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Session 2 – SHRM: models and concepts

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What is HRM?

“The term personnel management [describes] the policies, processes and procedures involved in the management of people in work organisations..primarily concerned with employment regulation … the ways in which people are selected, appraised, trained, paid, disciplined” (Sisson, 1989)

“The main dimensions of HRM [involve] the goal of integration [with business strategy and between HR policies], the goal of employee commitment, the goal of flexibility, the goal of quality”(Guest, 1987)

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Defining Human Resource Management

Generic approach: – Performs personnel management activities

Distinctive approach:– Carries out people-oriented organisational

activities.

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The human factor

‘Managing people’ is an impossibility (Watson, 2001)

When people go to work their intentions are to use the organisation for their own ends as the organisation is concerned to use them

Negotiated Order and Contested Terrains (Edwards, 1983; Silverman, 1970)

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The human factor (2)

“[PM] is concerned with assisting [senior management] to meet their purposes by obtaining the work effort of humans, exploitation of those efforts and dispensing with them when they are no longer required. Concern may be shown with welfare, justice or satisfaction, but only insofar as this is necessary for controlling interests to be met and always at least cost.” (Watson, 1986)

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The human factor (3)

SHRM is “the means of aligning the management of human resources with the strategy of the business” (Walker, 1992)

“SHRM aims to provide a sense of direction in an often turbulent environment so that organisational needs can be translated into coherent and practical policies” (Armstrong and Long, The Reality of Strategic HRM, 1994)

Aligning the Organizational Strategy with HRM / HRD strategy

Aligning employee expectations with strategyAligning employee expectations with strategy

Defining human resource issuesDefining human resource issues

Developing human resource strategiesDeveloping human resource strategies

Managing the HR function

Sharing successSharing success

Enabling and evaluating performance

Enabling and evaluating performance

Developingeffectivemanagers

Developingeffectivemanagers

Designing the organisation

Designing the organisation

Definingstaffingneeds

Definingstaffingneeds

Strategicstaffing

Strategicstaffing

DevelopingcapabilitiesDevelopingcapabilities

Source: Walker, 1992, p. 12

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Managing organisations strategically

Strategies are patterns that emerge over time (planned and unplanned) to allow the organisation to carry on into the future (Quinn, 1980; Mintzberg, 1994)

“The application of over-rationale, linear programmes of HRM as a means of securing competitive success is shown to be at odds with experience in the UK and elsewhere” (Whipp, 1992:33)

In short, integrating human resourcing with broader strategies is highly complex

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Managing HR strategically

Leopold, et al (2005:21) suggest that “ … strategic human resourcing must involve the establishing of clear principles about ‘how people are to be treated’ and the shaping of practices that implement these values and principles”.

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Generic term: HRM objectives

Organisation: Job design and role building Resourcing: HR planning, R & S Performance management: agreed objectives and

employment assessment HRD: Training and Development Reward management: pay and other benefits Employee Relations: communication, industrial

relations, employee involvement and participation.

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HRM roles and objectives

staffing

Line mgrs

Consultantsadvisers

Sub-contractors

HRSpecialists

HRGeneralists

admin

Change mgt

performance

HRM

Models of the HR Function How should HR be organised as a function to be

most effective?

Karen Legge (1978) identified 3 types of ‘personnel’ practitioners:– Conformist innovator – helps the organisation

achieve its objectives through cost saving, increasing productivity and reducing conflict.

– Deviant innovator – stands outside the conventional organisation aims. Independent, innovative, challenging. Modern examples may be proposals on work-life balance, engagement, knowledge management.

– Problem solver – conventional role providing day to day assistance to line managers.

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Personnel vs. HRM (Guest, 1987)

Personnel Mgt HRM

Time and planning perspective

Short term, reactive, ad hoc marginal

Long term, proactive, strategic, integrated

Psychological contract Compliance Commitment

Control systems External controls Self- control

Employee relations perceptive

Pluralist, collective, low trust Unitarist, individual, high trust

Preferred structures/systems

Bureaucratic/mechanistic, centralised, formal defined

roles

Organic. Devolved, flexible roles

Roles Specialist/professional Largely integrated into line mgt

Evaluation criteria Cost minimisation Maxi utilisation (human asset accounting)

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HRM Roles (Storey, 1992)

