Human Ressource Management in construction - Critical success factors in people management for construction companies
Many construction organisations promote their "soft" approach to Human Resource Management
in company brochures and annual reports. This style focuses on treating employees as highly valued
assets and a major source of their competitive advantage.
Advocates of this application of HRM argue that this way leads to a seamless company, improved
employer-employee relations and greater efficiency. Critics argue that these techniques are not new
methods. Nevertheless, reality shows that there is a gap between rhetoric and reality. Organisational
reality appears "hard" with an emphasis on the quantitative, calculative and strategic aspects of managing
In order to explore the importance of Human Resource Management in the construction industry
and to illustrate the gaping disparity between theory and practice, this study is based on the findings
of broad-spectrum interviews and questionnaires.
Results have shown that a majority of construction companies have an in-house HRM department.
This number was the highest in medium-sized companies. In corporations with a HRM department,
employees were more satisfied with the overall situation and better motivated.
Another finding is the relatively low amount of training. This reflects the trend towards the outsourcing
of work to specialised sub-contractors. However, some companies fear that their subcontractors
are not qualified enough and demand more training from them.
Another result showed that monetary remuneration is not the single key motivator for employees
in this business. Social empowerment and managerial recognition both scored highly as motivating
Induction seminars for new employees are no longer considered important to construction professionals.
Teamwork within the industry is seen as vital but should be improved and further developed.
However, this study found the application of HRM principles not to be a prerequisite. Some companies
apply little or no HRM principles and yet, they are still successful. Further research is required
to explore the consequences of this gap for organisations and employees.
The findings of this study support the demand for increased practices of empowerment, higher involvement
of employees in decision-making and improved communication in all levels of the hierarchy
Table of Contents
Table of Figures
List of Tables
To Whom It May Concern:
Introduction and Objectives
Different models of HRM
Comparison of different HRM Models
Techniques of strategy
Results of Interviews
Human Resource Trainer Hermine Müller
Evaluation of the interview
Junior Executive of a construction company Tim Meier
Evaluation of the interview
HRM Manager of a diversified German company Markus Hartmann
Evaluation of the interview
Executive of a German design company Hans Sachs
Evaluation of the interview
Results of Questionnaires
Evaluation of the dissertation
Many construction organisations promote their "soft" approach to Human Resource Management in company brochures and annual reports. This style focuses on treating employees as highly valued assets and a major source of their competitive advantage.
Advocates of this application of HRM argue that this way leads to a seamless company, improved employer-employee relations and greater efficiency. Critics argue that these techniques are not new methods. Nevertheless, reality shows that there is a gap between rhetoric and reality. Organisational reality appears "hard" with an emphasis on the quantitative, calculative and strategic aspects of managing people.
In order to explore the importance of Human Resource Management in the construction industry and to illustrate the gaping disparity between theory and practice, this study is based on the findings of broad-spectrum interviews and questionnaires.
Results have shown that a majority of construction companies have an in-house HRM department. This number was the highest in medium-sized companies. In corporations with a HRM department, employees were more satisfied with the overall situation and better motivated.
Another finding is the relatively low amount of training. This reflects the trend towards the outsourcing of work to specialised sub-contractors. However, some companies fear that their subcontractors are not qualified enough and demand more training from them.
Another result showed that monetary remuneration is not the single key motivator for employees in this business. Social empowerment and managerial recognition both scored highly as motivating factors.
Induction seminars for new employees are no longer considered important to construction professionals. Teamwork within the industry is seen as vital but should be improved and further developed.
However, this study found the application of HRM principles not to be a prerequisite. Some companies apply little or no HRM principles and yet, they are still successful. Further research is required to explore the consequences of this gap for organisations and employees.
The findings of this study support the demand for increased practices of empowerment, higher involvement of employees in decision-making and improved communication in all levels of the hierarchy and training.
Viele Bauunternehmen preisen ihre “softe” Handhabung von Human Resources in ihren Jahresberichten und Broschüren an. Diese Erscheinungsform sieht die Behandlung von Angestellten und Arbeitern als wichtigen Wirtschaftsfaktor und als eine Hauptursache für ihre Wettbewerbsfähigkeit an.
