EXECUTIVE SUMMARY

The Human Resource Management (HRM) literature suggests that HRM practices in an organization should be vertically aligned with its strategic choices, supporting the strategy of the organization, and horizontally aligned with other operational processes, facilitating the operations of the organization. Many have also argued that tight strategic alignment can damage the capacity of the HRM function to fulfill its historical role in balancing employee interests with managerial interests, and that each organization, and each HRM function, will be faced with dilemmas in this manner that need to be resolved. Project-oriented organizations make the strategic choice to adopt temporary organizations, such as projects and programs, to implement their work processes. Therefore the HRM practices adopted by the project-oriented organization should be aligned with that strategic choice and support the temporary work processes adopted, while also seeking to protect employee well-being in an environment where challenges to such well-being are ever present.

Mainstream HRM theory, which has emerged over the last century, has been shaped by the large, routine, functionally managed organization, based on the Taylorian model of management. The conditions under which HRM emerges in the project-oriented organization are substantially different than the environment assumed by that model. The project-oriented organization adopts temporary organizations and temporary work processes to undertake its work, and that creates a dynamic work environment. Every time a new project starts or finishes, the HRM configuration of the organization changes, making the HRM practices more invasive than in the classically managed organization. Therefore, we would expect that HRM practices would need to be applied specific to the temporary organization that is the project, as well as in the line as we would conventionally expect. However, we might expect that HRM practices in the line may need to be adapted to align with the HRM practices specific to the project. We would expect that the HRM practices emerging from the project-oriented organization might be different from those suggested by mainstream HRM theory based on the Taylorian model.

Further, because of the dynamic nature of the work environment in the project-oriented organization, it may be more difficult for project team members to achieve a work-life balance. If somebody is working on several projects at the same time, his or her workload may peak if demands from different projects or different clients peak together. Thus the issue of the well-being of employees and their ethical treatment may be significant in a project-oriented organization.

Thus we undertook this research project, sponsored by the Project Management Institute (PMI®), to investigate the HRM practices that emerge in the project-oriented organization. Our project had the twin aims of:

1. Exploring whether the distinctive characteristics of the project-oriented organization lead to the need for specific HRM practices and, if so, to what extent.
2. Considering the implications for organizations, projects, and individuals of these emergent practices.

Our research project consisted of four steps:

First, building on prior research undertaken by the three authors, we explored the work environment in the project-oriented organization. We identified that it has eight key features:

1. Adoption of temporary work processes
2. Dynamic nature
3. Uncertain requirements
4. Specific management paradigm
5. Employment of people competent in project management, fulfilling several roles
6. Multiple resource demands
7. Heightened pressures on employees
8. Spiral staircase career, based on a series of diverse assignments, rather than climbing the ladder in one function

We believe these features create the need for new and different HRM practices in the project-oriented organization compared to HRM mainstream theory. This discussion is presented in Chapter 2.

Next we reviewed what the academic literature has said about HRM in project-oriented organizations. We reviewed the HRM, general management, and project management literatures, which we report in Chapter 3.

• The HRM literature has considered HRM in new forms of organization, but apart from some work on organizational behavior in research and development and the consequence for HRM practices, by and large has not considered the project-oriented organization. There has also been some work on employment in project-intensive industries such as the film and construction industries.
• The focus of the general management literature has mainly been on knowledge management in knowledge-intensive forms, and overcoming the disintegrative tendencies of project-oriented working.
• The project management literature has over, the last twenty years, shifted in its focus from a technical focus to a more people-oriented focus. The first literature on organizational behavior regarding projects was in the 1970s, but it did not really gather pace, with writings about the project teams, until the late 1980s. In the 1990s, there was a focus on the project as a temporary organization. There have been a small number of books on HRM in project-oriented organizations, but usually adopting a conventional approach to HRM. Most of the work on whether project-oriented organizations need to adopt new or different HRM practices has been done by the three authors working together and individually.

Based on the work to this point, we developed a research model of HRM practices in the project-oriented organization. We suggest that new practices specific to the project are required, and practices in the line need to be adapted to dovetail with the practices on the project, and to deal with the dynamic work environment. Practices specific to the project should include assignment to the project, appraisal, development and reward on the project, and dispersement from the project. Thus the practices in the line that need to be adapted include recruitment and selection to the organization, appraisal, development and reward in the line, and release from the organization. Release from the organization particularly needs to focus on knowledge capture as temporary workers leave. In Chapter 4 we describe this research model. We also describe our research methodology, which includes two rounds of data gathering:

1. First we conducted a series of semi-structured interviews; twenty-three interviews in thirteen companies. The companies came from Ireland, England, France, the Netherlands, and Austria. They were all private sector and several companies had American parents.
2. Second we conducted more in-depth case studies with four organizations. The four companies were in the Netherlands, Austria, England, and the United States. The three European companies were private sector, but the North American one was public sector.

Throughout our research we adopted a social constructivist approach. At each stage we developed a set of hypotheses. At the end of each stage we reviewed the hypotheses against what we had found in that stage, and updated them accordingly. Since we were using a social constructivist approach, we were not looking for the “right” answer, but a set of hypotheses which we believe have a high level of internal validity to the extent that they reflect a shared understanding of organizational reality communicated to us by our respondents. In this project we developed five sets of hypotheses:

• At the start
• After our investigation into the project-oriented organization
• After the literature search
• After the interviews
• After the case studies, which was the final set.