Strategic

Tactical

Intervention Non-Intervention

ChangeMaker

Advisor

Regulator Facilitator(handmaiden)

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HRM vs. Personnel Management

More strategic Integrated Managerial Unitarist Individualistic Aimed at achieving organisational goals and

maximising competitive advantage

The Development of Personnel / HRM

Key environmental developments– Internal developments External developments

Social system Economic globalisation

Technical system Technological development

The social reformer – mid 19C – Robert Owen – exploitation - managers

The acolyte of benevolence – Welfare Officer – Cadbury – commitment

The humane bureaucrat – Scientific mgt – maximise efficiencies – Personnel

The consensus negotiator - +WW2 – expertise – TU – collectives

Organisation man – late 60s – integration with mgt

Manpower analyst – 80s – manpower planning

HRM – 84 / Asset Mgt – 2000+

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HRM Strategy development1. Separation Model

Torrington, et al (2005) point to 5 ways in which the relationship between business strategy and HRM strategy is played out:

1. Separation model: no relationship

OrganisationalStrategy

HRStrategyNo relationship

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HRM Strategy development2. ‘Best’ Fit (Contingency) Model

OrganisationalStrategy

HRStrategy

Growing recognition of the importance of people in the achievement of organisational strategy.

(Unitarist) E.g., Fombrum, et al, (1984) [slides 17 & 18]; Schuler & Jackson (1987)

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External Fit (Vertical Integration)(HR policies support business strategy)

EconomicForces

PoliticalForces Cultural

Forces

Mission and Strategy

OrganisationStructure

HRM

Trainingand

development

Appraisal

The Michigan HR resource cycle

Effectiveselection

Employeeperformance

Rewardsfor

performance

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Internal Fit (Horizontal Integration)(HR policies are consistent with each other)

Selection Appraisal

Rewards

Training

Performance

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HRM Strategy development3. Dialogue Model

OrganisationalStrategy

HRStrategy

This requires the need for two-way communication and some debate. Thus,

feasibility of the chosen strategy choice and alternative possibilities are analysed (pluralist)

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HRM Strategy development4. Holistic Model

OrganisationalStrategy

HRStrategy

People in the organisation are the key to competitive advantage. HR Strategy is not just the means for achieving organisationalStrategy (the ends), but an end in itself. HR strategy becomes critical. Baird et al, (1983) ‘there can be no strategy without HR

strategy’. Boxall (1996) develops this idea in relation to the ‘resource based form’, Where mutual development of strategies

is key.

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HRM Strategy development5. HR driven Model

OrganisationalStrategy

HRStrategy

If people are the key to competitive advantage, then we need to build on our people strengths. Here, if the potential of an

organisation's people affects the achievement of any plannedStrategy, it would be sensible to take account of this

When developing the strategic direction. Butler (1988/89), a shift from human resources as the implementors of strategy to the

drivers of strategy (resource based)

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3 Theoretical Perspectives

1. There is ‘one best way’ (Universalist approach) of managing human resources in order to improve business performance

2. There is a need to ‘align’ (fit) employment policies / practices with the requirements of business strategy in order that the latter will be achieved. Thus, different HR strategies needed for different business strategies

3. Resource Based View – focus on the quality of human resources available to the organisation and their ability to learn and adapt more quickly than their competitors

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Universalist approach(Guest 1989)

Strategic integration: ensuring HRM is fully integrated into strategic planning and that line managers use HRM practices

– Commitment: ensuring employees feel bound to the organisation and are committed to high performance via their behaviour

– Flexibility: ensuring an adaptable organisation structure, and functional flexibility based on multiskilling

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Universalist approach(Guest 1989) (2)

– Quality: ensuring a high quality of goods and services through high-quality, flexible employees

One model of labour management – a high-commitment model – is related to high organisational performance, in all contexts, irrespective of the particular competitive strategy of the organisation

Is this too prescriptive / are goals attainable (Purcell, 1991) / what of internal tensions (Ogbanna & Whipp, 1999)

The Harvard model of HRM

Stakeholderinterests

Situationalfactors

HRM policychoices

HRoutcomes

Long termconsequences

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Harvard Model of HRM (Beer et al. 1984)

