Human Resource Management in Australia: Historical Development and Contemporary Tensions

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3. Human resource management in Australia:
historical development and contemporary
tensions
Christopher Wright
INTRODUCTION
As is the case in other advanced liberal- market economies, human resource management
(HRM) in Australia has become an accepted ‘managerial profession’ with its own profes-
sional association and credentialism evident in specific education, training and profes-
sional networks (Armstrong 1986; Michelson and Kramar 2003). This chapter explores
the origins and historical development of HRM in Australian workplaces throughout
the twentieth century through to the present day. Despite its distance from the centres
of economic activity in the United States and Europe, and its comparatively small eco-
nomic footprint, Australia has played an important role in the historical development of
HRM. This is a southern hemisphere, settler economy highly dependent on the export
of resources, so one might suppose the predominant state of employee management to
be relatively informal and derivative, and indeed this general summation is accurate for
a significant component of the Australian economy. However, the history of HRM in
Australia also reveals surprising levels of local innovation and global influence. Australia
was after all the birthplace of the ‘father’ of human relations, Elton Mayo (Trahair 1984),
and as this chapter reveals played a central role in the ongoing global spread of new man-
agement ideas and practices.
The chapter reveals a complex picture of rapid changes in the practice of employment
and personnel administration, work organisation, and industrial relations and collective
bargaining. Examples of change and innovation operated alongside more traditional
and informal methods and were shaped by broader factors such as changes in product
and labour markets, patterns of government and state regulation, as well as the role of
the labour movement, professional groups, and the changing values of industry leaders
and business executives. While significant attention has been directed to the Australian
system of compulsory state industrial arbitration and awards (see for example Dabscheck
1980; Patmore 1991), the impact on management practice is perhaps less pronounced
than commonly supposed. Indeed, in establishing specific minimum standards of wages
and working conditions, large residual areas of workplace activity were deemed the sole
prerogative of management (De Vyver 1959). Contrary to popular opinion, this gave
employers significant freedom in deciding how work was organised and employment
managed over and above minimum standards. Most interestingly though, the Australian
case provides a revealing insight into the global diffusion of management ideas and
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HRM in Australia 47
practice and how even relatively marginal economic players contribute to the global flow
and development of management knowledge.
PRE- 1940: SIMPLE CONTROL AND THE BEGINNING OF
FORMALISED EMPLOYMENT PRACTICE
The early origins of Australian labour management were shaped by the distinctive
pattern of industrial development and the country’s close ties to Britain as a source of
primary produce (Cochrane 1980). During the early 1900s, Australian industry grew fol-
lowing the federation of the colonies, the introduction of unified tariff protection, and
increased processing of primary exports. These trends were reinforced during the First
World War. Population growth, immigration, and strengthened tariff protection after the
war assisted the formation of large industrial enterprises in the steel, glass, paper, and
chemical industries (Boehm 1971). The nature of production also underwent fundamen-
tal change as foreign firms set up manufacturing operations behind the tariff wall. While
many of these larger industrial concerns were based on the importation of British techni-
cal and managerial expertise, there were exceptions such as the Broken Hill Proprietary
(BHP) Co’s establishment of steel production and the entry of overseas car manufactur-
ers which used American techniques of mass production (Forster 1964; Mauldon 1938).
However, despite these moves towards large integrated enterprises, family owned and
managed firms remained as dominant features of the industrial landscape (Haddon- Cave
1945).
A critical factor in the development of workplace management in Australia was the
country’s tradition of strong collective worker organisation. From the 1820s, trade
unions of skilled workers increased in number. While most of these organisations were
limited to male craft workers in engineering, building, and printing trades, the develop-
ment of new mass trade unions by the 1880s in mining, shearing, the railways, maritime
and road transport, boot- making, and clothing, challenged the power of employers. One
response was greater employer co- ordination. During the 1870s, employer associations
were formed in sawmilling, brickmaking, coachmaking, tanning, building, iron- working,
retail and clerical work (Patmore 1991; Waters 1982). Employer opposition to trade
unionism and collective bargaining was reasserted during the 1890s Depression. The
Maritime Strike of 1890 and related disputes in shearing and mining provided employers
with an opportunity to undermine trade unionism. Assisted by a deteriorating economic
environment and the active support of colonial governments, a combination of ship-
ping, pastoralist and coal mining employers were able to break the strikes and institute
‘freedom of contract’. As the depression deepened, employers ignored union agreements,
bargained with workers individually and instituted wage cuts and work intensification
(Frances 1993; Waters 1982).
Employer dominance was potentially challenged by the introduction of compulsory
arbitration courts and wages boards during the later 1890s and early 1900s. Under
the compulsory arbitration systems introduced in New South Wales in 1901 and at
the Commonwealth level in 1904, trade unions were granted legal standing and could
bring employers before state tribunals to resolve employee grievances. The courts also
had the power to make enforceable awards setting down minimum wages and working
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conditions (Patmore 1991). While such state intervention in the terms and conditions
of employment appeared to fundamentally limit managerial discretion, arbitration also
offered employers a number of advantages. First, while the creation of uniform minimum
wages and working conditions may have reduced employer flexibility over labour costs,
for larger enterprises such reform also offered to alleviate competition from smaller,
low- wage producers. Second, the linking of the payment of ‘fair and reasonable’ wages
under arbitration to a system of tariff protection, held clear benefits for manufacturers.
