STRATEGIC MANAGEMENT AND HUMAN RESOURCES 75when they sign up. Both are taking risks. As the pioneering IR writers, Sidney
and Beatrice Webb (1902: 658) put it, the labour contract is ‘indeterminate’.
Or, as Cartier (1994: 182) puts it, ‘the contract of employment is inherently
incomplete’. As a result, the law gives employers the right to issue what are
commonly known as ‘lawful and reasonable orders’, something that sets up an
ongoing problem of motivation for the firm because control of the behaviour
of other human beings is always limited. When individuals are instructed to
carry out work tasks, their discretion is never fully taken away from them
(Bendix 1956). The employer, like the employee, must exercise some trust. As
Keenoy (1992: 95) argues, ‘no matter how extensive the controls, in the final
analysis, management is reliant on employee cooperation’.
There is a huge body of literature examining the relationships between
employer and employee interests in the workplace and their implications for
motivation and cooperation. While there is a fundamental set of common
interests in healthy, sustainable enterprise, managers and academics in the
‘pluralist’ tradition accept that there are important conflicts of interest in
the workplace (Fox 1974). These include the trade-offbetween employee
income and the profit of the firm, the trade-off between firm survival
and employee security, and the tension between employee control of work
decisions and conditions and control by the employer (Keenoy 1992). These
tensions are serious for the firm irrespective of the fact that workers do not
typically have ‘equal power’ with management (Clegg 1975). In the most
severe cases of conflict over these tensions, firms experience ‘motivational
crises’ which depress productivity and profitability, and can threaten their
viability.
ORGANIZATIONAL FLEXIBILITY
Labour productivity is something that is aimed for in agivencontext. In other
words, given a particular market and a certain type of technology (among
other things), it is about making the firm’s labour resources productive at
competitive cost. However, it is frequently observed that business environ-
ments are becoming more turbulent and that sources of competitive advantage
are more ephemeral than they were in the three decades after the Second
World War. There are many explanations for this from the introduction of
more assertive regimes of free trade under the World Trade Organization,
the end of monopolies in the trading sectors, including state monopolies,
and rapid technological change (seen, e.g. in information technology). Mar-
kets are less dominated by long-established big players as barriers to entry
have lowered and firms have been less able to protect themselves from new
entrants whether at home or abroad. All this means that change is inevitable
and suggests we need another goal domain in HRM: capacity to change or