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People Management and Psychology

Week 1 Introduction to HRM

Course Overview
Week 1 - Introduction to HRM Week 2 HR Planning Week 3 Job Design Week 4 Recruitment and Selection Week 5 Performance Management Week 6 -Training Week 7 - Leadership Week 8 - Conflict Week 9 Power Week 10 Review

Definitions of HRM
No universal definition. Many academics have written on the subject with no one definition agreed. Storey (1995:5) defines HRM as a distinctive approach to employment management which seeks to achieve competitive advantage through the strategic deployment of a highly committed and capable workforce, using an array of cultural, structural and personnel techniques

Features of HRM Models and Theories

There are four main features which emerge in HRM models and theories Integration of human resource policies with each other and with the organisations business plan. HRM is a key instrument of business strategy, viewing employees as important assets. Responsibility for managing people moves from personnel specialists to senior managers. Specialists provide a consultancy service for line managers. Employee relations shift away from collective bargaining dialogue between management and unions. Instead, direct discussion between management and individual employees is encouraged. A stress on commitment to the organisation and personal initiative
* Sisson K. (1990) Introducing the Human Resource Management Journal, Human Resource Management Journal 1(1): 1-11

HRM Overview
HRM has theoretical roots in the US Business Schools. Historically: A first wave arose with Storeys New Perspectives on HRM (1989) The second wave arose in consideration of: Social and economic context of HR functions HR and organizational performance New organizational forms and HR HR and knowledge management (1990s) The third wave (current) looks at the strategic implications of HRM, known as Strategic Human Resource Management (SHRM) Other debates exist around: The differences between HRM and personnel management Employee manipulation

A Framework for HRM Analysis

Factors determining its place in the organisation Age, Size, Ownership Trade Union presence Type of Leadership or Management Style History e.g. Public to private Organisational Sector (Telecoms, Airline) Culture of organisation (driven by all of the above)

Soft Commitment, Quality & Flexibility Partnership Hard Resources like any other Cost Efficiency Drive for performance Lean Production Staff & Management Soft and Hard HRM may not necessarily be incompatible. There may be different variants.

Personnel Mgt Planning Perspective People Management Perspective Reactive Crisis Mgt input Cost Efficiency Productivity

HR Mgt Proactive Strategic Planning

Resource rather than cost, Overall commitment and flexibility, Increased efficiency Unitarism High Commitment work practices

Employee Relations Perspective Structure Perspective Role Perspective

Pluralism direct responsibility of mgt Bureaucratic structures Specialist Function

Need for change and flexibility Line Manager Empowerment

What is HRM? (1)

HRM is linked to the management of human capital:
It is linked to a view of the employee as an economic asset It can be described as a strategic approach to managing employment relations that emphasizes human core competences to create competitive advantage This is achieved by distinctive employment practices It draws on organizational psychology (areas of motivation, role perception etc) It is linked with employment relations and problematic issues connected with this, and forms part of sociological studies

What is HRM? (2)

HRM relates to a workforce that embodies a mix of skills and capabilities
Commitment and learning are emphasized

HRM links HR functions to OB problems HRM entails:

An economic contractual relationship (pay/effort bargain) A legal and social relationship A psychological contract

HRM is built on the premise that the human capital of the employee can have strategic importance and value
Hence employment policy is coherent when integrated with strategic policy Some element of conflict of interest between workers and employers nevertheless remains, and the management of this is down to HR

OB Theories and HRM Practices

The Psychological Contract

The psychological contract relates to the two-way exchange between employee and employer Rousseau (1995) defines it as: Individual beliefs, shaped by the organization, regarding terms of an exchange agreement between individuals and their organization... It is viewed as a lever for individual commitment, motivation and task performance beyond expected outcomes...

HRM Functions
Millward et al (2000) and Ulrich (1997) identify eight key HRM functions:
Strategic planning the organizations HR needs/forecasts Staffing Training and development Motivation - requires a rewards system Maintenance - includes health and safety Managing relationships - participation schemes/collective agreements Managing change in the workplace Evaluation procedures to institute and communicate HR Policy

Theoretical Models of HRM

The following models provide an analytical framework for studying HRM and a means of linking OB theories to HR
They thereby serves as an heuristic device relating to HR policies

The Fombrun, Tichy and Devanna model (1984)

An early model emphasising the interrelatedness of HR activities

The Harvard mode

An heuristic device for explaining HR practices Has an analytical base (factors/stakeholders/choices) but links with attitudinal features (commitment/competence)