Third, arbitration tribunals provided a further source of labour discipline, which while
independent of management, commonly viewed the interests of the nation and industry
as one and the same (Coward 1973). Finally, and perhaps most importantly, while the
arbitration tribunals forced employers to recognise and bargain with trade unions, they
also assisted in the preservation of managerial prerogative by limiting the scope of col-
lective bargaining to a narrow range of industrial issues. During the 1920s and 1930s,
state industrial tribunals provided ample support for employers in their battles with trade
unions, instituting wage cuts, disciplining militant workers with goal and fines, deregis-
tering striking unions, and supporting management’s introduction of new technologies,
deskilling and rationalisation (Patmore 1994; Wright 1988; Cockfield 1993).
At the shopfloor level, the organisation of work varied by ownership structure, size and
industry. Despite the academic attention directed to formalised techniques such as scien-
tific management and mass production, in the Australian context most manufacturing
establishments relied upon simple forms of personal control (Edwards 1979). This was
pronounced in small firms, where control of the workforce was the concern of the owner-
manager or working proprietor. These employers exercised a wide discretion over the
firm’s affairs, including the supervision and direction of production, the hiring and firing
of workers, and the allocation of bonuses and other positive inducements (1922; 1934).
In larger firms, ‘simple control’ was often delegated. While the use of sub- contracting
was pronounced in industries such as clothing and footwear manufacture, by the late
nineteenth century, the engagement of sub- contractors was in decline, as employers
sought to improve productivity through direct control over the shopfloor (Frances 1993).
Here, the foreman was central to the successful management of the enterprise and his
discretion commonly extended to questions of production, cost and quality control. The
foreman’s control was often tempered by the craft skill of the workforce. For instance, in
boot- making, printing, coal mining and shearing, workers often exercised a high degree
of autonomy over working hours and methods, favouring piecework payment and com-
monly instituting collective output quotas and other forms of work regulation (Hagan
and Fisher 1973; Tsokhas 1990).
In the newer mass production industries such as automobile, electrical appliance, and
steel manufacture, the foreman’s role as shopfloor manager was critical to the manage-
ment of the firm. Jacoby’s (1985) conception of the ‘driving’ method of supervision in
American industry, appears directly relevant. Examples of large Australian firms high-
light the role of the foreman maximising output through a combination of bullying,
compulsion and authoritarian rule. Foremen maintained close surveillance over worker
behaviour and instituted strict discipline aimed at minimising time- wasting and ‘unpro-
ductive’ behaviour. Under such a system, it was not uncommon for foremen to abuse
workers or apply arbitrary penalties in an effort to increase production (Wright 1988;
Cochrane 1989).
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HRM in Australia 49
Tighter supervision facilitated the intensification of work. So too did the spread of
piecework and bonus wage payment systems. These developments took place in tandem
with job fragmentation and work reorganisation which in itself had a labour control
function; a deskilled workforce was not only cheaper to employ, but more flexible, more
easily replaced, more directly managed and less autonomous. Most pronounced were
the developments towards mass production in steel, automobile, electrical appliance,
rubber and armaments manufacture during the 1910s–1930s. Employers in these indus-
tries introduced foreign models of quantity production and systematic management.
For instance, during the mid 1920s, North American manufacturers, such as Ford and
General Motors, established Australian assembly plants which employed the most up to
date thinking on shop layout, routing, the use of specialised machinery, and new methods
of production flow and material handling (most notably the moving assembly line)
(Sutterby 1981). A similar pattern occurred in the fledgling electrical appliance industry,
for example in Metropolitan Vickers and Philips (1930; Forster 1964: 107–22).
Although the extent of ‘Taylorism’ prior to the 1940s was limited, a number of
Australian employers introduced more formalised techniques of labour control during
this period. In his writings and consultancy work in the United States in the 1890s and
1900s, Frederick Taylor challenged employers to exercise their authority in the work-
place, to wrest control over the work process from workers. His system, enshrined in The
Principles of Scientific Management necessitated ‘a complete revolution in the mental
attitude and the habits of all those engaged in management’ (Taylor 1911). The main
objective of Taylor and later work study specialists was to replace the ad hoc, unsystem-
atic managerial ‘rule of thumb’ with scientific methods of control which would maximise
productivity. The techniques of the efficiency engineers included detailed analysis of
the way that work was performed, with operations timed with a stop watch and work
motions closely analysed (Nelson 1991).
An early example of scientific management in Australian industry was the Melbourne
clothing manufacturer, Pearson, Law & Co. The managing director of the company,
James Law, had read Taylor’s Shop Management and applied the techniques of time
study, systematic production planning and costing to the manufacture of collars, shirts
and pyjamas (Frances 1993: 84–7). Other early examples included the NSW Railways,
the car companies, and the McKay Harvester works, the country’s largest manufacturer
of agricultural machinery (Patmore 1988; Sutterby 1981; Cockfield 1998). During the
1930s, a local office of the American management consultant Charles E. Bedaux was also
established. Bedaux was a key source for the global diffusion of scientific management
during the inter- war period (Kreis 1992; Littler 1982), and the Australian branch of the
consultancy worked for a dozen of the country’s leading manufacturers (Wright 1995:
27; Anderson 1930).
However, in contrast to the innovation in factory management evident in the new mass
production sectors, the vast majority of Australian manufacturing remained primitive
and unsophisticated. In the metal industries of the 1920s, despite the restructuring of the
metal trades awards to encourage greater use of mass production and payment by results,
the take- up of quantity production methods was limited. This reflected the impact of the
Depression, the lack of applicability of such techniques amongst small and medium size
enterprises, and also, importantly, trade union resistance to attempts to dilute and deskill
the work process (Sheridan 1975: 86–7; Shields 1984; Cockfield 1993).
