasionally exhibit behaviours associated with the 'lower' paradigms.Such 'regressions' into a lower-level paradigms may often be associated with crisis situations, which is the rationale for our studying the HR strategies followed by corporations during the economic downturn, as discussed in the next section.

People management during the recent economic downturn
While the two contrasting perspectives on the nature of employees' roles in organizations are conceptually distinct, there are no real-life organizations that operate exclusively within the tenets of a single paradigm.The behavioural styles characteristic of several paradigms intermingles in the actual behaviour of corporate executives.The practices may be at variance with the professed ideologies, as implied in the notions of 'espoused theory' and 'theory-in-use', discussed in the Organizational Behaviour literature (Argyris and Schon, 1974;Argyris and Schon, 1978;Argyris et al., 1985).The contrast is likely to be particularly sharp during an economic downturn because of the need to perform well under adverse conditions.In view of this, we decided to conduct a preliminary examination of the HR practices of Indian organizations during such a period of adversity, so as to identify the peoplemanagement philosophies underlying such practices.Basically, it involved the collection of data on the perceived environment and practiced HR strategies through a content-analysis of the actions taken by these organizations during the recent economic downturn.The technique of content-analysis of actions was preferred to self-reports by executives, with a view to identifying the 'theory-in-use' (as practiced) rather than the 'espoused theory' (as professed).It is natural that self-reports will be dominated by the 'espoused theories' because of the self-serving biases of the respondents, as proposed by the attribution theorists (Heider, 1958;Kelley, 1971;Kelley, 1973;Shepherd et al., 2008).With a view to minimizing the impact of the selfserving bias possible in the use of self-report surveys, the first author has developed and used a different method for data-collection called the 'Case-Survey Method' in an earlier study on Entrepreneurial Heuristics, where quantitative data were generated using the content-analysis of cases published in business magazines.The present study has employed a similar method, although there are some differences in the types of 'cases' used.

Sample for the study
The sample for this study was constituted by 56 Indian cases, of which 46 cases were based on interviews of CEOs published in a reputed Indian business magazine, Business Today.To these we added 10 cases developed from presentations made in an HR Conference by Heads of HRM in the respective organizations.All the cases contained reports on the actions taken on the HR front by corporations during the economic downturn.While there is indeed a self-report bias in these interviews and presentations, the process of generating quantitative data from the 'actions' could help in mitigating such bias to a large extent.The cases covered diverse industries such as software services, textile, automobile, banking and financial services, hospitality, and so on.

Data generation and analysis
The cases were content-analyzed to identify and rate (on a 5-point scale) the perceived environment and the preferred human resource strategies.Environmental perception variables (12 in number) were rated as '1' when not perceived at all, and '5' when perceived to be most important.There were twelve variables in this category, which related to both the internal as well as the external environment of organizations (see Table 1 for details).In a similar manner, we identified 11 human resource strategy variables (see Table 2 for details) and rated them on a 5-point scale.The strategies were rated as '1' when they were definitely not used, and '5' when they were definitely used.Of the 56 cases originally identified, 10 cases were discarded for want of appropriate data on all variables.The data were then subjected to descriptive statistical analyses to ascertain their relative importance.Additionally, the environmental perception variables and HR strategies were separately factor-analyzed to identify the principal orientations involved.Inter-factor correlations were computed to check for the association between the environmental perception and the HR strategies followed.Cluster Analysis was performed on the data to develop an organizational taxonomy based on the similarities in the HR strategies followed by the respondent organizations during this period.

Findings (a) Relative importance of environment and HR strategy variables
The means and standard deviations of the environmental perception variables were as shown below in Table 1.Those variables with means greater than 3.5 were: Downward pressure on prices (E-3); Reduction in demand and customer spending (E-1); Change in customer segments or needs (E-2); and, Perceived strength of brand image (E-11), implying that these are the environmental issues perceived as important by most organizations.
The means and standard deviations of the HR strategies identified are shown in Table 2. Based on the norm of average score above 3.5, it is evident from this table that the most frequently used HR strategies are: Leadership initiatives by the CEO (S-4); Motivating employees by managing their needs and expectations (S-5); Having a philosophy of openness and being genuine, trusting and being transparent in dealing with all stakeholders (S-7); Training and re-skilling of employees (S-9); Developing loyalty and commitment through ownership and empowerment (S-3); and, Timely and open communication with employees (S-6).

(b) Principal factors of environment and HR strategy variables
In order to understand the major dimensions underlying the variables, exploratory factor analysis was conducted on them.This analysis of the environmental variables revealed a five-factor solution explaining 64.8% of the total variance.The five environmental factors were named as: (E-I) Reduction in demand and prices, (E-II) Macro-level changes and interventions, (E-III) Perceived brand power, (E-IV) Lack of sensitivity to internal and external environment, and (E-V) Perceived competence to deal with unexpected events.These factors along with their factor loadings as well as the variance explained by each are shown in Table 3.For the HR Strategies also, a similar analysis revealed a five-factor solution explaining 73.3% of the total variance.The factors identified were: (S-I) Managing employee expectations, (S-II) Employee development, (S-III) Enlarging the talent pool, (S-IV) Leadership, and (S-V) Freezing salary and promotions.The HR strategy variables that coalesced to form the factors and their resultant factor loadings, and percentage of variance explained by the factors are shown in Table 4 below.

