1 Introduction business strategies and enable the organization to achieve its goals. In essence,strategic HRM is conceptual;it is a general notion of how inte gration or'fit'between HR and business strategies is achieved,the benefits of taking a longer-term view of where HR should be going and how to get there,and how coherent and mutually supporting HR strategies should be developed and implemented.Importantly,it isalso about how members of the HR function should adopt a strategic approach on a day-to-day basis This means that they operate as part of the management team,ensure that HR activties support the achievement of gies on a continuous basis and are consciously concerned with seeing that their activities add value To understand strategic HRM it is first necessary to appreciate the concepts of human resource management and strategy as covered in Chapters 1 and 2 respectively in Part 1(the framework of strategic HR).The concept of strategic human resource management(strategic HRM)is then examined in detail in Chapter 3 Part 2 of the book is concerned with the roles of management and HR in developed.The book concludes with a toolkit providing guidance on devel- oping HR strategy through a strategic review
Introduction Strategic human resource management (SHRM) is an approach to the development and implementation of HR strategies that are integrated with business strategies and enable the organization to achieve its goals. In essence, strategic HRM is conceptual; it is a general notion of how integration or ‘fit’ between HR and business strategies is achieved, the benefits of taking a longer-term view of where HR should be going and how to get there, and how coherent and mutually supporting HR strategies should be developed and implemented. Importantly, it is also about how members of the HR function should adopt a strategic approach on a day-to-day basis. This means that they operate as part of the management team, ensure that HR activities support the achievement of business strategies on a continuous basis and are consciously concerned with seeing that their activities add value. To understand strategic HRM it is first necessary to appreciate the concepts of human resource management and strategy as covered in Chapters 1 and 2 respectively in Part 1 (the framework of strategic HR). The concept of strategic human resource management (strategic HRM) is then examined in detail in Chapter 3. Part 2 of the book is concerned with the roles of management and HR in strategic HRM and with the processes of developing and implementing HR strategies. Part 3 covers each of the main areas of HR in which strategies are developed. The book concludes with a toolkit providing guidance on developing HR strategy through a strategic review. 1
3 Part 1 The conceptual framework of strategic HRM
Part 1 The conceptual framework of strategic HRM 3
5 The concept of human resource management In the first section of this chapter human reso rce management(HRM)is defined in general and as a system.Its aims and characteristics are described in later sections of the chapter. HRM DEFINED Human resource management is defined as a strategic and coherent approach to the management of an organization's most valued assets-the Boxall et al(2007)describe HRM as'the management of work and people towards desired ends'.John Storey (1989)believes that HRM can be regarded as a'set of interrelated policies with an ideological and philo- sophical underpinning'.He suggests four aspects that constitute the mean- ingful version of HRM:1)a particular constellation of beliefs and assumptions;2)a strategic thrust informing decisions about people management;3)the central involvement of line managers;and 4)reliance upon a set of'levers'to shape the employment relationship.HRMis further defined by the two models of HRM developed by what might be described as its founding fathers
1 The concept of human resource management In the first section of this chapter human resource management (HRM) is defined in general and as a system. Its aims and characteristics are described in later sections of the chapter. HRM DEFINED Human resource management is defined as a strategic and coherent approach to the management of an organization’s most valued assets – the people working there, who individually and collectively contribute to the achievement of its objectives. Boxall et al (2007) describe HRM as ‘the management of work and people towards desired ends’. John Storey (1989) believes that HRM can be regarded as a ‘set of interrelated policies with an ideological and philosophical underpinning’. He suggests four aspects that constitute the meaningful version of HRM: 1) a particular constellation of beliefs and assumptions; 2) a strategic thrust informing decisions about people management; 3) the central involvement of line managers; and 4) reliance upon a set of ‘levers’ to shape the employment relationship. HRM is further defined by the two models of HRM developed by what might be described as its founding fathers. 5
6 The conceptual framework of strategic HRM The matching model of HRM One of the first explicit statements of the HRM concept was made by the Michigan School(Fombrun,Tichy and Devanna,1984).They held that HR systems and the organization structure should be managed in a way that is congruent with organizational strategy (hence the name 'matching model'). They further explained that there is a human resource cycle(an adaptation of which Figure 1.1)which consists of four generic processeso functions that are performed in all organizations.These are: selection-matching available human resources to jobs appraisal-performance management; rewards-the reward system is one of the most under-utilized and that 'business must perform in the present to succeed in the future'; development-developing high-quality employees. The Harvard framework The other pioneers of HRM were the Harvard School of Beeret al(1984),who developed what Boxall (1992)calls the Harvard framework'.This framework is based on their belief that the problems of historical personnel management can only be solved: when general managers develop a viewpoint of how they wish to see employees involved in and developed by the enterprise,and of what HRM Rewards Selection Figure 1.1 The human resource cycle Source:Fombrun,Tichy and Devanna,1984
