ARTICLE REVIEW

HR Function i n Project -Oriented Organizations and the Problem of its Internal Consistency Katarzyna Piwowar-Sulej Wroclaw University of Economics, Wroclaw, Poland [email protected] Abstract:

Nowadays, repetitive or routine activities are slowly giving way to unique and complicated activities – i.e.

projects. Many enterprises implement the so-called management by projects (MBP). The enterprises following such an approach are referred to as project-oriented organizations (PORORs). A project and an organization cannot exist without appropriate human capital. This capital is developed in the process of HR function fulfillment (R&S, training, HR appraisal, remuneration and HR flow). In every enterprise, which implements MBP, HR function takes a two-way course: in an organization-wide perspective (general HR function) and within the framework of a particular project (HR function in projects). The objective of the article is to answer the following research questions: Q1: Should the same operational schemes in both “courses” of HR function be used from the perspective of an effective functioning of project -oriented organizations? Q2: What kind of gaps occur in the area of HR function internal consistency within the analyzed organizations? The article presents the results of empirical studies carried out in 2014 and 2015 in 100 project -oriented organizations. The methodology for measuring HR function’s internal consistency was proposed. Data triangulation was applied in the research process. The conducted studies indicate that the multidimensional consistency of the personnel function results in an increased efficiency of not only projects, but also the entire organization. The surveyed organization s present higher general HR function consistency than the HR function in projects. Moreover, some gaps in consistency between both personnel function courses were indicated. The presented results of empirical studies provide knowledge about the specificity of project-oriented organizations. The presented discussion can also become the foundation for developing further research.

Keywords:

HRM, HR function, project-oriented organization, management challenges, management by projects 1.

Introduction A thesis can be put forward that since the 90s of the 20 th century the interest in the way people function within organizational structures has been increasing continuously. Therefore, managing people (human resources management, HRM) can be considered as the key management area. Such management is identified with personnel function (HR function), which covers tasks related to attracting workers, adequate development of their capital and taking advantage of it in the course of any organization functioning. Currently this function is focused on achieving organizational goals along with meeting its employees’ needs. Its development remains within the responsibility of human resources department as a strategic partner. The interest in project management issues is also continuously growing. The analyses cover the application of specific knowledge, skills and tools in terms of operations performed in the course of carried out projects.

Nowadays, not only launching new products or services is implemented in the form of projects. Project- oriented approach, based on appointing interdisciplinary teams and using tools typical for project management, is extensively applied within the framework of managing changes (Young, 2006). These enterprises which take advantage of such approach are referred to as project-oriented organizations. Among them there are project-based organizations – in which project implementation remains their core business – and also organizations focused on repetitive actions (e.g. banks or manufacturing companies) which, however, implement projects.

Task-oriented organizational structure represents the factor which differentiates the analyzed organizations from the so-called traditional enterprises. In practice, pure project-based structures – i.e. the ones within which no other permanent units have been established – occur very rarely. Therefore, the usual alternative to this type of structure is the matrix structure, in which project teams are formed and dissolved (Young, 2003) .

In this case the complexity of personnel function is increasing. HRM has a two-way course: on the one hand, in the general organizational field, and on the other, within a given project. The two ways of the HR function have been respectively called the general personnel function and the personnel function in project. In the course of this function development in project- oriented organizations, “new” subjects, absent in traditional organizations, such as project managers gain more importance.

238 Katarzyna Piwowar-Sulej As Huselid (2005) points out, a HR M system, based on complementary practices, is the source of lasting competitive advantage in an enterprise. The subject literature presents various types of fit within the framework of HRM. The problem of HRM consistency is broadly discussed in the literature on traditional organizations (e.g. Boon et al, 2007; Kepes and Delery, 2007; Banks, 2014). Due to the two-way course of personnel function in project-oriented organizations, internal fit has been recognized as particularly important.

Even though the subject literature discussing project management calls for the standardization of operations in the subsequent projects in order to develop project management maturity (Crawford, 2014 ), it seems, however, that the consistency (fit) of activities taken up in projects only, along with the existing discrepancies between the practices applied in the general personnel function and a personnel function in project , shall result in some organizational disorder. The latter, on the other hand, has negative impact on the effectiveness of the entire enterprise. Lundy and Crowling (2000) are of the opinion that internal effectiveness in an enterprise results from implementing and establishing managerial mechanisms along with maintaining consistency, harmony and feasibility .