We grouped our findings into three sets:

1. The nature of the HRM practices adopted by the project-oriented organization—Chapter 5
2. The way in which roles are shared between the HRM department, line management, and project management—Chapter 6
3. Employee well-being and ethical treatment—Chapter 7

Nature of HRM Practices—The HRM practices we observed were consistent with our model:

1. New HRM practices specific to the project:
   • Assignment to the project—Different practices are adopted by organizations who conduct small- to medium-sized projects as opposed to large-sized projects. If projects last for more than a year, the assignment can be planned in the annual budgeting cycle, but if they last less than a year, assignment is more an operational decision.
   • Appraisal on the project—Even though the project management literature has been suggesting for almost twenty years that project appraisals are necessary for motivation of project team members and cohesiveness of the project team, many organizations still do not conduct them, relying on the line manager informally asking the project manager. However, some conduct 360-degree feedback and some conduct formal project appraisals.
   • Reward on the project—Many organizations have methods of project rewards, usually involving non-financial rewards in the forms of gifts or social events. Some organizations pay project-related bonuses. In the closing chapter, we suggest a form of gainsharing whereby project team members could be more formally rewarded.
   • Development on the project—We identified three types of project-specific development: (a) learning specific competencies, (b) being briefed about the project, or (c) learning how to use new technology developed by the project.
   • Dispersement from the project—This is the least understood practice: what to do with project personnel at the end of a project. They can be assigned to a new project, either immediately or to a more appropriate one that will start shortly, returned to the line to perform functional duties, or sent to the bench. In many organizations the process is unmanaged.
2. Adapted HRM practices in the line:
   • Recruitment and selection processes—Recruitment and selection need to be more organic as previously suggested by the authors. Recruitment and selection processes need to be more aware of the necessity to identify broad project management competencies. Currently, an understanding of what it takes to function effectively in the environment of a project-oriented organization is low and this damages the effectiveness of these processes.
   • Appraisal in the line—We believe that the main appraisal process should be in the line because the focus needs to be over a longer time scale than most projects. However, it should take project performance into account, but in many organizations, it is based only on informal contact between line manager and project manager. In other organizations, it is formalized through 360-degree feedback or project appraisals.
   • Reward in the line—Reward needs to be aligned with the line, but should be based on the project performance, in the same way as an appraisal.
   • Development in the line—In the project-oriented organization, careers are a series of projects, and the focus on development needs to be on identifying appropriate projects; and both the individual and the organization need to provide appropriate competence development. Having identified the desired projects, the organization needs to ensure that the individual receives appropriate experiences, taking into account the individual's development needs at the time of the project assignment.
   • Release from the parent organization—The main project-specific issue for project-oriented organizations is knowledge capture when temporary workers leave at the project completion. Project-oriented organizations need to use temporary workers to manage fluctuations in workload, but when they leave at the end of a project, they can take their project experiences with them.

Roles—There are three main actors in HRM in the project-oriented organization:

1. The HRM Department—The role of the HRM department is to set policy and provide guidance. That means their roles are to:
   • Set guidelines, policies, rules, and standards
   • Provide consultancy and advice
   • Advocate and protect employee well-being
   • Act as arbiter
2. Line managers—As stated previously, we believe it is right that appraisal, development, and reward should be aligned with the one organization, especially in organizations conducting small- to medium-sized projects, because the perspective needs to be longer than the duration of the project. However, there ought to be formal links to the project. However, in some organizations the line managers are very defensive of their positions and try hard not to delegate any responsibility to project managers. In organizations that conduct projects lasting longer than one year, sometimes people are transferred to work on the project and the project manager effectively becomes the line manager.
3. Project managers—We believe that for the sake of motivation of project team members and cohesiveness of the project team, the project manager should be formally involved in appraisal, reward, and development. Team members must all feel that hard work on the project is being recognized and rewarded, and that they are all being appraised and rewarded in an identical way against the same standards.

Well being—In our work, we observed that employee well-being is a problem in project-oriented organizations, and in their HR departments, particularly in organizations doing small- to medium-sized projects. In organizations doing projects lasting longer than a year, it is much easier to manage the employee workload and plan for project peaks; also in these organizations, people are working on one project at a time, so peaks in that one project can be managed. Achieving a work-life balance is much more problematic in organizations doing smaller projects, and in organizations that are not very good at managing the impacts on their employees. Profit and the act of responding to client demands take precedence over employee well-being. Organizations need to adopt practices to manage employee workloads better, but clients also need to be aware of the consequences of the demands they make on employee well-being and work-life balance. The HR functions, departments, and practitioners in project-oriented organizations need to be supported in their role of advocating and protecting employee well-being as they potentially play a vital role in achieving consensus across the organization of the importance of better workload management. But we also found that people working on projects seem to enjoy the work and the life. However, it does also tend to be self-selecting. People who enjoy it remain at the organization, and those who don't leave within five years.

In the last chapter, we present our final set of hypotheses, draw our overall conclusions, and describe an idealized model of HRM in the project-oriented organization. We also list possible areas for further research. We seem to have opened a Pandora's box of issues. As a result of our research we have almost identified more questions than we have answered—we started with two aims and finished with ten further research questions. In particular, there are other HRM practices we have not looked at, and in all of our interviews and case studies, organizations assigned people to projects from that single organization. We ask what happens when people are being assigned to projects from several organizations with different HRM policies and practices in the parent organization, and again what happens on virtual project teams.