Strategic HRMLecture 4
Strategic HRMAims of the session:
To outline the concept of ‘strategic’ HRM & explore several of its components
To critically evaluate some of the assumptions upon which strategic HRM is founded
Approaches to strategic HRM At least three theoretical approaches can be identified:
1. A resource-based view of the firm & the perceived value of human capital (Barney 1991).
2. Alignment of employment policies & practices with business strategy – fit or contingency approach (the Harvard framework).
3. A ‘one best way’ of managing human resources – the ‘universalist approach.’
Barney (1991)
For a resource to result in sustained competitive advantage it must meet four criteria:
1. It must be valuable
2. It must have rarity
3. It needs to be inimitable
4. It must be non-substitutable
Rarity is related to value...The assumption that the most valued
competence is cognitive ability due to future needs for adaptability & flexibility,
Cognitive ability is distributed unevenly & those with high levels of it will be rare.
Inimitable
Competitive advantage is difficult to determine – where or what does it come from?
If an individual in Firm A goes to Firm B they can never re-create what they did in Firm A – why?
Because of ‘social complexity’ & ‘causal ambiguity’.
Non-substitutable
In the short term human resources can be substituted by other resources e.g. technology.
In the long run the human resource cannot be substituted because it’s the only resource that doesn’t become obsolete.
Fit or contingency approaches to Strategic HRMFit or contingency approaches focus on two areas -
external & internal:
External: that HR strategy fits with the demands of business strategy
Internal: that all HR policies & activities fit together into a coherent whole & are mutually reinforcing
Strategic HRMExternal pressure
HR strategy Fit Business strategy
The fit between HRStrategy &business strategyP.92 Tyson
Internal pressure
Universalist approachDavid Guest’s model (1989) an example of this
approach – HRM as ‘best practice’
One model of labour-management – a ‘high commitment’ model – is related to high organisational performance in all contexts
Has four central components
Guest’s model (1989)1: A set of HRM policy goals
2: A set of HRM policies
3: A ‘cement’ that binds the system
4: A set of organisational outcomes
Guest’s Model
HRM Outcomes HRM Policy goals
HRM Policies
‘Cement’ that binds the whole - culture
HRM’s policy goals1. Strategic Integration: ensure that HRM is fully integrated into strategic
planning; HRM policies cohere across policy areas & organisational hierarchies
2. Commitment: concerned with binding employees to the organisation & securing commitment to high performance
3. Flexibility: the organisation as a whole must be flexible, adaptive & receptive to innovation, at the individual level it calls for functional flexibility
1. Quality: can only be delivered through the development of quality staff & this is a priority for senior management
HRMs goals & policies are…A package - each is necessary to ensure the right kind
of organisational outcomes - acceptance of the ‘package’ is the basis of strategic integration
Goals only achieved if the right policies are in place & this is one element that makes it strategic
There are 6 key policy areas
The HRM policies1. Recruitment, selection & socialisation
2. Appraisal, training & development
3. Organisation & job design
4. Communication systems
5. Reward systems
6. Change management
The ‘cement’Support from key leaders at every level of the
organisation
A ‘strong’ culture, moulded by either the present leadership or powerful ‘founding fathers’
Conscious strategy to pursue success through full & effective utilisation of human resources
HRM’s organisational outcomesHigh job performance
High acceptance of innovation & change
High cost effectiveness
Low labour turnover, absences & grievances
Guest’s model: a caveatFour preconditions are necessary for it to have a chance of success:
1. A ‘green-field site’
2. A professional management team
3. Intrinsically rewarding work
4. Security of employment
Guest’s ModelValues underpinning it are unitarist
Contrasts with the values of personnel management which emphasised collective & pluralist values
Question over the role of trade unions
How is the ‘model’ translated into practice?
Through the management of performance at every level of the organisation
By the use of tools such as performance management & performance appraisal
Critiques of Strategic HRMAmbiguity over the term itself - what does HRM
mean?
In USA is a generic term & used interchangeably with personnel management
Hard & soft versions are a rewording of Theory X and Theory Y
Torn between individualism & collectivism
Ability of line managers to ‘manage’ people
Legge: contradictions in HRMSerious problems with ‘integration’ - HRM
strategies will always be subordinate to business strategy
Decentralisation of costs/profits to SBUs leads to short-term thinking which undermines the ‘developmental’ direction of HRM
Flexibility vs. quality
Teamwork vs. individual pay
Legge (1996) critique of GuestCommitment to what?
The organisation?
The job?
Work group?
Career?
Family?
Noone (1992)HRM is a set of management practices –one
approach & not a general theory of management
HRM tries to resolve long-standing core issues of labour management - power, control, conflict, resistance, dependence & consent – it’s doing nothing new
Its origins in USA are also important
SummaryHR strategy must be context specific
It’s impossible to replicate what another organisation does
Difficult to say which HR policies are critical & are the key triggers for change
Outcomes not always clear
Relationship between HR strategy & business strategy is problematic
Further reading for this sessionBarney, J. (1991) ‘Firm Resources and Sustained Competitive Advantage’, Journal of Management, 17 (1): 99-120
Guest, D. (1987) Human Resource Management and industrial relations, Journal of Management Studies, 24, 503-21
Guest, D. (1989) HRM: Implications for industrial relations in Storey, J. (ed) New Perspectives on Human Resource Management. London: Routledge
Keenan, A and Paterson, J. (2008) Human Resource Management Ch 2
Legge, K. (1993) ‘HRM: A Critical Analysis in Storey, J. (ed) New Perspectives on Human Resource Management. London: Routledge
Legge, K. (1995) ‘HRM: rhetoric, reality and hidden agendas’ in Storey, J. (ed) New Perspectives on Human Resource Management. London: Routledge
Storey, J. 1995) (ed.) Human Resource Management: A Critical Text. London: Routledge
Storey, J and Sisson, K. (1993) Managing Human Resources and Industrial Relations. Buckingham: Open University Press