Employability, the emerging new deal?

Citation

Garavan, T.N. (1999), "Employability, the emerging new deal?", Journal of European Industrial Training, Vol. 23 No. 1. https://doi.org/10.1108/jeit.1999.00323aaa.001

Employability, the emerging new deal?

Employability, the emerging new deal?

There is evidence to suggest that the traditional employment relationship ­ job security ­ is under threat since the early 1980s, primarily as a result of three major forces: the changing nature of competitive dynamics in the market place, the impact of competition in traditional employment relationships and the occurrence of market failure in international labour markets (Andrew, 1997; Dench, 1997; Emmott and Hutchinson, 1998; Ghoshal et al., 1996). Consequently employability as opposed to employment security is now considered the new form of psychological contract between employers and employees.

While the term "employability" is ambiguous there is a view which stresses the need to equip employees with the skills and competencies they require to be employable and to create their own jobs and enterprises. Ghoshal et al. (1996) argue that an employability perspective does not guarantee continuity of employment with one company, but instead provides a commitment to enhancing the competencies of employees so that they can protect and continuously improve their options for gainful employment in the wider labour market in the future.

A fundamental difference between traditional job security perspectives and employability lies in the distinction between firm-specific skills and the advanced general skills as the source of an organisation's competitive advantage. In job security type perspectives specificity of employees' competencies is a source of wealth whereas in the employability perspective it is the firm's capacity to create particular opportunities that is important. The organisation's advantage within the employability perspective is based on its ability to enhance employee capabilities rather than its ability to control the capabilities of its human resources.

It is argued that the employability of an organisation's human resources is enhanced by competencies that are general but advanced. They may be competencies associated with specific tasks that relate to organisational technologies or tasks that are general in the sense that they have application to a wide variety of business contexts and organisations. General competencies are free to move to similar or higher value applications in a variety of settings both inside and outside the organisation in which they were developed. Such advanced general competencies relax the binding hold that specific competencies can have on employees. Cohen and Levinthal (1992), for example, argue that advanced general competencies provide employees with the breadth of categories into which prior knowledge is organised, the differentiation of those categories and the linkages across them. Bower and Hilgard (1981) suggest that an employability perspective permits employees to make sense of training and development interventions geared at enhancing knowledge. The possession of advanced general competencies is viewed as a necessary but insufficient condition for building sustained competitive advantage.

The literature suggests that an employability type psychological contract implies a number of important characteristics of the employment relationship:

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  Firms will invest in the development of the generic transferable skills of their employees improving their employability, in return for commitment and loyalty.

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  The employee will accept responsibility to provide employees with information, time, resources and opportunities to assess and develop skills that are needed.

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  The concept is based on the notion of an employable person as self-confident, committed, adaptable, flexible, a teamworker and an articulate communicator.

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  The employment relationship can be dissolved if the employee's contribution or aspirations do not match the requirements of the employer.

The following list presents other elements of employability cited in the HRM literature (Etienne, 1997; Jenkins and Hendry, 1996; Sparrow and Cooper, 1998; Swigart, 1995):

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  The ultimate reward for personal growth is a future ensuring capacity for continuous self-renewal.

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  The new way of work is for employees to think of themselves as self-employed even when they are employed by an organisation. The primary concern is an individual one.

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  The employee must market himself/herself as someone who can lead people but also possess the capacity to function as an effective team player, do the work and not just manage it.

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  Employees will not have a job forever but they will learn so much that they will be employable elsewhere.

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  Organisations will encourage employees and pay for them to acquire new skills and maintain existing ones. Such investment in learning will enhance the employees' performance while with the organisation and at the same time guarantee the employees' future employability.

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  An employability perspective views errors as opportunities for improvement not things to be severely punished.

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  Employability emphasises bringing the brain to work rather than filling in the hours. It de-emphasises hierarchy and instead places emphasis on business processes and knowledge teams.

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  The employee works with the organisation not for it, the employee has knowledge and owns it and accepts change is future oriented.

Commentators such as Bagshaw (1997) argue that employability is not a new idea, but a new word for something that existed for freelancers in the pre-industrial age. He suggests that it was the norm for all workers. It was quite common for short-term contracts for specific work to be negotiated regularly and these contracts were viewed as the norm at that time. Workers did not necessarily feel demoralised when such short-term contracts were complete because their expectations were not for new work to be continuously provided. Instead, they kept an eye open for what work was available and, where necessary, adapted their skills to suit. In other words they managed their own employability. It is arguable that the industrial age brought with it paternalism. Such paternalism is not strong enough to withstand current environmental conditions and consequently, many companies can no longer afford their traditional commitment to employment security given the need to restructure and downsize. The new competitive agenda mandates companies to be flexible in order to capitalise on changing business opportunities. Such changes have prompted a reversion to independence in the employment relationship, therefore giving greater freedom to employees and employers.

Employability presents a number of important challenges to employees. Waterman et al. (1994), for example, argue that it requires a supportive infrastructure in a number of key areas. There is a need for a change in attitudes and values away from loyalty to the company and instead focusing on the individual career. It requires a free flow and open sharing of information specifically relating to future company growth and required competencies. There must be a commitment to allocate resources to enable employees to conduct assessment of competencies and participate in continuous learning; and finally the organisation must implement clear and fair procedures to transfer and redeploy employees.

Much discussion has focused on the implementation of this new type of psychological contract and the need for fine balancing required between work commitment, personal flexibility and employability in the context of an employment relationship that is no longer dyadic. Employability presents a different proposition to companies about whether to invest in generic as opposed to industry-specific skills. Some commentators such as Pfeffer (1994) argue that employability may have a negative impact on employee commitment and contribution to organisational success. It is also argued that significant risk is associated with investment in generic skills, simply because firms have no guarantee that employees will respond with greater loyalty and commitment and possibly may even take flight.