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THE EMERGENCE OF FORMALISED LABOUR
MANAGEMENT: 1940–1970
The Second World War represented a turning point in Australian economic development
and had major impacts upon the development of labour management practice. The full
mobilisation of Australian industry to war production led to a dramatic increase in the
size and scale of industry. The manufacture of electrical goods, chemicals, rubber, vehi-
cles, aircraft and machinery developed rapidly in order to supply wartime demands and
resulted in the diffusion of new skills and techniques of complex manufacture (Butlin
and Schedvin 1977). During the post- war decades of the 1950s and 1960s, the Australian
economy continued to expand through the development of mass consumer markets,
increasing foreign (UK and US) investment, and the growing capital intensity of industry
(Boehm 1971). A new managerial ethos also evolved which stressed the central role of
the professional manager in post- war economic development. New management jour-
nals and professional groupings such as the Institute of Industrial Management (IIM)
were established to diffuse new theories and techniques of finance, sales, production and
labour management (Cochrane 1985; Rogers 1965). Within this context the beginnings of
more formalised employment relations emerged.
Wartime Welfare Work and the Rise of Personnel Management
The origins of modern HRM in Australia can be traced to state intervention in factory
labour management during the Second World War. Just as the state oversaw the man-
agement of the wartime economy more generally, so the Commonwealth Government
through the Department of Labour and National Service (DLNS) also played a crucial
role in the management of wartime labour supply and productivity. In particular, in an
effort to reduce absenteeism and improve morale amongst an industrially inexperienced
and largely female munitions workforce, the government initiated a systematic program
of industrial welfare work that became the precursor to much post- war personnel man-
agement. This program involved the government training of specialist ‘industrial welfare
officers’ in industrial psychology, human relations, industrial health, amenities and work
fatigue, prior to their secondment to industry. By the end of the war over 150 welfare
officers had been placed in factories to implement more formalised personnel practice.
While initially focused on improving working conditions and amenities for factory
workers, the early welfare officers also sought to introduce formalised procedures for
employment, induction and training (Wright 1995: 44–6).
Wartime welfare work provided the impetus for a more sophisticated approach to
labour management. While several larger employers had experimented in the pre- war
period with formalised examples of welfare work (Mauldon 1931; Reekie 1987), these
firms were very much exceptions to the rule (Wright 1995: 21–4). However, during the
post- war decades, rapid economic growth and pent- up consumer demand meant employ-
ers faced the increasing problem of attracting and retaining sufficient workers to staff
their growing factories. A popular response was the establishment of specialist employ-
ment or personnel managers to oversee the recruitment and selection of employees. For
instance, a 1949 DLNS survey found 47 per cent of firms employed full- time staff on
personnel duties, and 46 per cent of firms accepted personnel administration as a top
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management function (Kangan and Cook 1949). During the 1960s, the extent of person-
nel management appears to have broadened further, with one survey finding 50 per cent
of firms with a personnel officer (Russell and Johnstone 1967).
Beyond the product and labour market impetus for employers to formalise their per-
sonnel practices, other influences also played a role. In particular, local subsidiaries of
foreign companies acted as a direct means of importing overseas personnel techniques,
and provided examples to local industry of more advanced labour management practices.
For example, an early forerunner in personnel practice was Standard Telephones and
Cables (STC), a subsidiary of the large American electrical firm, International Telephone
and Telegraph (formerly the Western Electric Co.). Western Electric had been a pioneer
in the development of the ‘human relations’ approach to labour management. By the
early 1940s STC had imported the parent company’s philosophy and the personnel
function was accorded high status within the management hierarchy. The STC Works
Manager had experience of both American and European Western Electric plants during
the 1920s, and during the war lectured DLNS welfare trainees on personnel management,
later employing several welfare officers in the personnel department of the firm (Wright
1991b: 183). A similar approach occurred at ICIANZ, a subsidiary of the British chemi-
cal giant ICI, which inherited many of the parent company’s practices, including works
councils, a functional management organisation, company training programs and later,
job evaluation techniques (Reader 1975). Foreign companies such as GM- H, Ford and
Chrysler also precipitated the expansion of overseas management training, sending local
executives to university or internal company training programs (Goddard 1949).
A second factor behind the spread of personnel work during this period was the
combination of developments in management education and the formation of profes-
sional personnel bodies. The trend toward the professional organisation of personnel
work had begun during the war with the formation of Personnel and Industrial Welfare
Officers’ Associations in Sydney and Melbourne. These associations sought to highlight
the professional nature of personnel work, and argued for the extension of specialist
tertiary education in personnel management. In the immediate post- war period, while
the associations remained small in size, they provided an informal network for pioneer-
ing personnel officers and a means of comparing techniques and experiences. As the
numbers of personnel officers in industry increased, so the associations grew. Following
the creation of further state associations, a new federal constitution was adopted in 1954,
and the title changed to the Institute of Personnel Management (Australia) (IPMA). By
1967, the IPMA had over one thousand members, and many personnel managers were
also associated with other bodies such as the Australian Institute of Management (AIM,
formerly the IIM) and the Industrial Relations Society (Kangan 1964; Cameron 1967).