Consistency can be understood as harmony or compatibility, the condition of cohering or holding together and retaining form, solidity or firmness (Dictionary.com). Nadler and Tushman (1980) define consistency or fit as the level at which needs, requirements, goals, the construction of one element remain in compliance with the needs, requirements, goals, structure of another component. It was observed that the discussion presented in subject literature on human resources management in a project- oriented organization persists, to some extent, “in isolation” from the problem of organizational structure. Furthermore, so far the issue of personnel function consistency, in the specific functioning conditions of project-oriented organizations, has not been discussed. The purpose of the article was defined, i.e. answering the following research questions:

Q1: Should the same operational schemes in both “courses” of HR function be used from the perspective of effective functioning of project-oriented organizations?

Q2: What kind of gaps occur in the area of personnel function internal consistency in the analyzed organizations?

In order to carry out the purpose defined in this way the relationships between the two courses of personnel function were discussed. The theory referring to HRM consistency was also explained. Finally, the results of the empirical research were discussed. The above-mentioned research constitutes the component of a broader research project covering methods for personnel function implementation in project-oriented organizations.

The research project was financed by The National Science Centre Poland (DEC- 2013/09/D/HS4/00566).

2. Literature Background 2.1 HR function in a traditional organization vs. HR function in a project-oriented organization The discussion on HRM has been going on in the subject literature for many years. It is characterized by the diversity of definitions referring to the problem of human resources management, as well as a the broad spectrum of activities which could be assigned to this concept. It was adopted that every organization is characterized by a certain set of basic physical functions, indispensable in achieving its goals. One of them is a personnel function which refers to all employees and covers the tasks usually carried out by HR department.

As it has already been pointed out, its primary goal is to ensure proper staffing in order t o achieve the results identified by an enterprise. In the 50s of the 20 th century this function was still not perceived globally and no need was observed to consider the relationships occurring between its many components. The author – having considered the relations occurring between the particular HR function components – suggests its presentation in the form illustrated in figure 1. It was adopted that the recruitment and selection of candidates (R&S) is not finalized while signing an employment agreement or a civil contract. In practice the so -called trial period agreements are frequently signed. During such time an employee goes through a break -in period and his/her practical competences are verified, therefore he/she is still subject to the selection process. The term of HR flow is understood as promotions (horizontal, vertical), transfers (organizational unit changing while remaining at the same or similar position), demotions and layoffs. The feedbacks occurring between personnel function components are marked by a dotted line. For example, staff leaving implies the need for 239 Katarzyna Piwowar-Sulej personnel recruitment. A dotted line on the figure below illustrates that within the framework of R&S – and specifically while breaking into work – adequate training are provided. It refers to mandatory training associated with signing employment agreements. (e.g. trainings in occupational health and safety), but also additional onboarding training.

Figure 1: Model presentation of a HR function in a traditional organization Source: Piwowar-Sulej (2016) At this point it is worth emphasizing that the presented perspective is a model oriented one. The result of HR appraisal, either formal or informal, should imply offering adequate training in terms of remuneration and transfe r.

On the basis of literature studies combining the problems of project management and HRM two approaches to personnel function presentation were identified. The dominating practice is manifested in focusing on personnel function only as representing the set of activities addressed to project team members (see Clark and Colling, 2005; Melnic and Puiu, 2011). The second and also quite uncommon approach – which precursors are Huemann and Keegan and Turner (2007) – consists in noticing two courses of this function. The above- mentioned authors prepared a graphic presentation of differences occurring between personnel function in a traditional organization (managed in a “classical” way, where project -oriented approach is not applied) and a project-oriented one (see figure 2).

Figure 2 shows that a project involves people already employed in an organization. However, in business practice both recruitment process and the selection of candidates from an external labor market can be arranged specifically for the needs of a particular project. Figure 2: HRM in the project-oriented company vs. HRM in the classically managed (traditional) enterprise Source: Huemann and Keegan and Turner ( 2007) 240 Katarzyna Piwowar-Sulej As it has been indicated in the introduction to the study an organizational structure determines the form of personnel function. Personnel function in a project-oriented organization takes a two-way course. Personnel function in a project is made up of the same components as the personnel function at the general organizational level. There are mutual relations between the particular components of a personnel function in a project and a general personnel function, as shown in figure 3. They are strictly connected with the problem of internal HRM fit.

Figure 3: Two-way course of the personnel function in a project-oriented organization Source: Piwowar-Sulej (2014) 2.2 The problem of HRM internal consistency Scientific literature distinguishes between four different types of fit in terms of HRM, i.e. (Wood, 1999):

a) Strategic fit: the relationship between HRM system and business strategy. It occurs when HRM practices concentrate on stimulating people to meet organizational goals.

b) Internal fit: the relationship between various HRM practices in the entire HRM system. Following this approach HR system should remain internally consistent.

c) Organizational fit: the relationship between HRM system and other systems in an organization (e.g.

technological, manufacturing, control systems).

d) Environmental fit: related to HRM system and external environment. Following this logic, HRM system should be fit to changes in the environment, as well as principles and expectations of this environment against an organization.

