HUMAN RESOURCE MANAGEMENT

BMG346J2

Week Two: Strategic Human Resource Management

Norma Heaton Tel: 90366632

Room1D14 Email: ne.heaton@ulster.ac.uk

 OBJECTIVES
• To define and clarify strategic HRM and
HRM strategy
• To articulate the link between business
strategy and HR strategy
• To assess theoretical approaches to strategic
HRM
 DEFINING HUMAN RESOURCE
MANAGEMENT
“… a strategic and coherent approach to the management of
an organisation‟s most valued assets - the people working
there who individually and collectively contribute to the
achievement of its objectives ”
(Armstrong, 2006:3)

Torrington, Hall & Taylor (2005) argue that HRM is difficult

to define, since it is used in two ways:
• to describe the generic activities of managing people
(HRM mark 1)
• to denote a particular approach to managing people which
is clearly distinct from personnel management (HRM mark
2)
 HRM mark 1: the generic term
• This refers to the key objectives to be
achieved:
– Staffing objectives – planning, recruiting,
selecting
– Performance objectives – training, developing,
rewarding
– Change-management objectives
– Administration objectives – compliance with
legislation, arrangements for pay etc
 Defining HRM via Roles and Objectives

Performance Objectives Change-management Objectives

Staffing Objectives Administrative Objectives

HUMAN RESOURCE MANAGEMENT

Line Managers Human Resource Generalists

Consultants and Advisers Human Resource Specialists

Subcontractors
 Why the interest in HRM mark 2?

• The 1980s business climate

* Increased product market competition
* Recession
* New technology
• Government desire to reform industrial relations
* Firms encouraged to introduce new practices
• Restructuring of the economy
* Decline of old industries, rise in service sector
• Recognition of the need to improve British
management
• Influence of the „excellence‟ literature
 The Harvard Framework of HRM (US)

Stakeholders
Interests:
Shareholders
Management
Employee
Government
Community HRM policy HR outcomes: Long-term
Unions choices: Commitment consequences:
Employee Competence Individual
well-being
influence Congruence Organisational
HR flow Cost effectiveness
Situational Reward systems effectiveness Societal
Factors: Work systems well-being
Workforce
Business
conditions
Management
philosophy
Labour market
Unions
Laws and values
Attractiveness/advantages of the
Harvard model
• Recognises different stakeholder interests
• Acknowledges the importance of “trade
offs”
• Widens the context of HRM to include
“employee influence”
• Acknowledges a broad range of contextual
influences
• Emphasises strategic choice
 Strategic HRM and HR strategy
• Tyson‟s (1995) definition of HR strategy: “the
intentions of the corporation both explicit and
covert, toward the management of its employees,
expressed through philosophies, policies and
practices” (Cited Torrington, Hall and Taylor,
2005:28)
• HR strategy need not be written or explicit
• Strategy may be formed rather than formulated
 Business and HR strategy
• Separation model
– No relationship between organisational and HR strategy
• Fit model
– Recognition of the importance of people in achievement of
organisational strategy
• Dialogue model
– Recognises the need for two-way communication
• Holistic model
– Represents people as the key to competitive advantage
• HR driven
– Places HR strategy in prime position
Theoretical perspectives of Strategic
Human Resource Management
• Is there one best way to carry out HR
activities? UNIVERSALIST
APPROACH/BEST PRACTICE
• Should HR policies and activities “fit”
particular circumstances? BEST FIT
• Should the focus be on long-tem
sustainability? RESOURCE BASED VIEW
 UNIVERSALIST APPROACH
Guest‟s four policy goals for
HRM
1. Strategic integration
* Ensuring HRM is integrated into strategic planning
2. Commitment
* Ensuring that employees feel bound to the organisation
3. Flexibility
* Ensuring an adaptable structure
4. Quality
* Ensuring high quality goods and services through high
quality, flexible employees
The Universalist Approach (UK) - Guest (1989)
HRM Policies HR Outcomes Organisational Outcomes

Organisational/job design High job performance

Strategic integration
Management of change High problem-solving,
change, innovation
Recruitment & selection
Commitment Innovation
Socialisation

Appraisal, training,
development Flexibility/adaptability High cost effectiveness

