8 The conceptual framework of strategic HRM According to Boxall(1992)the advantages of this model are that it: incorporates recognition of a range of stakeholder interests; recognizes the importance of 'trade-offs',either explicitly or implicitly, between the interests of owners and those of employees as well as between various interest groups; widens the context of HRM to include 'employee influence',the organi- ation of work and the associated question ofs supervisory style; acknowledges a broad range of contextual influences on management's choice of strategy,suggesting a meshing of both product-market and socio-cultural logics: emphasizes strategic choice-it is not driven by situational or environ mental determinism. HRMisseen in the UK'as a substantially different model unitaris m individualism,high commitment and strategic alignment'(Guest,1987). However,the Harvard model has exerted considerable influence over the theory and practice of HRM,particularly in its emphasis on the fact that HRMis the concem of management in general rather than the HR function in particular.As Boxall,Purcell and Wright(2007)point out,'HRM is not just what HR departments do.' HUMAN RESOURCE SYSTEMS Human re source manage ment operates through human resource systems as illustrated in Figure 1.3.These bring together in a coherent way: HR philosophies,describing the overarching values and guiding principles adopted in managing people; HR strategies,defining the direction in which HRM intends to go; HR policies,which are the guidelines defining how these values,prin ciples and strategies should be applied and implemented in specific areas of HRM; HR processes,consisting of the formal procedures and methods used to HR practices,consisting of the informal approaches used in managing people; which enable HR strategies,policies and practices to be implemented according to plan
According to Boxall (1992) the advantages of this model are that it: l incorporates recognition of a range of stakeholder interests; l recognizes the importance of ‘trade-offs’, either explicitly or implicitly, between the interests of owners and those of employees as well as between various interest groups; l widens the context of HRM to include ‘employee influence’, the organization of work and the associated question of supervisory style; l acknowledges a broad range of contextual influences on management’s choice of strategy, suggesting a meshing of both product-market and socio-cultural logics; l emphasizes strategic choice – it is not driven by situational or environmental determinism. HRM is seen in the UK ‘as a substantially different model built on unitarism, individualism, high commitment and strategic alignment’ (Guest, 1987). However, the Harvard model has exerted considerable influence over the theory and practice of HRM, particularly in its emphasis on the fact that HRM is the concern of management in general rather than the HR function in particular. As Boxall, Purcell and Wright (2007) point out, ‘HRM is not just what HR departments do.’ HUMAN RESOURCE SYSTEMS Human resource management operates through human resource systems as illustrated in Figure 1.3. These bring together in a coherent way: l HR philosophies, describing the overarching values and guiding principles adopted in managing people; l HR strategies, defining the direction in which HRM intends to go; l HR policies, which are the guidelines defining how these values, principles and strategies should be applied and implemented in specific areas of HRM; l HR processes, consisting of the formal procedures and methods used to put HR strategic plans and policies into effect; l HR practices, consisting of the informal approaches used in managing people; l HR programmes, which enable HR strategies, policies and practices to be implemented according to plan. 8 l The conceptual framework of strategic HRM
The concept of human resource management9 HUMANAGENENTE HR philosophies rganization Resourcing management retatioe and selection ob/role desi Communication Health and safety management →HR services Figure 1.3 HRMactivities AIMS OF HRM (1990)remark:'HRM systems can be the source of organizational capabilities that allow firms to learn and capitalize on new opportunities.' Dyer and Holder(1988)analyse management's HR goals under the dimensions of contribution(what kind of employee behaviour is expected?)