By the later 1960s, the personnel function had consolidated its position as an enduring
feature of the management hierarchy in many larger establishments. However, the extent
of such change varied. While formal employment procedures and welfarist practices
were relatively common across Australian industry, far fewer firms adopted the system-
atic techniques of selection testing, induction, training, or consultation. In the area of
employee training for example, employers continued to rely on the external labour market
for much of their labour requirements. Similarly psychological and aptitude testing were
used by relatively few enterprises (Wright 1995: 50–65). Several factors appear to have
played a role here. First, despite the significant advances in management education
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that had occurred, many local employers remained sceptical of the benefits of such
techniques, in many cases viewing them as costly indulgences. Second, the more open,
consultative approach of personnel management also appeared to threaten traditional
authority relations. Perhaps not surprisingly, employers in industries with traditions of
labour conflict tended to reject such an approach viewing it as a ‘softening’ of manage-
ment’s stance in its relations with trade unions (a point discussed in more detail later). As
a result, management conservatism played a major part in limiting the breadth of person-
nel innovation. Third, for the vast majority of small enterprises, formal personnel pro-
cedures proved unnecessary and the simple, personal control of the manager or foreman
prevailed as an effective form of labour management. Overall then, while the rise of the
personnel function demonstrated the broader trend towards the increasing bureaucratisa-
tion of Australian labour management, the extent of such a change was varied.
Scientific Management and Shopfloor Control
The post- war uptake of personnel management practices highlighted a key aspect of the
history of Australian HRM, however other influences were also important. In particu-
lar, the development of more formal systems of shopfloor control and the adoption of
scientific management practice was also significant in popularising the image of manage-
ment as a ‘professional’ activity, as well as diffusing the ‘human relations’ philosophy of
workplace consensus.
While a number of Australian employers had experimented with time study and wage
incentives during the 1920s and 1930s, it was not until the later 1940s and 1950s that scien-
tific management attained a more widespread following in Australian industry. Just as the
post- war economic growth of Australian manufacturing precipitated the growth of per-
sonnel management practice, so too labour scarcity and growing consumer demand for
manufactured products resulted in increasing employer interest in formalised techniques
of shopfloor control. Scientific management offered to solve the problem of labour
attraction and retention through the use of wage incentives, where employees’ increased
productivity above a ‘standard rate’ led to increased bonus payments. Moreover, in the
focus upon redesigning work methods, and through ‘time study’ measuring a ‘fair day’s
work’, scientific management also offered significant productivity benefits (Wright 1995:
66- 91). As one early ‘methods engineer’ outlined:
The only way the high productivity came about was to measure what you could term a ‘norm’,
that is a normal day’s work, rather than an average day’s work. Once you had determined a
norm then you could say, ‘well you can do 30 per cent better than that’. . .The thing was the
norm was often 30–40 per cent above what they were doing as an average. (Wright 1995: 77)
In terms of the implications for HRM, scientific management promoted the idea of for-
malised and systematic methods of shopfloor control. Beyond the focus on redesigning
work methods and measuring performance, this also extended to issues of recruitment
and selection as well as job training. Indeed methods study involved a detailed analysis
of basic work tasks and sought to better identify the skills and aptitudes needed for
the successful performance of such jobs. For example, at electrical appliance company
STC, the use of micro- motion film cameras allowed methods engineers to identify the
basic activities of an assembly- line worker and redesign their selection and job- training
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around approved methods so as to maximise daily work output (Linton 1947). While this
represented an extreme case, survey evidence suggests the uptake of scientific manage-
ment practice increased in Australia during the post- war decades, particularly in labour-
intensive mass production settings such as textiles, clothing, footwear, automobile and
electrical appliance manufacture (Wright 1993).
As was the case with personnel management, multinational companies were particularly
important in the diffusion of scientific management to Australian industry during the
1940s and 1950s. Foreign companies such as General Motors, Ford, ICI and STC imported
scientific management practice from their US and UK operations and acted as leading-
edge examples to local industry of what could be achieved (Wright 1995: 68). Perhaps even
more importantly, early management consultancies were also central in diffusing scientific
management techniques to Australian industry. For example, the Australian consultancy
W.D. Scott & Co built close relations with leading American consultancies such as the
Methods Engineering Council and worked with a broad range of Australian manufactur-
ers, helping them to establish methods engineering functions and time study and wage
incentive systems. Similarly, the UK consultancy Personnel Administration (PA) also had a
significant impact, establishing Australian offices and helping over a thousand companies
implement work study and other industrial engineering systems. Indeed, the Australian
uptake of scientific management techniques such as Methods- Time- Measurement (MTM)
during the 1950s, led to its further global adoption when Australian Scotts’ consultants
implemented these systems in British and African companies (Wright 2000).
However, the adoption of time study and wage incentives also often proved a contro-
versial initiative with employees and trade unions. As had been the case in Britain during
the 1920s and 1930s, the use of scientific management and ‘Taylorism’ was seen as simply
an attempt to ‘speed- up’ and deskill work, and was often resisted, sometimes violently, by
unionised workers (Kreis 1992; Downs 1990). In particular in the skilled metal trades the
appearance of a stopwatch on the shopfloor was often sufficient to generate a stoppage
or strike. As one former consultant recalled:
You had a stopwatch and one of those printed sheets that showed each movement, and boy it
was lively – the number of people who ended up on the worse end of things from somewhat
violent unionists. It was quite interesting, you almost needed extra insurance in those days to go
into those places! (Wright 1995: 86)
Indeed, scientific management’s poor labour reputation had led to a revision of over-
seas practice through the adoption of ‘human relations’ thinking. This was reflected in
a strong emphasis upon supervisor and foreman training in better employee relations,
employee consultation, and attempts to involve trade unions in the new techniques (Shaw
1952). Australian consultancies followed a similar trend, placing great weight on the
need for supervisor training in the human relations approach and encouraging employee
consultation in implementing time and methods study. This involved close collaboration
with personnel managers as allies in the battle for the ‘hearts and minds’ of the workforce.
