FINANCIAL ACCOUNTING

Financial Resources and Performance Strategic Management

Financial Resources and Performance Strategic Management

Introduction

This paper examines how a leading US project management firm has responded to heightened competitive pressures through a process of organizational change[1]. A key aspect in the change process focused on the contribution of the corporate human resource function to “bottom line” economic and financial performance. This paper will argue that Exbeck introduced the change process in order to maintain its profile as a design engineer and project manager of “preferred choice”. The paper documents how Exbeck devised and evaluated a “Human Resources Agent for Change Programme” which was initiated in 1992. This programme re-positioned the corporate human resource function as a “Full Business Partner” in project management; as such Exbeck's corporate human resource function became a central actor in project management, assuming full control of management development but more unusually responsibility for monitoring financial performance in a new framework for project management. This was not a fashionable step made in response to internal power plays among top management; alternatively, the move was presented as a matter of competitive necessity designed to sustain and improve Exbeck's financial performance in tighter competitive conditions.

Recent survey evidence points to a direct positive link between “high commitment” or “high performance” approaches to HRM and the “bottom line” economic performance of the surveyed firms (Arthur, 1994; Becker and Gerhart, 1996; Dyer and Reeves, 1995; Huselid, 1995; Wood, 1996; IPD, 1997). However, the survey material appears unable to specify explicitly why the link exists; this space can be entered by case study work. A second limitation of the available survey material centres on why “commitment and performance” HRM is favoured by the survey constituency. For, if firms are efficient performers and incidentally have “commitment or performance” human resource systems any positive association between the two may be overstated, that is, any direct link between the two cannot be established theoretically (see Huselid, 1995).

Competitive conditions in EPPC and the position of Exbeck's corporate human resource function

The period since the early 1980s has witnessed a general intensification of competitive pressures in virtually all sectors of economic activity (see Legge, 1995; Sisson, 1994, p. 7). Intensification is manifest in the globalisation of market opportunities and hence competition. Equally, in particular industries international recession and sector specific developments have reduced market opportunities to place additional pressures on individual firms in terms of maintaining their sector specific profile; EPPC is one such sector. However, structural factors cannot provide a complete explanation; chief executives and personnel directors can have a critical input. At Exbeck the chief executive's interest in personnel issues was perhaps greater than that which is typical, for example it was his idea to make the corporate function a full business partner. Equally, the chief executive met regularly with the head of human resources to monitor and provide direct input into innovations such as project task forces.

The EPPC industry is a collection of about 100 firms worldwide whose primary business function is to design, construct, procure and test investment ...