Befürworter dieser Anwendung von HRM argumentieren, dass dieser Weg zu einer einheitlicheren Firma führt, die Beziehung zwischen Arbeitgeber und Arbeitnehmer fördert und die Effizienz erhöht. Kritiker entgegnen dem, dass diese Techniken nur alte Methoden in neuen Gewändern sind. Wie auch immer, die Realität sieht, im Gegensatz zur Rhetorik, anders aus. Die Realität in einer Firma beweist, dass vorzugsweise die “harte” Version von HRM existiert. Diese betont den quantitativen, rechnerischen und strategischen Umgang von Arbeitskräften.
Um die Bedeutung von Human Resource Management im Bauwesen, sowie die bestehenden Unterschiede zwischen Realität und Rhetorik herauszufinden, basiert diese Studie auf den Erkenntnissen, die aus tief greifenden Interviews und Fragebögen gewonnen wurden.
Die gewonnenen Erkenntnisse zeigen, dass eine Mehrzahl von Baufirmen eine eigene HRM Abteilung besitzen. Diese Zahl war am höchsten in so genannten Mittelstandsfirmen. In Firmen mit einer HRM Abteilung waren Angestellte und Arbeiter zufriedener mit der Gesamtsituation und darüber hinaus besser motiviert.
Eine andere Feststellung ist die geringe Anzahl von Fortbildung und Training. Dies reflektiert den Trend von „Outsourcing“, d.h. Weitergabe von Arbeitspaketen and spezialisierte Subunternehmer. Jedoch fürchten viele Unternehmen, dass deren Subunternehmer nicht genügend qualifiziert sind und fordern mehr Weiterbildung von diesen. Monetäre Entlohnung ist nicht der Hauptmotivator, zeigte die Auswertung der Interviews und Fragebögen. Anerkennung “von oben” und weitergehende Machtbefugnisse sind wichtiger. Einführungs-, bzw. Einarbeitungsseminare werden nicht mehr als wichtig angesehen. Das Arbeiten in Teams ist innerhalb der Industrie als wichtig angesehen, aber muss verbessert und weiter gefördert werden.
Dessen ungeachtet fand diese Studie heraus, dass es nicht zwingend notwendig ist, HRM Prinzipien anzuwenden. Etliche Firmen wenden wenige oder gar keine dieser Prinzipien an und sind dennoch erfolgreich. Weitere Nachforschung wird angemahnt, um die daraus entstehenden Konsequenzen näher zu beleuchten. Die Ergebnisse der vorliegenden Studie nähren jedoch die Ansicht, dass Angestellte stärker im Entscheidungsfindungsprozess (mit mehr Befugnissen) eingebunden, Kommunikation in der Firma in allen Ebenen verbessert und bedarfsgerechtere Fortbildung angewendet werden sollte.
Career aspirations and my own experience in the construction industry have motivated me to discuss the field of Human Resource Management in construction. Throughout my study, I realized that this area has not been thoroughly explored and therefore it merited more attention.
Another reason for focusing on this topic is the increasing numbers of bankruptcies and insolvencies in construction organisations in some member states of the European Union, due to "ballooned", non-effective construction companies and unfair and immense price wars amongst the competitors for a project. In times of high unemployment rates in several member states of the European Union, immense price wars between competitors for a project, lower profit margins and the coming enlargement of the European Union it is not easy to distinguish between successful and less successful construction companies. Although every company expresses that Human Resources are their most important asset, critics mention that only assets can be traded. Therefore, is this proud statement just selfish and deceptive? Can productivity be enhanced, work atmosphere be improved or even profitability be increased when Human Resource Management is introduced or applied to a company? Is it necessary to apply convenient and inconvenient rules or only a few, for the company suitable HRM techniques?
During my practice on construction sites, I saw and experienced extremes in people management: strict subcontractors, compassionate contractors, companies with “a human side” and vice versa, of course. However, an overwhelming majority of these “kind” companies were more successful in terms of profitability, profit, etc. than others – although they worked under equal conditions on the same building site for the same client. There must have been more than just the usual explanation of estimation and calculation of costs involved. Through talks with workers, engineers and architects on construction sites, I gathered that their work is fast changing towards a more service-orientated work, sometimes too fast for the participants.