Within the framework of human resources strategic management concept the need of so -called vertical (strategic) integration is primarily emphasized. The author is of the opinion that all of the above -mentioned types of HRM fit are equally important. Due to the specific nature of personnel function in a project-oriented organization it was decided that the problem of horizontal (internal) fit regarding HR practices is worth discussing in more detail, i.e. having considered the relationships marked with a dotted line in figure 3.

Recruitment and selection were recognized as major activities carried out within the framework of personnel function. It is justified by the fact that the decisions referring to employment of a candidate presenting a particular human capital remain fundamental for taking up actions in the course of the subsequent HRM stages.

A project team member can be recruited from either internal or external labor market. In the first case a temporary transfer of an employee from a permanent organizational unit to a project takes place. The general 241 Katarzyna Piwowar-Sulej personnel function stage, referred to as HR flow, provides “resources” at the stage of staff recruitment for project purposes.

Attracting project staff from external labor market can take the same forms as in the case of recruiting candidates for positions in an enterprise permanent structure. It consists in applying appropriate R&S methods or techniques. Moreover, when an employment agreement is concluded – in the light of Polish labor law – employee’s position in an organizational permanent unit has to be defined. In this way the relationship between recruiting people for organizations and attracting project team members becomes visible.

After project completion the stage of team members’ transfer tak es place. They can be recruited to the next project or return to their functional department. Once the project is finalized an employee can be offered a position in an organizational permanent structure.

The above presented examples illustrate objective relations occurring between the stage of staff transfer in a project and also R&S and HR flow stages in the general organizational structure. Therefore, how should internal consistency of the personnel function be approached in the analyzed organizations? The problem of interest for the author refers primarily to:

a. internal consistency within each course of the discussed function, b. consistency between both courses of the personnel function.

Internal consistency within a particular course takes the form of making staff oriented decisions based on the results of an employee appraisal. Training should result from the needs defined in the course of periodical staff appraisal. The consistency between personnel function courses means, on the other hand, that the practices applied within the framework of a general personnel function and a personnel function in project remain mutually fit. Not only are they linked by the relationships presented in figure 3, but also use similar methods in both courses within the particular stages of personnel functions implementation. It is not about applying exactly the same techniques e.g. candidates’ selection for work on positions in an organizational permanent structure and techniques for project members selection. It is about the same rules applying in both identified cases. For example, if the selection of candidates for the positions in an enterprise permanent structure takes advantage of recruitment addressed to a wide range of people, the same rule should apply in case of projects.

It ensures order and the sense of justice. Furthermore – since the organizational strategy is implemented based on a project-oriented approach – the general personnel function should support projects. Such adjustment can take the form of e.g. checking at the stage of selecting candidates’ suitability for project - oriented work in an enterprise. These and other relationships between the particular personnel function components were subject to empirical verification.

3. Research methodology As it has already been mentioned in the introduction to the study, so far no scientific debate has been going on regarding personnel function consistency in project-oriented organizations. On the other hand, the research on HRM consistency in traditional organizations has, so far, been mainly applying quantitative methods such as: reliability analysis, factor and cluster analysis, multiple regression analysis, sequence analysis (Boon, 2008).

An alternative approach to research methods in this area of knowledge was recognized as desirable. Within the framework of empirical research an idiographic approach, based on purposive sample, was used (for more see: Piwowar-Sulej, 2016). It covered 100 enterprises based in Poland and applying a project- oriented approach. The research sample was balanced, i.e. covered an equal number of project -based enterprises (with projects as their core business) and the other ones which conduct projects. In the process of the research sample construction it was considered that while a defined number of project-based enterprises is operating on the market, it is difficult to identify the other organizations which apply a project -oriented approach. There are no objective registers to define the entire population of project-oriented organizations and enable representative sampling. The study covered enterprises offering a position or a function (role) of a project manager. An additional condition to include an enterprise in a research sample was HR department presence in an enterprise structure. Thus, medium and large enterprises participated in the research. 242 Katarzyna Piwowar-Sulej Having considered the above-mentioned problems in obtaining a representative sample, along with an intention to ensure higher quality of the conducted research, data triangulation was used in the research process. Structured interview (using PAPI method) with a project manager, project executor and HR specialist was performed in each enterprise. Research tools were developed in the form of structured interview questionnaires . The questionnaires addressed to each group of respondents contained 300 questions. Due to size limitations of the article and its purpose, the author decided to focus on the research part which referred direc tly to the problem of personnel function consistency. 24 questions/statements (see table 1) were addressed to each group of respondents, which referred directly to internal consistency of the personnel function. The respondents had to choose the answer (“yes” or “now”). Kruskal-Wallis test was applied to check the convergence level of the answers provided by representatives of various respondent groups. It turned out that in case of 17 out of 24 questions the level of significance was less than 0,05, which indicates that the respondents were providing significantly different answers to a particular question. It became a reason for the use in the research process additional ly in -depth interview method . The answers to research questions will be provided in the next part of the study.