Cook and Wall (1980) and Allen and Meyer (1990) argue that it may make more sense to speak of organisational commitments rather than commitment. The literature on commitment tends to emphasise affective commitment ­ identification with the organisation and a sense of loyalty to it. Other forms of commitment include continuance and normative commitment. Continuance commitment refers to a sense of being trapped or locked in because of the high cost of leaving; whereas normative commitment reflects a sense of moral duty rather than positive emotional attachment. It is arguable, therefore, that notions of personal freedom and flexibility in employment are less likely to be associated with continuance commitment, because mobility and adaptability are unlikely to be enhanced whilst the employee feels blocked. It is reasonable to suggest that employability is more likely to be associated with affective and normative type commitment.

Another issue relates to job involvement. Kanungo (1982) defines this concept as involvement with a particular set of tasks, duties and responsibilities, rather than with an organisation, career or profession. It is arguable that within an employability concept the notion of job involvement is outdated and represents a hindrance to organisational flexibility and perhaps personal flexibility. Legge (1989) suggests that individuals who are highly involved with their jobs are more likely to resist changes in job design, redeployment, teamworking, etc. It appears that a more fruitful approach might be for organisations to encourage affective and normative commitment while at the same time discouraging continuance commitment and job involvement.

Sennett (1998) is very critical of notions such as employability. He argues that employability erodes character. Character is defined as the capacity of an individual to sustain for a long period of time a set of purposes and aims that are capable of realisation through that individual's actions. He believes that trust has essentially been eroded. He views trust as a fundamental commitment in particular dimensions of it: whether the individual believes that he/she is trusted and the extent to which the individual can invest trust in others. His basic point is that short-term employment relationships are not conducive to the formation of trust.

He further argues that the employee is the loser in an employability type relationship. He suggests that for about 15-18 per cent of individuals who enter a company espousing employability values, the first five years will reward them with upward mobility. However, a similar percentage experiences rapid downward mobility and the remainder find that their wages gradually fall. Research by the American Management Association suggests that the practices of downsizing and employability are not necessarily beneficial to the company. This research found that companies that repeatedly downsized provided lower profits and declining employee productivity.

While it is generally argued that the position of the employer is stronger, academics such as Ghoshal et al. (1996) suggest that a greater risk from employability is presented to employees who may find themselves exposed. Others would suggest that it is perhaps counteracted by the shift in the balance of need for employment stability, more towards the employer, resulting in more serious risks to the organisation. Employers, it is argued, have no guarantee of a return on their generic skill investment. While general training is highly desired by employees, specific or idiosyncratic investment also has an important role to play in achieving commitment to the organisation. Idiosyncratic investment by both parties is viewed as a strategy designed to increase the commitment and loyalty to each other, thereby reducing some of the risks posed by investment in general training.

There is evidence that employers are considering employability issues. Clarke and Payne (1997) for example, in a survey of 40 UK companies, found a recurring need for flexibility, adaptability, and a desire to learn continuously among all workers and across all levels of responsibility. These findings are supported by Dench (1997) who suggests that generic skills are not new needs in many workplaces, but they appear now to be given greater emphasis.

Herriot et al. (1997), for example, examined the perceived mutual obligations of UK employers and employees. Employers emphasised the following priorities: to work contracted hours; to do a quality piece of work; to deal honestly with clients of the employer; to be loyal and protect the organisation's regulation; to respect property; to be flexible and go beyond the job description. Employers placed greater emphasis on the inputs whereas employees placed significant emphasis on outcomes such as: systematic induction and training; fair selection, appraisal, promotion and redundancy procedures; due process; equitable pay structures; the balancing of family and personal needs; consultation about key issues and recognition for contribution, flexibility in terms of work performance and to provide what job security the employer can. Employees therefore appear to value relational constituents of the psychological contract and there are few employability type elements emphasised.

Guest and Conway (1997) found that generally employees wanted pay and an interesting job. Asked to select the three most important things they look for in a job, 70 per cent cited pay, 62 per cent cited interesting and varied work, with only 22 per cent looking for job security.

In a major study of graduates conducted by Garavan (1998) the research findings reveal that graduates, on entry to the workplace, had major expectations related to career development opportunities, initial job assignment and company culture. They appeared on entry to give specific emphasis to transactional rather than relational components of the psychological contract. However three years later, there was a shift in emphasis. Greater value was now placed on pay and promotion, compared to the pre-organisational entry situation. Career development issues were still highly valued. They now gave greater emphasis to relational dimensions.

Research conducted by Towers Perrin in the UK illustrates that while employers have articulated a new deal, it has in many cases broken down with disastrous consequences, specifically because employees have not, in many cases, accepted it as understood by employers. Table I illustrates how this has happened.

The current state of the employability literature is therefore in a state of flux, both in terms of the precise meaning of employability, its application to employing organisations and its implications for the employment relationship (Andrew, 1997; Emmott and Hutchinson, 1998; Ghoshal et al., 1996). Major unanswered questions include whether it is appropriate to all sectors of industry or just those operating in high velocity environments. Furthermore, are organisations willing to invest in generic training?; what are the advantages of doing so and what are the consequences for employees in the long term?

It is therefore best described as an emerging concept at this point in time. There is, for example, little empirical evidence to support various aspects of the concept, specifically do employment relationships that start out with employability priorities eventually move to the more traditional relationship? Does the need of organisations for loyalty and commitment and to survive in dynamic environments have no choice but to take in the risks associated with employability? How will employability influence HRD policy and training delivery in organisations? These, as yet, remain unanswered questions.

Thomas N. GaravanUniversity of Limerick