The Warwick model

Extends the Harvard framework The five elements of the model are: outer context; inner context, business strategy content, HRM context and HRM content Shows links between HR end environmental factors

The Fombrun, Tichy and Devanna Model

The Harvard Model of HRM

The Warwick Model of HRM

Strategic HRM (1)

The call for HRM to link with corporate strategy was strong by the late 1980s Strategy is a pattern of decisions/actions undertaken by management hierarchy to accomplish corporate goals. It can be conducted at
The corporate level The strategic business unit level The functional grass roots level (Porter, 1980)

Strategic HRM (SHRM) has roots in manpower planning but it is unclear whether it is an outcome or a process

Strategic HRM (2)

A distinction is possible between upstream and downstream strategic decisions (Purcell) and this has informed the SHRM debate Three orders of decisions can be identified Upstream or high level corporate decisions are first order Downstream or structural matters are second order HR matters are third order However, strategy in HR decisions can be determined in the context of the first order decisions (Purcell, 1989)

The Matching Model

Another area of debate relates to the fit of HR and business strategies This is called the concept of integration, which has three aspects:
Linking HR policies and practices with strategic management Internalizing the significance of HR with HR managers Fostering organizational commitment to strategic goals

This is known as the matching model

A Matching Model of Strategic HRM

The Resource Based Model

An alternative theory is the resource based model, which links resource aspects with strategic policy This is connected with the view of the employee as an asset to be cultivated, a feature of human capital
Barney (1991) argues that four characteristics of human capital are important: Sustaining competitive advantage Inimitability (of product or service) Rarity (of core competence) Non-substitutable product or service

The Resource Based View of the Firm The relationship among resource endowments and sustained competitive advantage

SHRM: Does it work?

SHRM theories work on the premise that a link between business and HR strategies will lead to high performance the HRMperformance link
SHRM is a genre of academic research

Overall, only a minority of workplaces have followed the premises set out by proponents of SHRM
Some studies have found positive correlations between bundles of SHRM practices and superior organizational performance However, evidence is not conclusive

A Model of the HRM--Performance Linkage

International HRM (1)

A central concern is the transferability of HRM models at a global level, because organizations seek to leverage resources at an international level in the teeth of fierce competition
This affects patterns of national employment relations. HR practices affect: Global recruitment and selection Training and reward management at an international level Recruitment of expatriates

It is necessary to consider aspects of the host country, as the employment relationship is affected by factors such as:
Cultural/legislative context National regulatory framework

International HRM (2)

A debate has occurred about the distinction between International HRM (IHRM) and Strategic International HRM (SIHRM):
IHRM is viewed as pro-Western in ethos SIHRM is viewed as attached to MNCs, connecting IHRM to strategy SIHRM contains a tension between global competitiveness or centralization and issues of local specification of strategy and adjustment to cultural sensitivities TNCs/MNCs need to achieve a balance between these conflicting forces

International HRM (3)

Tensions between SIHRM and IHRM can also be felt in the following areas:
Recruitment and selection practices and employment regimes Reward apportionment Performance appraisal (arguably best performed in the host country) Transfer of distinctive competences from head office to local level

The International HRM cycle tabulates these kinds of issues (see the next slide)

The International HRM Cycle

International HRM (4)

Does SIHRM reflect the convergence of HR practices and the interests of US capitalism? Answers to this question form part of the convergencedivergence debate It is argued that TNCs contribute to a homogenous or universalist HRM ethos (ie convergence) On the other hand, there are local practices or rationalities of HRM in varying countries (ie divergence)
It is argued that universalist/individualist Anglo-Saxon HRM cannot easily locate in the same manner across diverse geographical contexts of TNCs This said, the idea of an Asian HRM is problematic; but much diversity of practice does exist across the world

Overall, some degree of convergence does exist but it is not absolute

Diagram reflecting the Convergence/ Divergence Debate on IHRM

Paradoxes in HRM
A paradox occurs when managers try to accomplish a goal in a manner contradictory to the very goals the organization seeks to attain
Critics have drawn on the idea of a paradox of consequences deriving from a tension between HRM policies and practices For example, tension between a psychological contract and formal practices or procedures etc The soft versus hard aspects of HR might be said to express some degree of ambiguity about the aims of HRM Karen Legge (2005) has exposed the rhetoric of soft or caring HRM as being a foil for a managerial agenda This can be seen at a practical level for instance the tension between short term goals (accounting/financial) and longer term investment - for instance in staff training