AIMS OF HRM The overall purpose of human resource management is to ensure that the organization is able to achieve success through people. As Ulrich and Lake (1990) remark: ‘HRM systems can be the source of organizational capabilities that allow firms to learn and capitalize on new opportunities.’ Dyer and Holder (1988) analyse management’s HR goals under the dimensions of contribution (what kind of employee behaviour is expected?), The concept of human resource management l 9 HUMAN RESOURCE MANAGEMENT HR philosophies HR strategies, policies, processes, practices and programmes Human capital management Organization Resourcing Learning and development Reward management Employee relations Design Workforce planning Organizational learning Job evaluation/ market surveys Industrial relations Development Recruitment and selection Individual learning Grade and pay structures Employee voice Job/role design Talent management Management development Contingent pay Health and safety Performance management Employee well-being HR services Knowledge management Employee benefits Communications Corporate social responsibility Figure 1.3 HRM activities
10 The conceptual framework of strategic HRM employee attachment and identification?). Twelve policy goals for HRM have been identified by Caldwell(2004): 1.managing people as assets that are fundamental to the competitive advantage of the organization; 2.aligning HRM policies with business policies and corporate strategy: 3.developing a close fit of HR policies,procedures and systems with one another; 4.creating a flatter and more flexible organization capable of responding more quickly to change 5.encouraging teamworking and cooperation across internal organiza- tional boundaries; 6.creating a strong customer-first philosophy throughout the organization empowering employees to manage their own self-development and learning; 8.developing reward strategies designed to support a performance-driven culture 9.improving employee involvement through better internal communi- cation: 10.building greater employee commitm ent to the o rganization 11.increasing line management responsibility for HR policies; 12.developing the facilitating role of managers as enablers. But as Dyer and Holder(1988)emphasize:'HRM goals vary according to competitive choices,technologies or service tangibles,characteristics of their employees(eg could be different for managers),the state of the labour market and the societal regulations and national culture.'And Boxall, Purcell and Wright (2007)note thatThe general motives of HRM are multiple.' Specifically,HRM is concerned with achieving objectives in the areas summarized below. Organizational effectiveness Distinctive human resource practices shape the core competencies that determine how firms compete'(Cappelli and Crocker-Hefter,1996). Extensive research has shown that such practices can make a significant impact on firm performance.HRM strategies aim to support programmes for improving organizational effectiveness by developing policies in such areas as knowledge management,talent management and generally creating a great place to work'.This is the big idea'as described by Purcell et a
composition (what headcount, staffing ratio and skill mix?), competence (what general level of ability is desired?) and commitment (what level of employee attachment and identification?). Twelve policy goals for HRM have been identified by Caldwell (2004): 1. managing people as assets that are fundamental to the competitive advantage of the organization; 2. aligning HRM policies with business policies and corporate strategy; 3. developing a close fit of HR policies, procedures and systems with one another; 4. creating a flatter and more flexible organization capable of responding more quickly to change; 5. encouraging teamworking and cooperation across internal organizational boundaries; 6. creating a strong customer-first philosophy throughout the organization; 7. empowering employees to manage their own self-development and learning; 8. developing reward strategies designed to support a performance-driven culture; 9. improving employee involvement through better internal communication; 10. building greater employee commitment to the organization; 11. increasing line management responsibility for HR policies; 12. developing the facilitating role of managers as enablers. But as Dyer and Holder (1988) emphasize: ‘HRM goals vary according to competitive choices, technologies or service tangibles, characteristics of their employees (eg could be different for managers), the state of the labour market and the societal regulations and national culture.’ And Boxall, Purcell and Wright (2007) note that ‘The general motives of HRM are multiple.’ Specifically, HRM is concerned with achieving objectives in the areas summarized below. Organizational effectiveness ‘Distinctive human resource practices shape the core competencies that determine how firms compete’ (Cappelli and Crocker-Hefter, 1996). Extensive research has shown that such practices can make a significant impact on firm performance. HRM strategies aim to support programmes for improving organizational effectiveness by developing policies in such areas as knowledge management, talent management and generally creating ‘a great place to work’. This is the ‘big idea’ as described by Purcell et al 10 l The conceptual framework of strategic HRM
The concept of human resource management11 (2003),which consists of a'clear vision and a set of integrated values'.More specifically,HR strategies can be concerned with the development of continuous improvement and customer relations policies Human capital management The human capital of an orga nization consists of the people who work there and on whom the success of the business depends.It has been defined by Bontis et al (1999)as follows:'Human capital represents the human factor in the organization;the combined intelligence,skills and expertise that gives the organization its distinctive character.The human elements of the organi. zation are those that are capable of learning,changing,innovating and ation. Human capital can be regarded as the prime asset of an organization,and businesses need to invest in that asset to ensure their survival and growth. to assess and satisfy future people needs and to enhance and develop the inherent capacities of peopletheir contributions,potential and employa- bility-by providing learning and continuous development opportunities.I involves the operation of 'rigorous recruitment and selection procedures, performance-contingent incentive compensation systems,and management development and training activities linked to the needs of the busine (Becker et al,1997).It also means engaging in talent management-the process of acquiring and nurturing talent,wherever it is and wherever it is eeded,by us ing a number of interdependent HRM policies and practices in the fields of resourcing,learning and development,performance management and succession planning. The process of human capital management(HCM)as described in the next chapter is closely associated with human resource management.However, the focus of HCM is more on the use of metrics(measurements of HR and people performance)as a means of providing guidance on people management strategy and practice Knowledge management Knowledge management is'any process or practice of creating,acquiring, capturing,sharing and using knowledge,wherever it resides,to enhance learning and performance in organizations'(Scarborough et al,1999).HRM aims to support the development of firm-specific knowledge and skills that are the result of organizational learning processes