However, construction is evolving from a low service and high maintenance industry to the opposites of these. As a positive “side effect” the issues of HRM are developing. Hermine Müller, a well-known HRM specialist in Germany said, “…you will buy in future from people, you do not buy products”. Many companies are able to build an ordinary family house – but for example, the family selects the people they want to build with, whereby the product is and becomes more and more the way to the result, but not the crucial starting point. They may believe that the contractor is the right one to do the job – whether in terms of interpersonal sympathy, the ethical terms and values he is supporting, or the service he is offering to employees and/or customers.
In modern times, it is becoming increasingly more and more important to deal with Human Resource Management. In an era that is expressively dealing with high tech and low maintenance, the human part of business should not be forgotten. HR are vital to all industries, but especially the construction industry.
These are all issues, issues dealing with HRM and the treatment of people, which are normally not covered by a contract. Can they be in future? I do not think so. An old Finnish saying goes: “Trust is the beginning of everything”, but how can a company offer good services, and as a result a good product, while internally nobody in the company gets along? Can there be trust? We will agree, that there cannot. In addition, we agree that this company will not survive in the long run.
Nevertheless, experience has shown that the construction industry is a low service, and therefore a not 100% customer orientated industry. Regrettably, Construction is not well known for its politeness and understanding. When asked for their opinion of the construction process, most house buyers and private house builders will answer: “I won’t build again!”
This could be one of the reasons for the introduction of methods such as partnering, value management etc. These techniques are, to put simply, just an improvement of service and a big step towards the customer. However, these techniques are more or less in their initial stages and have to be improved and developed as soon as possible. In some countries these techniques are still in their inception and not very known, for example in Germany. Most companies are reluctant to change, and these policies and methods will change a lot in construction.
However, it is less than easy to find appropriate literature dealing with HR in construction. Surely, there are hundreds and hundreds of volumes of books published every year dealing with HR; but only a handful deal with construction and the use of successful HRM techniques. There are many “successful principles” in the eyes of the respective authors, such as the Seven S rules, Five P’s, Six Sigma etc. Moreover, most HR authors believe that “scholar book” HRM recipes can be applied without alteration to the construction industry. Is this the case? Are there successful HRM techniques and more importantly, which of them are applied in this industry?
The construction industry must not treat the client like an unloved season, but treat him with respect, fairness and openness – the same respect, fairness and openness we expect when we build. Alternatively, to cite the Holy Bible: “Treat people as you want to be treated.”
Table of Figures
Figure 1 – Relation between performance and HRM department
Figure 2 - Reasons for no HRM department
Figure 3 – KPI web diagram
Figure 4 – Important HRM Techniques in construction
Figure 5 – Duration and frequency training
Figure 6 – Kind of used training
Figure 7 – Supervision and Hierarchy
Figure 8 - Number of people to supervise
Figure 9 - Level of hierarchy
Figure 10 – Approach to a new project
Figure 11 – Awarding of employees
Figure 12 – Organisational Philosophy
Figure 13 – Practice of construction companies
List of Tables
Table 1 – Different HRM Approaches
Table 2 - Percentage of HRM Departments
Table 3 – Benchmark of the participating construction companies
Table 4 – Used HRM Techniques
I dedicate this work to
my parents, who showed me the path that I follow,
my adored love, with whom I follow it and to
my children, whose paths await them.
Additionally, I would like to thank my tutor John Carney for his exceptional helpful advice.
He always helped me anytime selflessly.
This dissertation would have not been possible without him.
Moreover, I am grateful to the staff of the Waterford Institute of Technology,
who helped in some awkward situations, here especially
Diarmuid McElhinney and Anna Henebery.
I am grateful to the managers and professionals who agreed to be interviewed as part of this study, and to the organisations who allowed access to their project team and to confidential data.
I hope the results are useful to companies.
To Whom It May Concern:
Hereby I, Adrian August Wildenauer, confirm that this dissertation is entirely my own work.
Used and cited literature, as well as opinions of other persons or third parties, is indicated.
I hereby also confirm, that this work is only submitted as a M.Sc. ECM thesis at the
Waterford Institute of Technology (and its partners) and at no other institution.
I hereby agree, that the Waterford Institute of Technology and its partners
are allowed to copy this thesis for further publication and copies in their libraries.