In some workplaces, the consultancies also succeeded in training union shop stewards in
the new methods engineering as a way of limiting disputes over rate- setting and bonus
payments (Wright 1995; 87–91).
The adoption of scientific management also contributed to the broader professionali-
sation of Australian post- war management. Many of the early consultancies broadened
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their services into management and executive training, which included marketing, per-
sonnel management, as well as industrial engineering (Wright 2000). Professional asso-
ciations of industrial engineers also emerged, which while distinct from the institutes of
personnel management, nevertheless highlighted management as an activity requiring
specialist expertise, training and accreditation (Clark 1957).
Industrial Relations Management and Trade Union Relations
As noted earlier, personnel and labour management in Australia were also critically
shaped by the country’s distinctive pattern of state labour regulation, specifically
the system of compulsory state industrial arbitration introduced in various states
and federally during the early 1900s. While potentially an impediment to manag-
ers’ freedom in managing the workplace, arbitration in establishing minimum wages
and working conditions also preserved many managerial prerogatives by limiting the
scope of collective bargaining to a narrow range of industrial issues. In addition, the
arbitration courts also often provided an additional source of labour discipline, par-
ticularly through the use of penal powers and fines imposed on striking workers. So,
for instance, in the major post- war strikes in the steel, maritime and coal industries,
arbitration courts played a pivotal role in the defeat and goaling of striking trade
unionists (Sheridan 1989).
In the post- war period of the later 1940s and early 1950s, scarce labour supply and
growing trade union strength resulted in increasing levels of industrial disputation aimed
at improving workers’ wages and working conditions (Sheridan 1989; Waters 1982).
For many small and medium- sized employers a key response was reliance on employer
associations and the arbitration courts as a means of ‘holding the line’ against union- led
industrial campaigns. The nature of multi- employer bargaining also militated against
employer associations adopting a more innovative approach to labour management.
Given variations in the resources of the association membership, bargaining strategies
and policy invariably demonstrated a ‘lowest common denominator’ approach (Plowman
1988; Walker 1970: 77–80).
In larger firms in industries subject to such hard bargaining, industrial relations offic-
ers also emerged as a largely conservative influence upon more innovative personnel
practice. Unlike the field of personnel management in which significant post- war inno-
vation occurred, the attitude of the industrial officers was invariably more conservative
and defensive. Originating largely from legal and administrative backgrounds, industrial
relations officers saw their role as maintaining and defending managerial prerogative
from trade union incursions. This was most pronounced in the basic steel and heavy
engineering industries where industrial relations were traditionally combative, and man-
agement adhered strictly to the provisions of the arbitration award, regarding them as
both maximum and minimum standards. In such industries, suggestions of the need for
improved worker consultation were invariably rejected, industrial officers arguing such
forums held the potential to be taken over by ‘militants’ and used as a further avenue
of trade union pressure (Walker 1970: 363–4; Quinlan 1986). As a result, the industrial
function’s preoccupation with the legalistic areas of labour management, in many cases
retarded the influence of personnel practice in the workplace. As one former personnel
manager recalled:
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HRM in Australia 55
In the Australian scene, the industrial relations aspect took much longer to weld into the per-
sonnel set- up. . .The metal industry people as a group were the most conservative and reluctant
supporters of personnel management that incorporated IR work. They as an industry felt they
were fighting a battle with the unions. (Wright 1995: 105)
ECONOMIC RATIONALISATION AND THE GROWTH OF THE
NEW MANAGERIALISM (1970- 2000)
The emergence and growth of formalised labour management practice during the post-
war years was fundamentally challenged during the 1970s following the end of the post-
war economic boom and industry restructuring. Old models of labour management
faced the constraints of technological change and industry rationalisation. During the
1980s, government deregulation of financial markets and tariff reduction fundamentally
reshaped the Australian economy, which by the later 1990s had become an increasingly
globalised service- based economy, although still heavily reliant on resource exports.
Within this context, Australian employers increasingly adopted the discourse and prac-
tice of modern HRM, albeit supplemented by significant local experimentation and
adaptation.
