Human resource management (HRM) in the project-oriented organization is a relatively under-explored topic. This is unusual since HRM should be a core process in all organizations because it affects the way they acquire and use human resources and how employees experience the employment relationship. HRM is of strategic importance to all organizations, contributing to the success of the organization and helping to create competitive advantage. Thus HRM should be linked both vertically and horizontally with the strategy of the organization: (a) vertically, so that HRM practices support the organization's strategy choices; and (b) horizontally, so that HRM practices support other operational practices under the umbrella of the strategy of the organization

Project-oriented organizations adopt project-based ways of working as a strategic choice in response to their customers’ demands for customized products or services, and so the HRM practices and processes adopted by the organization should support that choice, and the HRM and project management practices and processes adopted should support each other.

The conditions under which HRM emerges in the project-oriented organization may differ from those associated with mainstream HRM, which is shaped by the typically large, classically managed organizations, based on the Taylorian model of management. We expect the working environment in the project-oriented organization to be different. The project-oriented organization adopts temporary organizations in the form of projects and programs, and associated temporary work processes to deliver its products and services to its customers. This creates a dynamic work environment. Every time a new project or program starts or an old one finishes, the HRM configuration of the organization needs to change. There is no reason why we should expect the traditional, normative models of HRM to be appropriate for this context. If the project-oriented organization is to adopt HRM practices and processes that support its strategic choice of project-based working both vertically and horizontally, then the practices and processes should be designed for that purpose. We propose that project-oriented organizations will require both additional and different HRM practices and processes than those suggested by the traditional approaches:

• They will require additional processes specific to the project and programs they adopt to undertake their work. Projects and programs are temporary organizations, and so HRM practices and processes will be required specific to those organizations.
• They will require different practices to deal with the dynamic nature of the working environment in the project-oriented organization.

In addition, a dynamic working environment can create additional stresses on employees. For instance workloads can be difficult to predict, and they can lead to peaks for employees as the demands of projects for different clients peak simultaneously. There can also be uncertainties about an employee's forthcoming working environment and the colleagues he or she will be engaging with, which can create additional stresses. Employee well-being and ethical treatment can be significant issues in this context.

We undertook this research project to explore the kinds of HRM practices and processes which are appropriate for the project-oriented organization to be strategically linked to the temporary nature of the work processes and the dynamic nature of the work environment. However, rather than just adopting a purely managerialist or unitarist perspective, we are particularly concerned to investigate how these practices and processes affect the employees’ perceptions of the work environment and the employment relationship. Therefore, the aims of our research project are:

1. To explore if, and to what extent, the distinctive characteristics of a project-oriented organization lead to the need for specific HRM practices.
2. To consider the implications for organizations, projects, and individuals of these emergent practices.

THE RESEARCH PROJECT

We adopted a three-stage approach to our work, consisting of a literature search, interviews, and in-depth case studies, but it was also based on prior work by the authors. We adopted a radical constructivist approach to our work, which means that we developed proposals which we reviewed and revised at each stage based on what we had learned at that stage, to develop a model of the HRM practices adopted by the project-oriented organization and how they differ from the classically managed organization.

Prior Work

Rodney Turner and Anne Keegan first became interested in HRM practices in the project-oriented organization through their work on the management of the project-based organization, in the late 1990s at Erasmus University Rotterdam. They were investigating the management of the project-based organization, looking at a number of issues, including governance, operational control, and innovation. Through that work, they identified that the project-based organization needed additional and different approaches to HRM (Keegan and Turner, 2003). Meanwhile, Marina Huemann was involved in the work being undertaken by the Project Management Group at the Vienna University of Economics and Business Administration on the management of the project-oriented organization. The group identified and benchmarked processes adopted in the management of the project-oriented organization. One of the processes identified has been personnel management, (Huemann, 2005). We began working together on this topic in the early part of this decade, pooling our ideas, and laying the basis for this research project, (Huemann et al., 2004a, 2004b). In the first of these we developed the first set of proposals:

Literature Search

The literature search was conducted in two parts. We researched the nature of the project-oriented organization and the nature of the work processes and work environment that creates new and different requirements for HRM practices and processes. We identified that a project-oriented organization is one with project-based ways of working because of the nature of the work demands made by their clients that makes the strategic choice to be project-oriented. A project-oriented organization is one in which the people of the organization:

1. Define management by projects as their organizational strategy.
2. Apply projects and programs for the performance of complex processes.
3. Manage a project portfolio of different internal and external project types.
4. Have specific permanent organizations like a project portfolio group or a project office to provide integrative functions.
5. View the organization as being project-oriented.