Waterford, 12th of September 2003
illustration not visible in this excerpt
Adrian August Wildenauer
illustration not visible in this excerpt
“A superior group is formed out of average people”
General Bruce Cooper Clarke,
Commander-in-chief of the American Forces for Europe and Civil Engineer
Chapter 1 introduces the rationale for the research and outlines the main aims and objectives of this dissertation
Chapter 2 explains the basic models of Human Resource Management and gives an overview of diverse techniques dealing with HR in construction.
Chapter 3 deals with research design and methodology and explains the manner in which information was obtained for this dissertation.
Chapter 4 shows different opinions which were gathered during the held interviews. An evaluation of each interview sums up this chapter
Chapter 5 gives an overview of the results of the returned questionnaires and presents the analysis of this information.
Chapter 6 presents the conclusions of this dissertation.
Chapter 7 gives recommendations for construction companies and for further research.
Appendices show the used questionnaire and the self-evaluation of this dissertation.
Introduction and Objectives
The author is convinced that the following prime objectives of this dissertation are necessary in order to reach the aim of this work:
- To determine the people management background of successful construction companies
- To determine the organisational philosophy of successful construction companies
Furthermore, the author wants to test the hypothesis of this dissertation as follows:
Construction companies who apply effective HRM policies
have a competitive advantage over their rivals.
Different models of HRM
For this literature review not only books directly related to the construction industry were used. It was recognised that there is an obvious lack of books dealing with HRM in construction. Therefore, the literature review was used as a principal guideline.
Human resources are present in each activity we do, and, therefore, basic. In the field of construction, which is considerably staff intensive, it is even more important to deal with interpersonal behaviour and the resulting problems or challenges. Engineers, architects, construction workers and clients have to communicate with each other, to express their points of view, to reach an agreement or a consensus in the working process. The more people are involved in decision-making or in a process, the more difficult it gets to reach this goal. This can lead to conflicts through misinterpretation or due to a lack of information.
Many experts believe that construction is a unique business in general terms, as well as in more detail, e.g. the dealing with people – each project is different, you do not necessarily have to work with the same people twice, it is a highly fragmented industry on a single project-by-project basis, the environment is not stable (e.g. compared to a manufacturer). (compare Yankov and Kleiner, 2001; Druker et.al., 1995)
Nevertheless, not all Human Resource Management (HRM) experts do share this opinion, as research done by Druker et. al. (1995) shows. They asked British personnel manager in construction, if “normal” scholar book HRM principles can be applied to the construction industry. A minority answered favourably. A majority answered that there are “…key determinants of policy and practice.” Moreover, they explain that this vulnerability is caused by “…a short-termist approach to employment matters…unfairly, the construction industry has long had a reputation for unsophisticated personnel management.” However, Druker et.al. predict that …”the conclusion… [the personnel managers] reach could contain important lessons to all personnel practitioners.” What is more, McGeorge and Palmer (1995, p.121), construction managers themselves, conclude that construction is not a unique business, as it has some characteristics which are unique just as any other business has unique characteristics.
However, some HRM lecturers and experts believe that it is the case. “The construction industry, however, presents a challenging environment for the effective management of human resources due to the dynamic and fast changing organisational, project and skill requirements.” (Raiden, no date)
Nonetheless, following the remarks on the postal questionnaires, most construction people believe that the success of HRM in construction depends on motivation, leadership, the structure of the organisation itself and the ability to deal with problems that occur.
In general terms, there are differences in HRM between hard and soft HRM, which are mostly opposing, and described as the soft and the hard model. Not forgotten should be the Theories of McGregor, Theory X and Theory Y, as well as the development of them, Theory Z of Ouchi. (Compare Table 1)
The Soft Model (also called the Harvard HRM model) regards human relations, the utilisation of talent, communication, but demands high levels of trust, flexibility and adaptability. (compare Grayton et.al.). They argue that it is primarily self-regulated rather than controlled by sanctions. It deals with interpersonal behaviour and therefore with the humane part in the name HRM. It is further developed in many, many ways; for example, in the Theory Y of McGregor in the 1960’s. This theory, a kind of humanist approach to management, says that
1. People are not by nature passive or resistant to organisational needs. They have become so as a result of experience in organisations.