Personnel Management, Organisational Development and 1970s Experimentation
By the early 1970s personnel management had consolidated a position as an enduring
administrative function in many large organisations in Australian industry. However,
despite such institutional permanency, the personnel profession remained ill at ease with
its position within the management hierarchy. In a review of the IPMA journal since its
inception in 1962 to 1980, by far the greatest single topic of discussion was the ‘person-
nel function’. What did personnel management involve? How should it be defined? What
should be the future direction of personnel management? Why isn’t personnel accorded
the respect and status of other management specialisms? Such ‘soul- searching’ was
summed up succinctly by the editor of the journal as late as 1983 when he stated, ‘Why do
so many Personnel Managers feel that they are the organisational equivalent of the “poor
cousin”?’(O’Neill 1983: 2). As an observer of the time noted, the failings of personnel
management were seen as based upon practitioners’ obsession with techniques, the low
calibre of most personnel functionaries, and senior management ignorance of the poten-
tial role that effective personnel management could play (Pickett 1969: 28–9). Statements
by senior management seemed to support these arguments. For many executives, the
contribution of personnel management was too intangible and not directly related to
organisational performance. As the Managing Director of Massey Ferguson (Aust.) told
a Victorian IPMA seminar in 1970:
. . .I detect a certain preoccupation in your minds regarding your own status in the busi-
ness world. Gentlemen I think you should become less concerned with status per se and
more concerned with your basic function. Personnel management will earn its place in the
sun and in the business hierarchy by making a valuable contribution to the objectives of
the enterprise. . .One real problem facing the personnel function is the inherent difficulty
in putting a profit price tag on various of its contributions. If personnel executives spent
more time thinking about profit, revised methods of reporting, and became more skilled at
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communicating the profit potential of personnel activities, we could all perhaps advance a
little faster. (Weber 1970: 20–1)
The growth of personnel management as a distinct profession clearly assisted the drive
for increased status. Membership of the IPMA boomed during the 1970s despite declines
in the economic fortunes of the manufacturing sector from which it had sprung. From a
membership level in 1967 of just over 1,000, by 1975 this had risen to 2,000, and by 1980
there were over 3,700 due paying members. Increasing numbers of personnel managers
came from firms in the finance and retail industries as well as government instrumentali-
ties and the public service. As had occurred in the post- war period, the IPMA assisted
the professionalisation process through the publication of a monthly journal, conducting
seminars and training courses in personnel practices and theory, and seeking input into
personnel management education in technical colleges and colleges of advanced educa-
tion. By 1974, 57 per cent of IPMA members held tertiary qualifications, 8 per cent of
whom had postgraduate degrees. By 1980, these figures had increased to 61 and 15 per
cent respectively (Cameron 1967; Dredge and Smyth 1981).
In terms of actual practice, personnel management literature throughout the 1970s
stressed the need to move away from traditional administrative concerns, such as employ-
ment and welfare, and to seek input into executive decision- making and forward planning.
Surveys of the membership of the IPMA during the 1970s support such a contention.
For example, a comparison of the 1974 and 1980 surveys indicates an increase from 40
to over 50 per cent of personnel managers involved in organisational and manpower
planning (Dredge and Smyth 1981). Examples of a more strategic, planned approach
to the recruitment, selection and development of the workforce were highlighted in the
establishment of new mining projects by multinational subsidiaries during the late 1970s
(Lea 1979; Dunphy 1987). However, these were very much exceptions to the general rule.
This period was also marked by new influences, particularly a growing interest in
employee participation at work and experimentation in job redesign and quality of work
life initiatives. A variety of parties advocated the need for employee participation during
this period. One of the most prominent of these was a new breed of management consult-
ants from industrial psychology backgrounds who made up what came to be known as
the Organisational Development (OD) movement. While industrial psychology had made
inroads into Australian personnel practice in the post- war period, particularly in the
area of selection testing, the extent of such impact had always been limited. During the
early 1970s its influence was broadened as increasing numbers of academically trained
psychologists advocated a range of techniques to improve productivity and reduce labour
turnover (Wright 1995: 125–30).
Like Australian management education generally, local industrial psychologists were
highly dependent on overseas theories and research. Two schools of thought were influ-
ential here. The first and dominant was the American tradition of human relations and
human resource theory, developed by writers such as Mayo, Lewin and Herzberg. The
second was the British tradition, symbolised by the work of the Tavistock Institute of
Human Relations and socio- technical systems theory. Despite differences between these
groups, the distinctive feature of the ‘human relations’ approach and its later derivations
was the emphasis researchers placed on the social and emotional needs of workers as
opposed to economic considerations as the true source of productivity improvement.
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HRM in Australia 57
Despite fundamental criticism as to its theoretical and methodological validity (Carey
1976), human relations theories proved highly influential within Australian management
education, and during the early 1970s provided a basis for much of the OD experimen-
tation in industry. Beyond OD consultants, the state, in the form of Federal and State
Labor governments, also played a crucial role in advocating for greater employee par-
ticipation in industry, implementing changes in public sector workplaces, encouraging
the dissemination of employee participation techniques through OD networks and the
publication of OD literature (Bentley 1976; Sweeney 1976).
For employers the introduction of employee participation was centred around the
immediate problems of labour supply and declining productivity. Rapid technological
change had also made the maintenance of wage incentives schemes increasingly problem-
atic, and many manufacturers which had been at the forefront of scientific management
practice now looked for alternative means of managing the shopfloor (Wright 1991a).
Practical initiatives took a variety of forms including joint management- employee con-
sultative committees, worker directors, improved employee communications and attitude
surveys. There was experimentation with job redesign and attempts to improve the quality
of work in the face of increasing absenteeism and labour disputation in mass production
industries. OD consultants and government bodies promoted and implemented new
forms of work organisation including semi- autonomous work groups, job enrichment
and job rotation schemes. For example, the electrical manufacturer Philips imported the
Dutch parent company’s philosophy of work restructuring as well as plant managers
versed in the practice of job redesign (Dunphy et al. 1976). Organisations involved in job
redesign came from a variety of industries and backgrounds including: electrical appli-
ance assembly (Philips, Sunbeam), cosmetics (Avon), wood joinery (Fricker Carrington),
aluminium smelting (Alcan), chemical processing (ICI), cigarette manufacture (Philip
Morris), and clerical and administrative work (Shell and the Australian Tax Office)
(Gunzburg 1975; Andreatta and Rumbold 1974). While socio- technical systems theory
differed from scientific management in its emphasis upon group working and employee
accountability, it was also fundamentally similar as a strategy through which manage-
ment sought to maximise labour productivity. Like the broader OD movement, the
interest in job redesign declined during the later 1970s as economic conditions tightened.