We researched the academic literature to see what has been written about HRM in the project-oriented organization. We researched:

• Project management literature
• General management literature
• HRM literature

Very little has been written about HRM in the project-oriented organization. The HRM literature has considered HRM in new forms of organization (Flood, Gannon, and Paauwe, 1996), and organizational behavior in project-oriented companies (Söderlund and Bredin, 2006). The general management literature has mainly focused on knowledge management in knowledge-intensive firms (Sydow, Lindkvist, and DeFillippi, 2004). The project management literature has traditionally focused on the tools and techniques to manage the individual project (Crawford and Turner 2007) but it is beginning to take an interest in HRM within the project-oriented company (Belout and Gauvreau, 2004). So we believe this research is timely and will contribute to the growing interest in this subject.

Based on our research of the literature, we further refined our proposals and developed an initial model of HRM in the project-oriented organization.

Interviews

To further develop and refine our proposals and to further investigate and develop our model, we conducted a series of individual semi-structured interviews. We conducted interviews with 22 people from 13 companies and interviewed people from high-tech and engineering companies throughout Europe. Several of the companies had American parents and, therefore, operated with American-oriented HRM policies, but these companies do need to adapt to the local culture and legal traditions. Through the interviews we identified differences in HRM practices often depending on the size of projects being undertaken. For instance the impact of projects starting and finishing were more significant in organizations undertaking medium-sized projects than those doing small assignments or large projects, and in these organizations there was the greatest impact on work-life balance.

Case Studies

Finally we conducted four in-depth case studies to explore individual elements of the model in greater detail. We conducted case studies at four organizations:

• From high-tech and engineering industries
• From the private and public sectors
• From the United States, United Kingdom, Austria and the Netherlands
• From companies undertaking small-, medium-, and large-sized projects

That gave us a spread of organizations to be able to compare HRM practices in a number of different contexts. Our aim was also to interview a range of people from each organization, including:

• Project managers
• Program managers or managers of large projects
• Portfolio managers or project office managers
• Project directors
• Project team members
• HR directors
• HR managers

We were also able to inspect documentation used for HRM purposes, to help us compare the HRM practices from the different organizations, and to be able to see how the practices are implemented.

SUMMARY CONCLUSIONS

Our conclusions from this work fell into three main areas:

1. Project-oriented organizations need additional HRM practices and processes not seen in the traditional, classically managed organization. Project-oriented organizations use temporary organizations (projects and programs) to undertake their work processes, and these additional practices are required as part of the management of the temporary organizations. We adopted a fairly simple model of HRM practices, limiting ourselves to the more common practices. We identified that the HRM practices required specific to the project or program included the following:
   • Assignment to Projects: Processes are required for identifying people to work on projects and transferring them to the project. These processes are almost always initiated in the parent organization, but usually are terminated on the project. We observed differences between organizations undertaking small-, medium-, and large-sized projects. For those undertaking small-sized projects, projects are assigned to people. For those undertaking medium-sized projects, the practices are most distinct, whereas for those undertaking large-sized projects, assignment tends to be linked to the annual budgeting cycle.
   • Assessing Performance on Projects: Formal (annual, bi-annual, quarterly) appraisal of employees’ performance is almost always conducted in the line, which we believe is the best approach. The main exception is on large projects lasting more than one year. Then people may be transferred to the project so that the project director becomes their line manager. For the sake of motivation of project team members and cohesion of the project team (Graham, 1989), information should be gathered on projects so that project managers have a role in appraisal. Some organizations conduct formal project appraisals, and the information is given to the line manager. Others conduct 360-degree appraisals, so many people from the project are necessarily involved. Some rely on the line manager to informally seek information from the project manager, but this is not to be recommended. In a small number of organizations, line managers did not seek the project manager's opinion.
   • Reward on Projects: Again reward is primarily undertaken in the line. However, often rewards are given based on project performance, particularly the achievement of major milestones. These rewards may be financial, but are more likely to be in kind, or festivals linked to the achievement of milestones.
   • Development on Projects: The need for development is also usually determined at the appraisal in the line and funded by the line. However, sometimes development is required on the project. For instance, a project team member may need to learn a new competency to work on the project. Some organizations still insist that it is paid for by the line, but most pay for it out of the project budget. However, we identified a major development need on many projects that team members joining the project need to be briefed about the current status of the project, both in the progress of the work and the development of the technology. This can be a major constraint to the rate at which people can join the project team. There may also be a need to train project team members in the use of new technology being developed by the project.
   • Dispersement from Projects: At the end of a project, project team members are assigned to a new project, or returned to the line. If being returned to the line, the parent organization needs to determine how to utilize them. Will they be returned to functional duties or held in abeyance in some way (sitting on the bench) awaiting their next project? For some personnel, the organization needs to determine whether it is better to immediately assign them to a new start-up project or hold them for a project starting at some point in the future where their competence will be of more value. During the dispersement process, project team members need to be debriefed as part of the organization's knowledge management processes.
2. Project-oriented organizations need to implement some HRM practices differently within the parent organization. Using the same simplified model of HRM practices, we identified the following issues:
   • Selection and Recruitment: Keegan and Turner (2003) identified that project-oriented organizations tend to adopt organic recruitment processes and our findings confirmed that. Project-oriented organizations also tend to use a high ratio of peripheral workers who need to be recruited into the organization as part of the project assignment process.
   • Appraisal in the Line: As we have seen, appraisal in the line needs to incorporate information from projects and programs, requiring both for the project manager to be consulted and for project appraisals to be conducted.
   • Development: Many organizations have career paths for project managers, with defined levels and competency profiles. The development of project personnel needs to be linked to the career paths, and project opportunities found to offer suitable experiences. These needs will be identified at the appraisal in the line. This often requires dedicated training and development programs. Some of the organizations interviewed have identified that they need training programs specifically designed for project professionals. They may have standard programs suitable for a range of functional managers but require specific programs for project professionals.
   • Release from the Organization: Capturing knowledge from peripheral workers leaving at the end of a project is a significant issue. Many organizations find they lose knowledge with the departure of peripheral workers. Some organizations may use only contract staff to undertake a project, and all knowledge about the project is lost as they leave, meaning the organization can never develop. Some organizations also put substantial effort into maintaining contact with their peripheral workers. It is cheaper to reuse someone than recruit a new person.
3. Finally, employee well-being and ethical treatment were investigated. Three significant issues were identified:
   • Work-Life Balance: The dynamic work environment in project-oriented companies can lead to peaks in workload that overload employees, as demands from several projects or clients peak together. This is particularly severe in companies undertaking medium-sized projects. In organizations undertaking small projects, it is easier to control the assignment process to manage an individual's workload. In organizations undertaking large projects, employees will tend to work on just one project at a time, and workload peaks on that project will be much more predictable. By and large, companies are not very good at smoothing these peaks in workload. Working away from home can create additional pressures for employees which also needs managing. Müller and Turner (2006) report interviewing one Swedish company where the ability to manage work-life balance was a key criterion for appointing project managers.
   • Matching Projects to Career Development: As previously noted, project-oriented organizations need identified career paths for project management personnel, with clearly defined skill sets at several levels. They then need to work with project professionals to identify project assignments required for career development needs to be identified in the routine appraisals. Career development needs must be taken into account during assignment to projects. This creates the classic dilemma when a project arises that matches an individual's development needs: should the employee be transferred or retained on the current project? Enlightened organizations will transfer the individual to the new project. If not, individuals start to look for projects outside to match their needs.
   • Enjoyment of Project Work: Overall, people working on projects seem to enjoy the work. There is, however, an element of self-selection, as identified by Lee-Kelley and Leong (2003) and Dolfi and Andrews (2007). People who like project work stay; those who do not move on to other careers.