2. The motivation, the potential for development, the capacity to assume responsibility, the readiness to direct behaviour towards organisational goals, are all present in people. It is a responsibility of management to make it possible for people to reorganise and develop these human characteristics for themselves.
3. Management is responsible for organising the elements of productive enterprise in the interest of economic ends, but their essential task is to arrange the conditions and methods of operation so that people can achieve their own goals best by directing their own efforts towards organisational objectives.
McGregor suggests that four kinds of learning are relevant for managers when applying Theory Y: intellectual knowledge, manual skills, problem-solving skills and social interaction. Moreover, he states, that
“…we normally get little feedback of real value concerning the impact of our behaviour on others. If they do not behave as we desire, it is easy to blame their stupidity, their adjustment, or their peculiarities. Above all it is not considered good taste to give this kind of feedback in most social settings. Instead, it is discussed by our colleagues when we are not present to learn it.”
The Hard Model is also known under the name “Michigan model”. It deals with a more quantitative approach than the soft model. This hard model is calculative and regards human resources as a part of production (Grayton et.al.). Thus, it deals with the resources part in the name HRM. Van Maurik (2001) writes, that Theory X is totally different from Theory Y, and therefore the soft model. In this theory X, people dislike work and avoid it whenever possible. Companies must use a “stick-and-carrot” approach to motivate. Moreover, it is necessary to coerce, control, direct and threaten in order to ensure that organisational objectives are met. However, workers avoid responsibility and want to be directed and controlled to gain a level of security, so Van Maurik further. Nevertheless, Van Maurik shares the opinion that these models, may it be McGregor’s theories or the Harvard or Michigan model, are extremes and not to be found in enterprises in their “pure” form. More or less it is a mixture between these models and theories which predominate in reality. (compare Table 1)
Before McGregor died in 1964, he was working on Theory Z, the comparison between Japanese and Anglo Saxon companies. William Ouchi finished his work in 1981. This comparison between eastern and western companies has a long tradition and gave new incentives to the American economy when it was down. Theory Z states that trust is an essential factor in enhancing productivity. The work force is guaranteed lifetime employment and intimacy, which enhance productivity; trade relationships within companies are stable and convenient to both sides. It is also possible to apply for a non-specialist in the company, which means a kind of lifetime job rotation. The problem he encountered was that in western companies only award specialists, which leads to less staff interaction. Japanese companies give everybody the chance to take part and as decisions are made by consensus, everybody is involved, understands the reasons for that decision, and shares a commitment and a kind of responsibility for its success.
However, the author states implicitly that these techniques should not just be adopted, but adapted.
Pascale and Athos (1981) argue in Ouchi’s favour, that western companies rely on hard factors such as strategy, structure and systems, whereas, eastern companies concentrate on soft factors such as shared values, believes, skills, staff and style of HRM and business. Moreover, to be successful, the responsible managers should take the seven S approach: strategy, structure, skills, staff, shared values, systems and styles.
Notwithstanding, a relatively high number of famous HRM managers and thinkers come from Japan, namely Kenichi Ohmae. He is one of the most famous Japanese managers, dealing with SHRM and Business strategies. His principles are to think in innovative, simple, and unconventional terms, mostly in HRM related terms. The question "Why?" must be asked on all topics and all processes. Through research that he carried out in Japan, his native country, he found that a company must have some key principles in HRM or better business strategies to act successfully, these are visionary and dynamic leadership, customer focus, and methodology. The customer in Japan is always the focus of interest and is the main part in the strategic planning. Japanese corporations tend to "have a single, driving force in the form of an effective strategist, a leader, or visionary who possesses an idiosyncratic mode of thinking". Managers must have a detailed understanding of all characteristics of each element that is involved in a process and develop then "a holistic plan, tying together each part of the business, each separate resource, into competitive and efficient operation". This effort combines analysis, knowledge, innovation, intuition, and creativity all together in a process or a project. These eastern principles do not sound very familiar to western construction companies. There is no doubt that it is necessary for a large or medium-sized building company to survive in a globalized world, but what is the result of the questioned companies?
