Innovating the HR Function in a Commercialising British Public Sector Organisation: Towards a More Strategic Role for HR?

Abstract

Although the body of research and practice on HR management in private sector organisations has grown at an astonishing pace in recent years, much less is known about the nature, role and meaning of a strategic HR department within public sector organisations undergoing commercialisation. This article addresses this gap by exploring the changing role of the HR function within a British public sector organisation responding to the New Labour government's 'modernisation' agenda. The findings are based on in-depth interviews, focus groups, analysis of documentary evidence and observations carried out over a period of two years. Drawing on role-set theory and concepts of negotiated order, the study sheds light on the factors that support or hinder the shift towards a more strategic role for the function and suggests a number of conclusions and implications for both theorists and practitioners. Key words: Strategic Human Resource Management, Role of the HR Function, Organisational Change, Public Sector Introduction In the context of significant changes in their operating environments and pressures to increase efficiency and accountability, public sector organisations in the United Kingdom have been provided with the opportunity to operate and compete commercially, whilst the Government retains ownership (New Labour Modernising Government White Paper, March 1999; E-Government Strategic Framework, April 2001). Commercialisation, part of these Labour reforms, has been seen as one of the ways of reinventing public sector entities to make them more competitive in the commercial market. It was used as a way of relieving some of the government's financial pressures and described the situation whereby former government agencies were allowed to charge the public for the provision of goods and services and to adopt features of the commercial environment. As a result, many public sector organisations now exist in the intersection of two different spheres - the public and the private. They fit neither in the strictly public realm of state action nor in the strictly private realm of commercial relationships. They are expected to function like businesses - to be efficient, customer driven, and client oriented - yet they perform tasks that are inherently public. A common goal has been to transform these organisations along the lines of an idealised private sector firm by adopting a strategic approach to people management instead of the traditional bureaucratic public personnel management approach. This has exposed personnel practitioners to a new set of role demands, professional challenges and managerial expectations. However, there has been a tendency to assume that processes of change in the public domain are essentially the same as those in commercial organisations in the private sector. The main problem with these assumptions is that they may ignore how both the context and the mechanisms of change are different in public organisations. In particular, being 'halfway' towards the private sector may add different constraints to developing a strategic HR agenda and we may, thus, fail to do justice to what is distinctive about public sector transformation in terms of the strategic priorities and demands it creates, and the kind of responses it elicits from HR functions. This article explores the changing role of the HR function within a commercialising British public sector organisation responding to the 'modernisation' agenda. Drawing on role-theory and concepts of negotiated order, the study sheds light on the factors that support or hinder the shift towards a more strategic role for the function. The article also discusses some of the challenges and constraints that this organisation is facing in transforming its HR function in the long journey to commercialisation. Previous research Research into the role of the HR departments in public sector organisations has centred around the question of whether the HR function is taking on a more strategic role. …