Stakeholder interests

Shareholders

Management

Employee groups

Government

Community

Unions

Situational factors

Workforce characteristic

Business strategy & conditions

Management philosophy

Labour market

Unions

Task technology

Laws and societal values

HR policy choices

Employee influence

Human resource flow

Rewards systems

Work systems

HR outcomes

Commitment

Competence

Congruence

Cost effectiveness

Long term consequences

Individual well being

Organisational effectiveness

Societal well being

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“Best Fit”: SHRM

Fit or contingency approach (Fombrun et al. 1984)– External or vertical fit: HR policies support

business strategy

– Internal or horizontal fit: HR policies are consistent with each other

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Resource-Based Approach(Boxall, 1996)

Concerned with the relationships between internal resources (human resources are only one), strategy and firm performance. The focus is not just on the behaviour of human resources (fit approach), but on the skills, knowledge, attitudes and competencies which underpin this

Briggs & Keogh (1999): business excellence is not just about ‘best practice’ or ‘leapfrogging the competition’, but about the intellectual capital and business intelligence to anticipate the future, today.

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Resource-Based Approach(Barney, 1991)

States that in order for a resource to result in sustained competitive advantage it must meet four criteria:

1. Valuable – matching competencies with needs of the firm

2. Rarity – cognitive ability

3. Inimitable – history and difficulty of duplication (culture)

4. Non-substitutable – over time may become unique and transferable across other products

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Resource-Based Approach(Wright, et al (1994)

BusinessStrategy

ExternalForces

HRM Strategy& Practices

Employee Skills,

AbilitiesEmployeeBehaviour

BusinessPerformance

(Sustained CA)

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Problems matching HR to business strategy (Armstrong & Long)

Evolutionary nature of business strategy The absence of a clear business strategy The qualitative nature of HR issues

– such as commitment, motivation

National Legal requirements– override any strategic requirements

Businessstrategy

HRstrategy

HR effectiveness

HRpractices

HRoutcomes

Quality of goodsand services

Productivity

Financialperformance

Possible links between HRM and business performance

Adapted from Guest et al (2003)

Role of HR

Organisational PerformanceThe Rational (Hard) – Emotional balance (Soft)

Corporate strategy

Results (Performance)

Successful HRM prescriptions6 key requirements for HR departments to add value and ensure organisational survival (Rucci 1997) :

Create change – eliminating unnecessary rules and encouraging flexibility and risk-takingDevelop principled leaders – courage and ethicsPromote economic literacy and ‘big picture’ thinking amongst managersCentre on the customer – external customer centred activity in performance reviews, promotion criteria and reward decisionsMaximise service/minimise staff – to internal customers at minimum costSteward the values – not just ‘values police’ but embedding values in R&S, training, performance management and reward.

See case study AEHN p71 Kew & Stredwick

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References

Armstrong, M (2001) A Handbook of Human Resource Practice, 7th Edition, Kogan Page, Chapters 3 &19 Beardwell, I. & Holden, L. (2001) HRM: A Contemporary Approach (3rd edn) Harlow, FT/Prentice Hall Chs

1 & 2 Boxall, P. and Purcell, J. (2008) Strategy and HRM cited in Kew, J. and Stredwick, J. (2010, 4) Human

Resource Management in a Business Context. London, CIPD Collins, J. C. & Porras, J. I. (1998) Built to Last, London: Century Ltd Guest, D., J. Michie, N. Conway and M. Sheehan (2003) 'Human resource management and corporate

performance in the UK', British Journal of Industrial Relations, 41, 2, June. p. 291-304. Higgs, M,. & Dulewicz, V. (2002) Making Sense of Emotional Intelligence, ASE, Granada Learning Ltd Kew, J., and Stredwick, J., (2010) Human Resource Management in a Business Context, London, CIPD Mintzberg, H. (1998) The Structuring of Organisations in Mintzberg, H., Quin, J.B. and Ghoshal, S., The

Strategy Process. Hemel Hempstead, Prentice Hall Europe. Torrington, D, Hall, L and Taylor, S (2005) Human Resource Management, 6th edition, Prentice Hall,

Chapters 1&2 Walton J, (1999), Strategic Human Resource Development, 1st edition, Pearson Education, Chapter 5 Watson J, Harris L, Leopold J, (2005), The Strategic Management of Human Resources, 1st edition, FT

Prentice Hall, Chapter 1