Table 1: Hypothesis test summary (Kruskal-Wallis test for independent samples) No. Null hypothesis Significance Decision 1. A project team member is brought into operation in a planned manner (formal information about the project objective, project implementation methodology, methods of work, duties). ,007 Reject null hypothesis 2. During staff employment in an enterprise their suitability for project - oriented work is taken into account . 0,804 Accept null hypothesis 3. The system of periodical appraisal, taking project - oriented work into account, functions in an enterprise. ,174 Accept null hypothesis 4. Decisions about employees’ remuneration result from periodical appraisals in an enterprise. ,000 Reject null hypothesis 5. Decisions about training result from periodical appraisals in an enterprise. ,000 Reject null hypothesis 6. Decisions about employee promotions result from periodical appraisals in an enterprise. ,386 Accept null hypothesis 7. Decisions about moving a n employee from an organizational structure to a project result from periodical appr aisals in an enterprise . ,000 Reject null hypothesis 8. T raining offered in the workplace is necessary for the successful implementation of a particular project. ,013 Reject null hypothesis 9. During a long - term project the decision is made about a team member training based on his/her work appraisal. ,893 Accept null hypothesis 10. Project - oriented training is organized in the workplace . ,000 Reject null hypothesis 11. The analysis of training needs in the company is based on employee appraisal. ,014 Reject null hypothesis 12. After finalizing training its effectiveness is analyzed. ,006 Reject null hypothesis 13. Base salary level (including e.g. pay rise) depends on the variety of roles performed by a particular employee. ,046 Reject null hypothesis 14. Base salary level (including e.g. pay rise) depends on employee’s achievements in project s . ,000 Reject null hypothesis 15. Career paths in the enterprise take into account project - oriented career (offer opportunities not only for climbing the career ladder from an administration clerk position to a department manager, but also for taking the position/function of a project manager or specialist i n project management office ). ,006 Reject null hypothesis 16. Success in project s is taken into account while making decisions about an internal promotion in a department where an employee works on a daily basis. ,093 Accept null hypothesis 17. Recruitme nt to the enterprise and project team members’ recruitment follows the same general principles. ,003 Reject null hypothesis 18. The selection of candidates for enterprise employees and the selection of project team members is performed based on the same professional methods. ,000 Reject null hypothesis 19. A new employee and a new project team member breaks into work in a planned manner ( there is a formal onboarding process ) . ,173 Accept null hypothesis 20. New employees rep resenting different departments are informed about the possibility of participation in projects . ,017 Reject null hypothesis 21. Formal appraisal system for projects is applied based on the same methods used in the appraisal system in permanent organizational units (e.g. appraisal based on competencies, management by objectives, 360 degree feedback). ,000 Reject null hypothesis 22. Decisions about salaries, training and promotions result from periodical appraisals in an enterprise. ,001 Reject n ull hypothesis 243 Katarzyna Piwowar-Sulej 23. Decisions about project team members’ salaries and role changes result from periodical HR appraisals in a particular project. ,280 Accept null hypothesis 24. All e mployees have access to information about the p rinciples of participation in projectV . ,001 Reject null hypothesis The presentation of asymptomatic significance. The level of significance is ,05.

Source:

author’s research project 4. The results of empirical studies with reference to the research questions Q1: Should the same operational schemes in both “courses” of personnel function be used from the perspective of an effective functioning of project-oriented organizations?

Having taken into account the first research question (Q1) the author distinguished two detaile d areas of organizational effectiveness, i.e.:

 personnel function fulfillment,  project management.

A database of common answers provided by all groups of respondents was established for the purposes of the conducted analysis. Respondents from 88% of the studied organizations stated unanimously that multidimensional consistency increases the effectiveness of the entire organization (see table 2 ). Internal personnel function consistency increases the effectiveness of personnel function fulfillment and project success probability in opinion of respondents from 85% of the organizations.