The matching model of HRM One of the first explicit statements of the HRM concept was made by the Michigan School (Fombrun, Tichy and Devanna, 1984). They held that HR systems and the organization structure should be managed in a way that is congruent with organizational strategy (hence the name ‘matching model’). They further explained that there is a human resource cycle (an adaptation of which is illustrated in Figure 1.1), which consists of four generic processes or functions that are performed in all organizations. These are: l selection – matching available human resources to jobs; l appraisal – performance management; l rewards – ‘the reward system is one of the most under-utilized and mishandled managerial tools for driving organizational performance’; it must reward short- as well as long-term achievements, bearing in mind that ‘business must perform in the present to succeed in the future’; l development – developing high-quality employees. The Harvard framework The other pioneers of HRM were the Harvard School of Beer et al (1984), who developed what Boxall (1992) calls the ‘Harvard framework’. This framework is based on their belief that the problems of historical personnel management can only be solved: when general managers develop a viewpoint of how they wish to see employees involved in and developed by the enterprise, and of what HRM 6 l The conceptual framework of strategic HRM Selection Performance Rewards Development Performance appraisal Figure 1.1 The human resource cycle Source: Fombrun, Tichy and Devanna, 1984
The concept of human resource management7 policies and practices may achieve those goals.Without either a centra philosophy or a strategic vision-which can be provided only by general managers-HRM is likely to remain a set of independent activities,each guided by its own practice tradition. Beer and his colleagues believed that,'Today,many pressures are demanding a broader,more comprehensive and more strategic perspective with regard to the organization's human resources.'These pressures have created a need forA longer-term perspective in managing people and consideration of people as potential assets rather than merely a variable cost'.They were the first to underline the HRM tenet that it belongs to line managers.They also stated that'Human resource management involves all management decisions and action that affect the nature of the relationship between the organization and its employees-its human resources.' The Harvard school suggested that HRM had two characteristic features: 1)line managers accept more responsibility for ensuring the alignment o competitive strategy and personnel policies:2)personnel has the mission of setting policies that govern how personnel activities are developed and ented in ays that em mor e mutually reinfor Haryard framework as modelled by Beersso Stakeholder shareholder management government unions HRM policy HR outcomes: Long-term choices: consequences individual gruence well-bei flown resource effectiveness ·workforce and nage nen labour market ·la values Figure 1.2 The Harvard framework for human resource management Source:Beer et al,1984
policies and practices may achieve those goals. Without either a central philosophy or a strategic vision – which can be provided only by general managers – HRM is likely to remain a set of independent activities, each guided by its own practice tradition. Beer and his colleagues believed that, ‘Today, many pressures are demanding a broader, more comprehensive and more strategic perspective with regard to the organization’s human resources.’ These pressures have created a need for ‘A longer-term perspective in managing people and consideration of people as potential assets rather than merely a variable cost’. They were the first to underline the HRM tenet that it belongs to line managers. They also stated that ‘Human resource management involves all management decisions and action that affect the nature of the relationship between the organization and its employees – its human resources.’ The Harvard school suggested that HRM had two characteristic features: 1) line managers accept more responsibility for ensuring the alignment of competitive strategy and personnel policies; 2) personnel has the mission of setting policies that govern how personnel activities are developed and implemented in ways that make them more mutually reinforcing. The Harvard framework as modelled by Beer et al is shown in Figure 1.2. The concept of human resource management l 7 Figure 1.2 The Harvard framework for human resource management Source: Beer et al, 1984 Stakeholder interests: • shareholders • management • employees • government • unions HRM policy choices: • employee influence • human resource flow • reward systems • work systems HR outcomes: • commitment • congruence • cost- effectiveness Long-term consequences: • individual well-being • organizational effectiveness • societal well- being Situational factors: • workforce characteristics • business strategy and conditions • management philosophy • labour market • unions • task technology • laws and social values