(c) Inter-factor correlations
The inter-factor correlations were computed for the environmental perception and the HR strategy factors, which were found to be small and non-significant (see Table 5).The largest correlation (0.24) is between E-V ("Perceived competence to deal with unexpected events") and S-I ("Managing employee expectations").It may be noted that E-V is an internal environmental factor.Apparently, the strategies are more related to internal capabilities than to external environment.One other possible hypothesis is that organizations have their strategies based on their peoplemanagement philosophies, which would remain largely unaffected by the happenings in the external environment (implying that such philosophies are hard to change).

(d) A taxonomy of respondent organizations
As the inter-factor correlations showed almost complete absence of any association between environmental perception and strategy choices, it was logical for us to conclude that the source of strategies is primarily the philosophical orientations of the organizations.Hence it was decided to get a clearer understanding of the specific orientations of different sub-groups within the sample, for which we conducted a 'cluster-analysis' of the respondents based on the HR strategy factors.The procedure helped us to identify five sub-groups, which were named as: (1) Pacifiers, constituting 35% of the sample; (2) Modifiers, constituting 22%; (3) Molders, constituting 17%; (4) Enhancers, constituting 15%; and (5) Exploiters, constituting 11%.(See Table 6 for the strategic orientations associated with each group).Table 6.Cluster analysis of the organizations based on the HR strategies identified.Since the basis of classifying the respondents was their strategic orientations, we shall briefly outline the most commonly employed HR strategies of the group, which characterized their management of the economic downturn.Pacifiers (35%) adopt a strategy of allaying the fears of employees through open and genuine communication with them and through the management of their apprehensions, aspirations and expectations.Modifiers (22%) adopt a strategy of introspection by revisiting their own vision, mission and values, wherein they would also involve their employees.Molders (17%) attempt to change (in some cases, develop) their employees by training and reskilling them, so that they could be redeployed and thereby avoid both retrenchments as well as fresh recruitments.Enhancers (15%) are the 'opportunistic' organizations who look at the glut in the talent market as an opportunity for them to acquire good talent at low cost, with a view to keeping them and/or further developing them for their long-term plans.Exploiters (11%) are also opportunistic in the sense that they tighten the norms and metrics of performance, which helps them to get more work out of fewer people and provide a rationale for retrenchment, where timely communication with employees is seen as a means to enforcing the new norms without much heartburn.

Conclusion: Paradigms and praxis of HRM in India
Since the present study is based on the published interviews and presentations of a small sample of Indian organizations, it is unlikely to be free of the self-serving biases of the presenters.Hence, the findings of the study should be treated as indications rather than inferences.The major findings of the study, along with brief comments on their implications, are listed below:  It seems that organizations are more sensitive to their external environment than their internal (see Table 1).However, as we shall see later when discussing the 'environment-strategy' correlations, the internal environment of organizations (philosophies, values, competencies, etc.) is likely to have a greater influence on the strategic choices made by them.Hence, a focus on the latter may be more beneficial to organizations in the long run.


With reference to the HR strategies adopted during an economic downturn, it may be noted that Indian organizations prefer employee-friendly strategies to those that are hostile.As may be seen from Table 2, the more commonly adopted strategies are leadership initiatives, open and authentic communication, training and re-skilling of employees, and ownership and empowerment; the least preferred ones are downsizing, freezing salary and promotions, and tightening performance norms.


It was rather surprising (and contrary to the prevailing notions of the 'environment-strategy' relationship) that the inter-factor correlations were extremely small and non-significant, where the largest value of correlation was between an internal environmental factor and employee expectation management (see Table 5).As explained above, this finding may suggest a greater influence of organizational philosophies, values, and competencies on strategy-making.What, then, would be the influence of the external environment on strategymaking?Taking an analogy from the theory of biological evolution, one could say that it is not 'environmental causation' (as proposed by Lamarck) but 'environmental selection' (as proposed by Darwin).In other words, the primary reason for a change in an organism (or organization, in the present context) is the internal dynamism of the organism.But the survival of the change (or the success of the strategy, in the present context) is because of the selection by the environment based on its compatibility with the environment.So, the environment does not cause, but only selects or rejects.


Based on the observation made above regarding the possibility of a greater influence of the organizations' people-management philosophies on their HR strategies, the patterns of underlying orientations were explored using cluster analysis.Among the five types of orientations identified (pacifiers (35%), modifiers (22%), molders (17%), enhancers (15%), and exploiters (11%), none of them is about utilizing employee initiatives.In fact, all of them are owner/manager-initiated strategies for survival, many of them involving employees, but a few of them not.In terms of the two broad categories of paradigms we have identified in the introductory part, it may be legitimate for us to infer that Indian organizations are operating mostly in the 'outsider' paradigm.However, to be fair to them, it should be admitted that they are mostly at the benign end of this paradigm.

Table 1 .
Means and standard deviation of environmental perception variables.

Table 2 .
Means and standard deviations of human resource (HR) strategy variables.

Table 3 .
Exploratory factor analysis of environmental perception variables.

Table 4 .
Exploratory factor analysis of HR strategy variables.

Table 5 .
Inter-factor correlations between environmental factors and HR strategy factors.