However, these ideas enjoyed a renaissance during the 1980s and 1990s.
The Emergence of HRM and its Consolidation in Australian Industry: 1980s to Present
The 1980s marked a major economic transformation in Australia underpinned by the
removal of tariff protection, the deregulation of the financial system, and labour market
reform (Kelly 1994). A key feature of this period was the Accord, a government- trade
union prices and incomes compact in which union- agreed wage restraint was linked to
a tripartite process of industry and workplace restructuring (Dabscheck 1989). Against
this policy backdrop, employment practices underwent significant change, as manag-
ers were exposed to increasing globalisation, new management ideas, and the growing
acceptance of HRM as a dominant discourse of labour management.
During the 1980s, the extent of formalised personnel practice increased. For example,
a 1988 survey of 140 of the largest companies in Australia found 90 per cent had a spe-
cialist personnel function (Deery and Purcell 1989). The increased status of personnel
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specialists in large organisations was mirrored in the language and education of the
personnel profession. The IPMA for example continued to increase in size, rising from
3,700 members in 1980, to over 7,100 in 1990. In 1992 the IPMA was renamed the
Australian Human Resource Institute (AHRI). Tertiary education in human resource
management also expanded dramatically. By the mid- 1980s the number of tertiary per-
sonnel (and increasingly HRM) courses had expanded ten- fold in the space of ten years
(Morris 1992). However, outside of the larger firms specialist labour managers were less
pronounced. For example, the 1990 Australian Workplace Industrial Relations Survey
(AWIRS) found only 34 per cent of all workplaces reported the existence of a specialist
labour manager, with only 22 per cent of workplaces with between 20 and 50 employees
reporting such a function, as opposed to 87 per cent of workplaces with over 500 employ-
ees (Callus et al. 1991: 84–6 & 260).
A variety of reasons have been suggested for the continued growth of personnel
management during the 1980s. Government legislation during this period in areas such
as affirmative action, equal employment opportunity, taxation and occupational health
and safety, increased the legislative requirements for managers and increased the need
for in- house specialist human resource expertise. Economic factors, particularly the
recessions of the mid- 1970s and early 1980s and increasing product market competition
forced senior managers to view labour management as a strategic variable which could
have an important bearing on organisational performance. Companies devoted increas-
ing resources to the personnel function in order to plan retrenchments as part of broader
business restructuring (Deery and Nash 1988: 166).
Indeed, as opposed to the traditional vision of personnel as a low- status, administrative
function, by the 1980s chief executives in the larger Australian corporations increasingly
spoke of ‘human resources’ as the key to profitability (James 1991). In part such state-
ments reflected the impact of changes in management education and the importation of
American theories and concepts which stressed the need for a more strategic approach to
labour management. As early as the 1950s, American writers had argued for the need to
consider ‘human resources’ as organisational assets. Within the management literature,
the normative concept of HRM was linked to several key themes. First, there was an
emphasis upon strategy. This implied changes in the level and manner in which employ-
ment relations was managed. Unlike traditional personnel specialists who were seen to
operate as functions separate from executive management, HR managers were viewed as
being integrally involved in corporate and business strategy decision- making (Beer et al.
1984; Schuler and Jackson 1987). The emphasis on strategy also implied a longer- term
planning perspective in the management of employment relations, as opposed to the
traditional stereotype of personnel as a ‘fire- fighting’ or reactive function. The inte-
gration of HRM within business also related to its integration with line management.
Under this view the HRM function was seen more as an internal consultant to advise
and assist line management rather than as a separate staff specialism which controlled
or ‘owned’ labour management issues. Thirdly, the normative HRM model stressed the
importance of organisational culture. Influenced by management texts such as Peters and
Waterman’s (1982) In Search of Excellence, the development of a strong organisational
culture was seen as a key element of successful HRM.
The adoption of the HRM model was more pronounced amongst larger Australian
companies and those with multinational links. Employer associations, such as the
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HRM in Australia 59
Business Council of Australia (BCA), which represented the largest Australian com-
panies, also played a central role in disseminating the HRM ideal as a key contributor
to improved organisational performance. For instance, the BCA’s 1989 publication,
Enterprise- based Bargaining: A Better Way of Working was important in highlighting
the move away from centralised wage fixation towards enterprise- level bargaining in
which the HRM approach was seen as central (Hilmer et al. 1989). The report’s authors
drew heavily on overseas visions of corporate culture and presented a seductive vision of
cooperative workplace relations based upon common interest and mutual gain (Wright
and Kitay 2004; O’Brien 1994). While some companies interpreted these innovations as
a way to weaken or remove trade unions from their workplaces (van den Broek 1997;
Hearn Mackinnon 2003), others sought to develop more collaborative trade union rela-
tions. These influences also fitted with new management fashions such as Total Quality
Management (TQM) and High Performance Management which also stressed the
need for workforce consultation and information sharing, and found increasing favour
amongst manufacturers seeking productivity gains in the face of tariff cuts and increased
overseas competition (Buchanan and Hall 2002).