These thoughts are not new. Approximately 2500 years before Kenichi Ohmae published his books, General Sun Tzu explained his thoughts about the basic elements of war in his book, "The Art of War". This book was misinterpreted and misunderstood by the western hemisphere for long time. Nowadays, the book is well established as one of the fundamental management books, which, according to many management experts, e.g. Gary Hamel, the author of "Competing for the future", gave the Japanese management system a lot of advantages, and helped it to attain its present high reputation. It also deals with HR. The basic principles of Sun Tzu are firstly to get the strategy right. "Why destroy", he asks, "when you can win by stealth and cunning? To subdue the enemy's forces without fighting is the summit of skill." Furthermore, he explains that "the best approach is to attack the other side's strategy; next best is to attack his alliances; next best is to attack his soldiers…". Secondly, he demands that data and information should be obtained from the right sources, by saying that "advance knowledge cannot be gained from ghosts and spirits, but must be obtained from people who know the enemy situation" Thirdly, he insists on a fixed focus. "Deploy forces to defend the strategic points, exercise vigilance in preparation, do not be indolent. Deeply investigate the true situation, secretly await their laxity. Wait until they leave their strongholds, then seize what they love."
These principles of war in past times may sound strange or uncomfortable to modern people, but the basic principles of Sun Tzu "encapsulate basic and eternal truth", as Hamel explains further, "and if the stakes are high in business, they are rather higher in the military sphere." As the most important fact, he adds "…when you know your enemy, whether you are a military general or a managing director, the world appears clearer and you know better how to handle this situation".
However, a lot of literature about managing people and organisations comes from Japan, notably “The Book of Five Rings” of Miyamoto Musashi, “The Book of the Samurai” of Yamamoto Tsunemoto, “Made in Japan” of Akio Morita or “The knowledge creating company” of Ikujiro Nonaka and Hirotaka Takeuchi. More or less all of these books deal with military thoughts of leadership and guidance of people, with the appropriate strategy at the right time.
Are these principles applied by managers in successful construction companies?
Sun Tzu's book about strategic planning and thinking is based on a strong historical hierarchy in military. Today, more and more companies try to breakdown hierarchical “barriers”, want to stop “inflexible” and “agonizing” rules, although these rules have worked for years or decades quite successfully. Nowadays it seems to be old-fashioned not to adopt these new, almost religious management techniques. Several parts of the economy have suffered from applying these principles, such “as flexitime, team work, and emotional intelligence”. The burst of the German “New Economy” Bubble with “High-Tech companies” with “Low People Guidance” is just a sentimental example. Judith Mair (2002), a successful designer, explains her company philosophy, "Trendy words or expressions like innovative, and creative… are forbidden in the office, employees have to wear working clothes… we do not accept team work, as everybody is responsible for their own work …our company has strict rules which have to be fulfilled…". She is convinced that only a rigorous HRM style can help to produce efficiency and effectiveness. Her success is supporting her point of view. Furthermore, she states, "work is not fun, work is just work." A company needs strong hierarchy and powerful leaders, does not matter, if they are "… charismatic or not", otherwise they “…will fail from the very beginning. If they survive, this is not a sign of power, but of incompetence and struggling… People need to be guided, and only want responsibility that they can handle.” On the contrary, Yerkes (2003) states, that creating fun in the workplace is essential for a successful company. “Work attitudes have changed over the years… from Aristotle’s ‘work is for slaves’ to Calvin’s ‘work is a commandment’ to ‘work is who I am’ – Nowadays work is more productive when it’s fun” Fun at the workplace, Yerkes continues, reduces absenteeism, mends conflicts, creates stronger, deeper, longer-lasting customer-relationships, raises employee morale, stimulates creativity and innovation and increases productivity.
Is this the way to success? In the construction industry the principles of strict rules and strong hierarchy are often found, but more and more companies change their policies and rules to soften them, some to gain a “people-friendly” reputation, others to improve their productivity. What is the way to success? However, Alan Price points out in his book that Human Resource Management is only the result of the progress of various disciplines, such as Taylorism, Fordism, Human Factor researches in World War I, Human Relations research from the late 20s of the last century, Management by Objectives, as Drucker called it, Strategic Management and Corporate Culture. Price explains:
"Throughout the twentieth century, practitioners and academics have searched for theories and tools to explain and influence human behaviour at work. Managers in different industries encounter similar experiences: businesses expand or fail; they innovate or stagnate; they may be exciting or unhappy organizations in which to work; finance has to be obtained and workers have to be recruited; new equipment is purchased, eliminating old procedures and introducing new methods; staff must be re-organized, retrained or dismissed. Over and over again, managers must deal with events which are clearly similar but also different enough to require fresh thinking."