Reward systems
Low turnover, absence,
Communication Quality grievances
 Components of best practice HRM
(adapted from Marchington and
Wilkinson,2005)
• Employment security and internal labour markets
• Selective hiring and sophisticated selection
• Extensive training, learning and development
• Employee involvement, information sharing and
worker voice
• Self-managed teams / teamworking
• High compensation contingent on performance
• Reduction of status differentials
Bundles of human resource practices
• EI/employment security/reduction of
differentials
• Teamworking/incentives/training
• Selection/flexibility/internal promotion
• The more the better – but how many are
needed?
• What happens if achievement of one
contradicts another?
 HRM and performance – the USA
studies
• Huselid (1995) survey of 1,000
organisations concluded that “the
magnitude of the return for investments in
high performance work practices is high”
• Pfeffer (1998) argues that best practice
HRM has the potential to have a positive
impact irrespective of size, sector or country
• Ref: Marchington and Wilkinson (2005)
 HRM and performance – studies in
the UK
• West‟s (2002) research in the NHS shows three
practices have a strong impact on performance –
training, teamwork and appraisal
• Guest (2003) looked at the extent of adoption of
best practice HR and its effectiveness and
concluded that research methods used impact on
results
– Subjective measures lead to a positive message
– Objective measures lead to a less consistent message
 Questions about the best practice-
performance link
• Direction of causality
• Little consistency in HR practices in the bundle
• Variation in proxies used to measure performance
• Dangers in relying on self-report scores from HR
managers
• Doubts about how much autonomy organisations
have in decision making
 Universal application of best
practice HR?
• Boxall and Purcell stress the need to understand
where, how and when it is applied
• Marchington and Wilkinson express doubts about
it at a conceptual level
– It works best on the assumption that employers have a
long-term perspective
– Easier to engage in best practice HRM when labour
costs form a low proportion of costs
– Is “flexible” employment compatible with “best
practice” HRM?
 Critique of best practice in
Beardwell, Holden and Claydon
(2004)
• The validity of the research methods?
• Problems associated with inconsistencies in
the models
• Direction of causality
• Applicability to organisations in highly
competitive markets
• Underlying theme of “unitarism”
 Best-fit HRM
• Assesses the extent to which there is
vertical integration between an
organisation‟s business strategy and its
HRM policies and practices
• Demonstrate vertical integration through
– Linking business goals to individual objectives
– Measurement and rewarding of business goals
Designing HRM to fit organisational
goals
• Life cycle models
– Start-up
– Growth
– Maturity
– decline
• Competitive advantage models
– Cost reduction
– Quality enhancement
– Innovation
 Life cycle models
• Start-up
– Need for committed, flexible staff
– Little formalised practice
– HR combined with other managerial tasks
• Growth
– Formal and systematic HR procedures
– Need for specialist advice
– Maintenance of employee motivation and morale
 Life cycle models (2)
• Maturity
– “golden age” with high commitment practices
– May be followed by increasing focus on control of
labour costs
– Doubts about sustainability of positive psychological
contract
• Decline
– Rationalisation and redundancy
– Services contracted out
Competitive advantage models: Cost
reduction
• Resourcing
– Ad hoc
– Tight performance management
• Learning and development
– Poor on non-existent
• Employee relations
– Little EI or communication
• Reward management
– Low pay levels, no additional benefits
• HR function
– Lacking influence
 Quality enhancement
• Resourcing
– Sophisticated recruitment and selection
• Learning and development
– Extensive training, long-term focus
• Employee relations
– Well developed systems
• Reward management
– Competitive pay and benefits
• HR function
– Potentially large influence
 Innovation
• Resourcing
– Focus on competencies and transferable skills
• Learning and development
– Individual responsibility
• Employee relations
– Informal communications
• Reward management
– Cafeteria reward system, some share ownership or profit sharing
• HR function
– Advice and support, potentially some influence
 Limitations of best fit models
(Marchington and Wilkinson)
• Models are deterministic and top down in
orientation
• There are multiple influences on organisations
• Managers do not have complete control over
workers
• Lack of attention to institutional forces
• Categorisation of “real” organisations can be
difficult
 Limitations of best-fit models
(Beardwell, Holden and Claydon)
• Reliance on rational planning approach
• Lack of sophistication in description of
generic strategies
• Employee interests ignored
• Lack of internal context
 Resource based view of the firm
• RBV analyses strategy from “inside out”
• Focuses on internal resources and the unique
factors which enable organisations to remain
viable
• Competitive advantage requires four attributes:
– Value: the resource makes a difference
– Rarity: there is a shortage of these resources
– Imperfect imitability: difficult for other employers to
copy these resources
– Non-substitutable: resources cannot be rendered
obsolete or unnecessary
 Problems with the resource-based
view (Torrington, Hall and Taylor)
• Focus on “firms” and “competitive
advantage” make this less relevant for the
public sector
• Too much time may be spent on measuring
and not everything that is measured is of
critical value
 Conclusions
• Best practice suggests there is one best way in
which HRM should be delivered and that this has
a positive impact on organisational performance
• Best fit HRM is the idea that HR practice should
and does vary between organisations, depending
on business strategy or product market
circumstances
• The resource based view focuses on internal
resources
 References
• Armstrong,M. (2006) A Handbook of Human Resource Management.
London: Kogan Page
• Beardwell,I., Holden,L. and Claydon,T. (2004), Human Resource
Management: a contemporary approach, London: FT/Prentice Hall
• Boxall,P. and Purcell,J. (2000) Strategic human resource management:
where have we come from and where should we be going?,
International Journal of Management Reviews, Vol 2, Issue 2, pp183-
203
• Guest,D. (1989) Personnel and HRM: can you tell the difference?
Personnel Management, Jan 1989
• Guest,D., Michie,J., Conway,N. and Shehan,M. (2003) Human
Resource Management and performance, British Journal of Industrial
Relations, Vol 41, No 2, pp291-314
•
References ctd
Huselid,M. (1995) The impact of human resource practices on
turnover, productivity and corporate financial performance, Academy
of Management Journal, Vol 38, No 3, pp635-672

• Marchington,M. and Wilkinson,A. (2005) Human Resource

Management, London: CIPD
• Pfeffer,J. (1998) The human equation; building profits by putting
people first, Boston: Harvard Business School Press
• Torrington, D., Hall,L. and Taylor,S.(2005) Human Resource
Management. London: FT/Prentice Hall
• West,M. (et al) (2002) The link between the management of
employees and patient mortality in acute hospitals, International
Journal of Human Resource Management, Vol 13, No 8, pp1299-1310