Human resource

management
Chapter 17

Work and Organizational Behaviour - Lecture 17: Human resource management

Introduction
In this lecture we will:
Introduce and explain the concepts and practices of Human
Resource Management (HRM)
Summarise key HR functions
Discuss theoretical issues surrounding the HRM debate
Explain the meaning and conceptual basis of International HRM
Explain how developments in global capitalism affect corporate
and HR strategies in large firms

Work and Organizational Behaviour - Lecture 17: Human resource management

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

Work and Organizational Behaviour - Lecture 17: Human resource management

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

Work and Organizational Behaviour - Lecture 17: Human resource management

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
Work and Organizational Behaviour - Lecture 17: Human resource management

Table 17.1 - OB Theories and HRM Practices

Work and Organizational Behaviour - Lecture 17: Human resource management

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...
Work and Organizational Behaviour - Lecture 17: Human resource management

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
Work and Organizational Behaviour - Lecture 17: Human resource management

Table 17.2 - Work

Responsibilities of HR
managers
HR managers can be
specialists or generalists and
their exact remit of duties will
vary depending on their role
and company

Work and Organizational Behaviour - Lecture 17: Human resource management

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
Work and Organizational Behaviour - Lecture 17: Human resource management

Figure 17.1 - The Fombrun, Tichy and Devanna Model

Work and Organizational Behaviour - Lecture 17: Human resource management

Figure 17.2 - The Harvard Model of HRM

Work and Organizational Behaviour - Lecture 17: Human resource management

Figure 17.3 - The Warwick

Model of HRM

Work and Organizational Behaviour - Lecture 17: Human resource management

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

Work and Organizational Behaviour - Lecture 17: Human resource management

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)
Work and Organizational Behaviour - Lecture 17: Human resource management

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

Work and Organizational Behaviour - Lecture 17: Human resource management

Figure 17.4 - A Matching Model of Strategic HRM

Work and Organizational Behaviour - Lecture 17: Human resource management

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

Work and Organizational Behaviour - Lecture 17: Human resource management

Figure 17.5 - The Resource

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

Work and Organizational Behaviour - Lecture 17: Human resource management

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

Work and Organizational Behaviour - Lecture 17: Human resource management

Figure 17.6 - A Model of the HRM--Performance Linkage

Work and Organizational Behaviour - Lecture 17: Human resource management

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

Work and Organizational Behaviour - Lecture 17: Human resource management

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

Work and Organizational Behaviour - Lecture 17: Human resource management

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)

Work and Organizational Behaviour - Lecture 17: Human resource management

Figure 17.7 - The International HRM Cycle

Work and Organizational Behaviour - Lecture 17: Human resource management

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
convergence-divergence 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

Work and Organizational Behaviour - Lecture 17: Human resource management

Figure 17.8 - Diagram reflecting the Convergence/Divergence Debate on IHRM

Work and Organizational Behaviour - Lecture 17: Human resource management

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

Work and Organizational Behaviour - Lecture 17: Human resource management