STRUCTURE OF THIS REPORT

This report describes the results of our research project, and is structured as follows:

Chapter 2: Identifies the need for new and different HRM practices in the project-oriented organization. We analyze the trend towards the project-oriented society and consider the nature of careers of people within such a society. We define the project-oriented organization, describe project management roles within the organization, and identify its nature, particularly the temporary nature of the work processes and the dynamic nature of the work environment. We show how this creates the need for new and different HRM practices.

Chapter 3: Reviews the literature on HRM in the project-oriented organization. First we review what has been written in the project management, general management, and HRM literature. We identify that there is a different focus of the three fields. The project management literature shows a shift from a technical focus to a people focus. The general management literature is mainly concerned with temporary employment and knowledge management in high-tech firms. The HRM literature is showing an emerging interest in new forms of organization, including project-based firms. We summarize the author's prior writings on the subject. We moved from a focus on selection and development in the late 1990s, to identifying new and different HRM practices in project-oriented organizations in the middle part of this decade.

Chapter 4: Explains our research approach. We describe the aims and objectives of the research and the research methods, including the literature search, interviews, and case studies. We describe the initial set of research proposals resulting from our research and the research model of HRM in the project-oriented organization we used. We suggest that the project-oriented organization needs to apply HRM practices both within the line organization (as usual) but suggest that it also needs to apply HRM practices specific to the project, which will not be seen in routine organizations. Practices specific to the project include assignment to the project, appraisal, development and reward on the project, and dispersement on project completion.

Chapter 5: Describes the results of the interviews. We identify results under each of the headings, new HRM practices specific to the project or program, different practices used in the line, and employee well-being. The presentation of our finding follows the model as outlined in Chapter 4.

Chapter 6: Describes what we found concerning who fulfills different HRM roles in the organization. In line with modern practice, project-oriented organizations tend to delegate responsibility for implementing HRM practices to managers at the work interface, with the HRM department setting policy and providing guidance. We review what we found regarding the role of the HRM department and line and project managers. We also discuss the issue of task-versus-people orientation of project managers.

Chapter 7: Focuses on employee well-being. We pull together the threads for achieving work-life balance and the ethical treatment of employees.

Chapter 8: Summarizes our conclusions. We present our final model for HRM practices in the project-oriented organization and discuss the implications for organizations, implications for projects, and implications for individuals.