(2003), which consists of a ‘clear vision and a set of integrated values’. More specifically, HR strategies can be concerned with the development of continuous improvement and customer relations policies. Human capital management The human capital of an organization consists of the people who work there and on whom the success of the business depends. It has been defined by Bontis et al (1999) as follows: ‘Human capital represents the human factor in the organization; the combined intelligence, skills and expertise that gives the organization its distinctive character. The human elements of the organization are those that are capable of learning, changing, innovating and providing the creative thrust which if properly motivated can ensure the long-term survival of the organization.’ Human capital can be regarded as the prime asset of an organization, and businesses need to invest in that asset to ensure their survival and growth. HRM aims to ensure that the organization obtains and retains the skilled, committed and well-motivated workforce it needs. This means taking steps to assess and satisfy future people needs and to enhance and develop the inherent capacities of people – their contributions, potential and employability – by providing learning and continuous development opportunities. It involves the operation of ‘rigorous recruitment and selection procedures, performance-contingent incentive compensation systems, and management development and training activities linked to the needs of the business’ (Becker et al, 1997). It also means engaging in talent management – the process of acquiring and nurturing talent, wherever it is and wherever it is needed, by using a number of interdependent HRM policies and practices in the fields of resourcing, learning and development, performance management and succession planning. The process of human capital management (HCM) as described in the next chapter is closely associated with human resource management. However, the focus of HCM is more on the use of metrics (measurements of HR and people performance) as a means of providing guidance on people management strategy and practice. Knowledge management Knowledge management is ‘any process or practice of creating, acquiring, capturing, sharing and using knowledge, wherever it resides, to enhance learning and performance in organizations’ (Scarborough et al, 1999). HRM aims to support the development of firm-specific knowledge and skills that are the result of organizational learning processes. The concept of human resource management l 11
12 The conceptual framework of strategic HRM Reward management HRM aims to enhance motivation,job engagement and commitment by introducing policies and processes that ensure that people are valued and rewarded for what they do and achieve and for the levels f skill and compe tence they reach. Employee relations The aim is to create a climate in which productive and harmonious relation ships can be maintained through partnerships between management and employees and their trade unions. Meeting diverse needs HRM aims to develop and implement policies that balance and adapt to the needs of its stakeholders and provide for the management of a diverse work- force,taking into account individual and group differences in employment, personal ne s,work style and aspirations and the provision ofequal oppor tunities for all. Bridging the gap between rhetoric and reality The research conducted by Gratton()found that there was generally a wide gap between the sort of rhetoric expressed above and reality. Managements may start with good intentions to do some or all of these siness prio ities,short-termism,limited support from line managers,an inadequate infrastructure of supporting processes,lack of resources,resistance to change and lack of trust.An overarching aim of HRM is to bridge this gap by making every attempt to ensure that aspirations are translated into sustained and effective action.To do this,members of the HR function have to remember that it is relatively easy to come up with new and innovatory policies and practice.The challenge is to get them to work.They must appreciate,in the phrase used by Purcell et al(2003),that it is the front-line managers who bring HR policies to life,and act accordingly. CHARACTERISTICS OF HRM The characteristics of the HRM concept are that it is: diverse strategic,with an emphasis on integration;
Reward management HRM aims to enhance motivation, job engagement and commitment by introducing policies and processes that ensure that people are valued and rewarded for what they do and achieve and for the levels of skill and competence they reach. Employee relations The aim is to create a climate in which productive and harmonious relationships can be maintained through partnerships between management and employees and their trade unions. Meeting diverse needs HRM aims to develop and implement policies that balance and adapt to the needs of its stakeholders and provide for the management of a diverse workforce, taking into account individual and group differences in employment, personal needs, work style and aspirations and the provision of equal opportunities for all. Bridging the gap between rhetoric and reality The research conducted by Gratton et al (1999) found that there was generally a wide gap between the sort of rhetoric expressed above and reality. Managements may start with good intentions to do some or all of these things, but the realization of them – ‘theory in use’ – is often very difficult. This arises because of contextual and process problems: other business priorities, short-termism, limited support from line managers, an inadequate infrastructure of supporting processes, lack of resources, resistance to change and lack of trust. An overarching aim of HRM is to bridge this gap by making every attempt to ensure that aspirations are translated into sustained and effective action. To do this, members of the HR function have to remember that it is relatively easy to come up with new and innovatory policies and practice. The challenge is to get them to work. They must appreciate, in the phrase used by Purcell et al (2003), that it is the front-line managers who bring HR policies to life, and act accordingly. CHARACTERISTICS OF HRM The characteristics of the HRM concept are that it is: l diverse; l strategic, with an emphasis on integration; 12 l The conceptual framework of strategic HRM