Table 2: The impact areas of personnel function internal consistency Number of enterprises ( n=100) Statement Total (n=100) Internal personnel function consistency increases project success probability. 85 (85%) Internal personnel function consistency increases the effectiveness of personnel function fulfillment. 85 (85%) Internal personnel function consistency increases the entire organization effectiveness . 88 (88%) Source: author’s research project Q2: What kind of gaps occur in the area of the personnel function internal consistency in the analyzed organizations?

The survey consisted of 24 questions focused exclusively on diagnosing internal consistency level of the personnel function. The maximum number of positive responses was thus 24 (24 questions to which the respondents answered unanimously “yes”). The highest p ossible level of personnel function consistency – in accordance with the provided responses – was not achieved in any of the analyzed organizations. The arithmetic mean was 8,74, at standard deviation of 4,87. The median was set at the level of 9, lower qu artile – 5, upper quartile – 12. Based on the statistical measures one can state that the personnel function is not consistent in the majority of organizations. Moreover, in-depth data analysis confirmed:

a. higher internal consistency of the general personnel function than the project-oriented personnel function, b. some shortcomings in the consistency of both personnel function courses (see table 3).

244 Katarzyna Piwowar-Sulej Table 3: Main shortcomings in the personnel function internal consistency – summary of the empirical research results Stage of HR function Revealed shortcomings Recruitment and selection (R&S) There are certain discrepancies in the area of recruitment between both personnel function courses.

Recruitment to permanent structures – whether internal or external – takes an open form, whereas project - oriented recruitment is usually based on addressing the offer for project participation to the individuals selected from an internal labor market. It often happens that project managers do not decide about the composition of their team, whereas line unit managers recruit staff for their projects themselves . Competence profiles are used in the process of selecting candidates for permanent organizational units, whereas it is not applied in the course of project - oriented selection. The criteria for getting a job in the first case are of substantive nature. In recruiting project team members, however, availability remains the crucial attribute of a candidate. While selecting candidates for permanent structures their project oriented competencies are not verified. Personnel appraisal The appraisals – but rather the organization - wide ones – result in the decisions about salaries, transfers and trainings. Rewarding The project staff doesn’t know the rewarding system which is used in projects. Training and development The so - called “hard training ”, related to pro ject - oriented topics, are mainly organized. The effectiveness of trainings is subject to verification. Source:

author’s research project In the responding organizations the general personnel function remains internally consistent. It, however, cannot be decided whether it supports personnel function fulfillment in a project. It results, e.g. in the absence of individuals, in an organization, featuring the human capital required for work in interdisciplinary teams.

However, the disorder revealed in a project-oriented personnel function – manifested by the absence of clear principles – results in the sense of injustice. It mainly refers to the selection process of project team members.

The above presented observations can result from the lack of HR specialists involvement in projects.

Moreover, as O. Zwikael and E. Unger-Aviram (2010) indicated, the absence of an appropriate training remains one of the main reasons of the underutilization of project team management tools. 5. Conclusions and directions for further research In the modern economic reality factors such as rapid changes in the environment require, e.g. such organizational structure adjustment which ensures immediate reaction to the occurring opportunities. In these conditions flexible organizational structures, including matrix ones, function very well, whereas organizational changes are implemented in the form of projects.

The discussed situation is implied by the two-way course of the personnel function. This particular function, in accordance with the theory of management and empirical studies presented in the article, should remain internally consistent. Such consistency should be analyzed in terms of practices applied in the area of each functional course and with regard to mutual relations between both personnel function courses. Moreover, the conducted empirical research leads to the conclusion that the general personnel function is characterized by higher consistency than a project-oriented one. The analyzed organizations revealed numerous consistency gaps between the two personnel function courses.

The practical significance of this research project consists in supplying HR departments and those involved in project management with information in how many dimensions should the personnel function be analyzed and how should its particular components be arranged to facilitate an effective project implementation and increase the effectiveness of the entire organization.

HRM is a complex and multi-dimensional object of academic studies. The organizational structures in current enterprises are more and mo re complicated. There are organizations which also implement so called process - oriented approach and process manager position s. If permanent units (departments) coexist not only with projects (project teams) but also with well-described and formalized cross-functional processes , the complexity of HR function increases even more. This issue seems nowadays to be an interesting research problem. References Banks, G.C. (2015), “The influence of internal HRM activity fit on the dynamics within the “black box”“, Human Resource Management Review, Vo. 25, Issue 4, pp 352-367.

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