The growing adoption of the HRM approach in many large Australian companies also
served to reduce the traditional resistance of industrial relations functionaries to a more
consultative personnel management approach. In particular, the re- labelling of industrial
relations and personnel departments within ‘HRM’ or ‘Employee Relations’ groupings
signified a movement towards the integration of industrial relations within a broader
HRM approach to labour management. At the plant level, such a trend was evident in
attempts by organisations to increase the involvement of supervisors in shopfloor griev-
ance resolution through the introduction of communication techniques such as quality
circles and employee involvement schemes (McGraw and Dunford 1987). However,
despite the rhetoric of devolution of day- to- day industrial relations issues from the head
office to plant level, in many larger organisations corporate HRM functions continued
to determine strategy and maintain a close watch on workplace- level union bargaining
(Lansbury and Macdonald 1992; Bramble 1996).
The coming to power of the conservative Howard Liberal government in 1996 marked
a significant change in the context of industrial relations management in Australia.
Building on earlier government policy promoting ‘enterprise bargaining’, aggressive
legislative changes by the new conservative government opened up space for employ-
ers to challenge trade union representation. Following major industrial disputes, large
companies such as Rio Tinto in mining promoted the benefits of non- union bargaining
and direct dealing often accompanied by sophisticated workplace culture change initia-
tives (Hearn Mackinnon 2007). Here new ground was opened up for the HR function
as not simply an administrative function but potentially the designer and custodian of a
new unitarist workplace culture. In the period up to 2007, an employer- friendly federal
government provided significant legislative support for the expansion of managerial
prerogative in a context of rapidly declining trade union density (Hall 2006; Bray and
Waring 2006). Moreover, this was a period of significant organisational and technologi-
cal change. Corporate restructuring, downsizing, offshoring, and the growing adoption
of sophisticated information technology systems, created a favourable environment for
the expansion of the HR function as increasingly central to the management of work-
place change and the creation and maintenance of a value- creating organisational culture
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(Littler et al. 1997; Grant et al. 2006). However, as the management of people became
more central to value creation in Australian corporations, so too did the emergence of
rival managerial occupations in areas such as organisational development, change man-
agement, project management, as well as specialist internal and external consultancies
(Wright 2008).
CONCLUSION: CONTEMPORARY AUSTRALIAN HRM AND
HISTORICAL LEGACIES
As this chapter has outlined, the historical development of HRM in Australia has
involved a long and tenuous evolution from the early days of simple personal control
through to the sophisticated human resource systems found in many large organisations
today. In contrast to simple depictions of adoption, the history of HRM in Australia
has involved significant differences between industries and sectors, shaped by variations
in product and labour markets, the role of the state and trade unions, as well as the
influence of diffusion agents such as multinational firms, management consultancies,
employer associations and professional bodies. While the practice of HRM in Australia
has often lagged leading developments in US and European industry, the Australian
story is notable in its role as an adopter of overseas management ideas, as well as the
adaptation and innovation of these ideas and practices and their later diffusion not only
within Australian industry, but also globally. For instance, while the Australian ‘father’ of
human relations Elton Mayo is well known (Trahair 1984), less famous are the Australian
management consultancies and OD practitioners who contributed to the global spread
of different management ideas.
Certainly the acceptance of the discourse of HRM in Australia over the last twenty
years appears to have reversed the traditionally weak standing of personnel management
as a ‘managerial profession’. For instance, the professional association of Australian
HRM practitioners, AHRI, has prominently promoted the most recent American
depictions of HRM as a guiding model, in which the HRM function acts as a ‘strategic
partner’ to the business, focused on the delivery of ‘results’ and ‘achieving organizational
excellence’ (Ulrich 1998: 124). However, while it is tempting to assume that HRM has
now attained its place in the sun as a ‘trusted advisor’ to the CEO, recent developments
in the management of organisations suggest HRM as a ‘managerial profession’ will
face renewed challenges. For example, the adoption of new information systems offer
the potential to increasingly automate and outsource HR activities (Hendrickson 2003;
Conklin 2005; Greer, et al. 1999; Adler 2003). Others have argued that rather than a
wholesale externalisation of HRM activity, a process of fragmentation and ‘balkanisa-
tion’ is occurring in which some HR tasks are separated and outsourced to external
providers, while others are delivered internally as a ‘shared service’ across organisational
business units (Adams 1991; Frase- Blunt 2004; Ulrich 1995; Forst 1997).
Indeed, despite significant promotion by HRM practitioners of the importance of
their function to business success and their role as ‘strategic advisors’ ‘business partners’
and ‘internal consultants’, critics have highlighted the marked difference between the
rhetoric and the reality of HRM (Legge 1995a, b), as well as the limitations of an HRM
strategy of professional closure (Farndale and Brewster 2005). New managerial group-
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HRM in Australia 61
ings such as ‘change managers’ and ‘project managers’ have also emerged and become
increasingly prominent in the management of organisational change (Sturdy and Wright
2008). These managers, who often come from management consulting backgrounds,
pose a direct competitive threat to the HRM function particularly in the desired roles of
‘strategic advisor’ and ‘change agent’ (Wright 2008). Hence, while the discourse of HRM
has promoted a more strategic vision, the achievement of such a professional project
appears far more limited in practice, leading some to characterise HRM more as a ‘semi-
profession’ (Hodson and Sullivan 2002: 300) and others to question the function’s future
viability (Kanter 2003).
Overall, the history of HRM in Australia demonstrates increasing formalism and
sophistication in the practice of labour management over time. A large part of this has
been linked to the emergence of a distinct managerial profession of specialist ‘people
managers’ that were initially labelled ‘welfare officers’, then ‘personnel managers’, and
most recently ‘human resource managers’. While it is too early to determine how HRM
will fare in the face of new information technologies and the restructuring of people
management activities, if the history is any guide, the future of HRM as a defined
management function will continue to be one of uncertainty and contestation.
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