The chapters in part three of the book all discuss how aspects of the organizational context pose challenges for human resource management. The case presented here concerns a municipal town hall administration, which faces labor shortages, local politics and a diverse city population. The study questions at the end of the case cover the chapters War for talent, Power of workers and Diversity and inclusion.
Suderstadt is a steadily growing, mid-sized Western European municipality of 150.000 inhabitants. The city has a long history with a blooming period in the mediaeval ages. Today, the city center is famous for its many historical buildings, good restaurants and fine quality shops. Located strategically near a central transportation hub, the municipality’s economy is doing well. Its strategic position and favorable trade climate attract new business. Nowadays, the municipality’s most important industries are logistics, agri-food, ICT and construction. The municipality hosts a renowned university of applied sciences where professionals for these core industries are educated.
The labor demographic characteristics of the municipality resemble that of the country’s average. About 65 percent of all inhabitants aged 15 to 65 is actively participating in the labor market, either by being employed or because they are looking for employment. The long-term unemployment rate is currently 1,8%, which indicates that employers have difficulties filling positions. Due to the increase in the legal retirement age and the reduction in size of birth cohorts, the share of workers in the labor population aged 50+ is increasing. Another characteristic of the local labor market is that twenty percent of Suderstadt’s population has a migration background. Of these, one third originate from one of the 27 EU countries, and two thirds from outside Europe. The majority of the non-European migrants are people descents from migrant laborers from North Africa and from inhabitants of former colonies in South America and Asia. Although the overall unemployment in Suderstadt is relatively low, rates vary for distinct demographic groups. Especially older workers (50+) and workers with a non-Western migration background have trouble in finding employment. This pattern is not unique for Suderstadt, but compares to other cities the country. For example, in 2015, only half of the immigrants in the country had a paid job, as compared to 75% of all native citizens. This difference of 25% is one of the highest in Europe. In the same vein, figures indicate that the unemployment rates of second generation, nonwestern immigrants are twice to three times higher. This figure is not just a matter of education mismatches, as also qualified and high-educated immigrants find it difficult to secure employment.
The municipality has a well-functioning city administration organization. It consists of the major and the municipality council on the one hand, and a supporting administrative organization of 2000 employees on the other hand. The administrative organization exists of five departments: City Maintenance and Control, Work and Income, Communities and Services, City Development, Strategy and Support.
Since the 1980s, national government has repeatedly cut the budgets for municipality administrations in subsequent periods of economic downturn. Currently, the organizational models of city administration organizations resemble Atkinson’s flexible firm model: there is a core of about 1000 permanent employees, with an additional 400 employees on temporary contracts and about 600 ‘outsourced’ employees, who do work for the municipality but find employment at a supplying organization. This type of organizational structure grant municipality administrations with maximal numerical flexibility, but it also bears risks.
The average age of the core workforce at the municipality of Suderstadt is 46, which is quite old. These core employees received their permanent contract around the age of 35. Employment legislation protects employees on permanent case and study questions contracts for dismissal. Job security and relatively good employment conditions cause that most core employees intend to work in the city administration until their retirement. The turnover rate of core employees is therefore very low. This means that the municipality administration has a stable and very experienced but greying workforce. Younger employees tend to be found in the flexible ranks of the organizations. Moreover, the number of employees with a non-western migration background in the core employees is less than 10%.
Ranjesh, a young lawyer on a temporary contract in the city development department, states it like this: “My job is everything I hoped for when I graduated, but still, I find it unsatisfying. I know that I have the right experience and that I could lead larger city development projects as good as my older colleagues. Even my supervisor agrees that my profile and my eagerness are what this department needs. Still, she cannot promise me a future in the organization. HR already renewed my contract twice, which means that I will have to start looking for another job if none of my older colleagues retires earlier in the next few months. I fear that this will not happen and that reduces my motivation. Worse, I notice that my colleagues often do not consider including me in their informal communication. I think that they feel I am a threat to them; I feel so unlike them! I know I am not alone in this feeling. At lunch, I sit with other young professionals and they all feel the same, namely that the older employees have built a kind of fortress that does not open for outsiders. Now sadly, I will have to seriously consider a job offer by one of the new international businesses in town. It is a less inspiring position, but at least they offer a good salary and job security.”
Last spring, the city council has accepted a verdict that holds that the demographic composition of employees working at the municipality administration should resemble the demographic composition of the inhabitants of the municipality. To this end, the major has signed the European “Charter for Diversity”; a written commitment that the municipality administration wishes to ban discrimination in the workplace and aims to work towards creating a diverse workforce.
Some political parties in the city council advocate that the municipality administration should anonymize all applications. That way, people will have equal opportunities to be hired (or rejected). It would be impossible to reject applicants for their age, religion or migration background. The positions about the practicality of such an intervention within the municipality administration differ. Management fears that anonymous applications reduce the active promotion of minority employees. The works council also doubts that anonymous applications will resolve the diversity issues of the organization, because they know of cases where colleagues with a non-western migration background quit their jobs because they felt discriminated in the workplace. In their opinion, anonymous applications will not solve the broader issue of discrimination.
Answer the study questions using evidence from the theory and research described in each chapter.
Which types of labor shortages exist in Suderstadt?
Which frictions in the labor market can you list if you read the case of Suderstadt?
Core employees of the Suderstadt administration are reluctant to leave the organization. Do their employment conditions resemble high wages in efficiency wage theory?
Use the internal labor market model to indicate costs and pitfalls of the current workforce composition in the municipal organization. Compare the transaction costs for the organization related to core employees with those of flexible employees.
Look at Ranjesh’ quote and explain his feeling of reduced motivation using equity theory.
In what kind of rewards would high-educated employees like Ranjesh find valence in working in environments like the City development of Suderstadt?
Ranjesh’ description of his employment situation expresses a feeling of unfairness. Evaluate which of the dimensions of organizational justice causes his feeling of unfairness.
Describe how Ranjesh’ psychological contract developed before and during his time in his job. What can his manager do to prevent or restore psychological contract violation?
Use the resource dependence theory to evaluate the relative power of talented employees with a migration background in Suderstadt to negotiate favorable terms and conditions.
List HR practices (interventions) that would enhance or limit the likelihood that employees who feel discriminated by their peers at work to voice their complaints.
Build on the previous question and give one example of an HR intervention that fits a critical perspective on the power question and one the fits a unitarist perspective.
Which stakeholders are involved in the system of industrial relations of Suderstadt’s municipal administration?
Rajesh’ complaints indicate that he does not feel fully empowered in his team. Which interventions in the structural conditions for empowerment could improve Rajesh’ psychological empowerment?
Explain your view on the position of the works council of Suderstadt’s municipal administration. Are they mainly representing employee interests, management interests of something in between?
Which types of diversity come forward in the Suderstadt case?
Regarding the value of anonymized applications for increasing the ethnical diversity, one can understand the different views put forward by the city council and the management of Suderstadts’ by comparing these to Tomei’s models for equality. Explain which model is used in the city council and which by the management and works council of Suderstadt.
Is it allowed to make jokes about someone’s headscarf? When would it be a legal case of discrimination in terms of the formal definition of discrimination?
Mention some clues for stereotypes that seem to exist in Suderstadt’s municipal administration. How do stereotypes influence the interaction between Rajesh and his senior colleagues?
Use social identity theory to suggest a strategy to improve the collaboration between Rajesh and his senior colleagues.
Use optimal distinctiveness theory to explain why and how Suderstadt’s management should respond to the headscarf incident.