This leads to the question of how accepted Human Resource Management is in the construction industry. There is no doubt that this is a powerful tool in guiding, leading, and most importantly understanding people, but is it applied in construction companies, in which the working climate is normally quite draconian? Is it a necessity for a company to have a Human Resource Management Department? The result of the questionnaires shows that a majority have a HRM department, but this will be discussed later on.
Nevertheless, HRM is nowadays becoming a larger concern for companies. However, it should not be forgotten that it is only a small piece of the puzzle in the conglomerate of a company. Other authors, such as Peters and Waterman, who wrote “In Search of Excellence” deal with HRM as a part of the success of these excellent companies. This milestone in management book, as it is described by critics, merits more attention.
The authors of the book "In Search Of Excellence", Peters and Waterman, describe the necessary skills and knowledge for a (global) company, whatever business they are in, as follows:
1. Orientation on action
2. Consumer oriented approach
3. Simplicity of the form, not numerous management staff
4. Independence and enterprise
5. Freedom and strictness at the same time
6. Devotion to your business
7. Personal efficiency
8. Social communication, valuable management
Furthermore, they describe that bureaucracy alone is too ineffective in dealing with the management of people, only "fluid" organizations are and will be able to survive:
"The concept of organizational fluidity, therefore, is not new. What is new is that in excellent companies seem to know how to make good use of it. Whether it is their rich ways of communicating informally or their special ways of using ad hoc devices, such as task forces, the excellent companies get quick action just because their organizations are fluid." (Peters and Waterman, 1986, In search of excellence, Reprint)
Being the most popular management authors of the 1980's, they condemned "unemotional" modern management methods and demanded a return to simpler management techniques; the authors themselves realized after a certain time that these ideas were better applied in smaller companies. An interesting fact is that some of these "excellent" companies do not exist anymore. Additionally, most of these “successful” companies were already successful global players such as Wal-Mart, Hewlett-Packard or IBM. The emphasis of this research that was done in cooperation with McKinsey was limited in its view of big companies which deal with the manufacturing and selling of goods, but not with construction.
This leads to the question: should a construction company, if it wants to act efficiently and successfully, apply these techniques of management, when even the authors are not totally convinced of their findings and suggestions for a company? Which management principles are the best for this industry? Is a general recommendation of a technique or a style possible and advisable? Surely, not all of these thoughts are advisable to the building business, but the focus on customer and on action are similar to the working principles in construction.
Dealing more with the optimisation of manufacturing processes, Womack and Jones describe explicitly in their book how lean thinking and lean manufacturing can improve productivity in a company. In spite of this, it is possible to apply these principles to the construction business and some of them have already been introduced with success. This system was first applied in the U.S.A. and was further developed in the Japanese Toyota Car manufacturing plant by the owners Sakichi and Kiichiro Toyoda in the 1930's. Their principles are based on a three-pillar model:
Firstly, automatic machines and lines must stop whenever a mistake, however "big" this mistake is, is made, so that the bad parts can be sorted out (called Jidoka).
Secondly, pull systems, in which only parts that are actually needed are produced (called Just-in-Time).
Finally, the levelling of workload in a mixed model production flow is necessary (called Heijunka).
Jidoka could be named nowadays as the basic principle of "Total Quality Management" in construction. There is no doubt that this principle adds value to the building, increases quality on and off site in the construction process and is in the interest of the client, but do successful companies differentiate between knowledge and wisdom of quality? Do they just "buy" knowledge from other companies which are experts in this sector, or are they gaining wisdom, while applying "learning by doing" principles? The result of the questionnaires shows that the bigger a company the higher the chance to find outside consultancy, which would deliver knowledge to a company, but is this advisable? Companies get addicted to outsiders by this method of “outsourcing necessary knowledge”. (This will be discussed later on)
 Enemy means in the modern context of Sun Tzu not only foe, but rival and competitor.
Not all of his 13 sections of his book are of interest nowadays.