Strategic Human Resource Management. A Critical Survey Of Literature. Human resource management (HRM) is defined as the effective use of

Transcription

1 Strategic Human Resource Management. A Critical Survey Of Literature Introduction Human resource management (HRM) is defined as the effective use of human resource assets for the achievement of organisational goals and continued viability and sucess of an organisations. HRM, as a concept and a framework for practice, has gained broard acceptance during the last decade from academics and practitioners around the world. More recently, the notion of strategic HRM which involves the alignment of HRM and overall organisational objectives and strategies has become popular with human resource professionals. HRM and strategic HRM supersede earlier personnel management theories and derive from the writings of a number U.S and U.K academics. Principal focus of these new concepts in management include a managerial focus; perception of employee as organisational resources, the integration of all HR functions with each other and towards organisational goals and a long term planning orientation. Most professional courses now use the term HRM than personnel management and in Malaysia, the Malaysian Institute Of Personnel Management(MIPM) is also planning to change its name to Malaysian Institute Of Human Resource

2 Management(MIHRM), even the Ministry of Human Resources was previously known as the Ministry of Labour. In this context, the challenge for HR specialists is to construct a model and a framework for practice which more accurately reflects and contributes to the development of their own diverse and unique environments. A model of HRM or strategic HRM in the Malaysian context need to incorporate the institutionalised and often adversarial nature of industrial relations systems and the paternalistic management style. Such strategic HRM models will need to be sufficiently flexible to incorporate different social, cultural, economic and legislative condition. They need to be modified according the environment. The major HRM activities comprise recruitment, selection, training, motivation, appraisal and compensation. As mentioned earlier in the latter half of the 1980s as well as at present, there have been significant change in human resource management infrastructure. Organisation are realising that the human resource is the most important asset. Such development have acted to reinforce consideration of HRM within work organisation

3 themselves as Storey and Sission (1990:62) point out, in a wide variety of work context: It seems that even the most unsophisticated organisation has issued its statement of Mission ; has declared commitment to direct communication with its most valued asset - its employees; has experimented with quality circles; looked to performance related pay; brushed down its appraisal system; reconsidered its selection procedures and declared its commitment to training. As such, HRM presents significant issues for the analysis and operation of the employment relationship. Considerable controversy exists as to the origins, characteristics and the philosophy of HRM, and its capacity to influence the nature of the relationship. In general, the debate can be characterised by four approaches: HRM as a restatement of personnel management and industrial relations policies. HRM as a fusion of personnel management and industrial relations to create a new management discipline and function. HRM as a developmental approach stressing the potential of the individual employees in terms of an investment, as opposed to a cost. HRM as a strategic/international phenomenon, making a determining contribution top corporate strategy and capable of being translated across cultures. Although these four perspectives of HRM contain strong distiguising features, they are by no means mutually exclusive. As such, it should be recognised that although many organisations will display at least one of

4 these primary perspectives, they will also probably rely on several characteristics drawn from the other three. In the U.K. as well as U.S.A., there has been search for defining characteristics that describe, analyse and explain the HRM phenomenon. In the U.K. significant commentary on HRM has been provided by authors as Guest; Pettigrew and Hendry; Storey and Poole. Guest proposes that its HRM s applicability in the field and its capacity to satisfy the key issues such as strategic integration ; high commitment ; high quality and flexibility which is the ultimate test of HRMs significance. Pettigrew and Hendry argue that HRM is fundamentally characterised by its close alignments to business strategy. Storey defines the schools of HRM as hard (focuses on a strategy and the utilisation of human resources) and soft (focuses on human relations approach, concern for people in organisations). To illustrate this he has developed a model which set out four areas of analysis: Belief and Assumption ; Strategic Response ; Line management ; and Key levers as major determinants of HRM practice. Critical perspectives on HRM in the U.K. have been provided by Legge, Armstrong and Keeney. These authors argue that the underlying values of

5 personnel management and HRM differ only in degree and that organisational constraints may well make a truly integrated HRM approach highly impractical (Legge). In addition, Armstrong notes that financial orientations may well clash with HRM prescriptions while Keeney suggest that HRM is being constructed around the highly ambiguous nature of the term which can come to mean anything to anyone. What is Human Resource Management? The nature of human resource is according to Torrington (1989:60) not yet clear. Like most innovations it tend to be whatever the person speaking at the time wants it to be. A large scale survey of corporate managers, for example, found that while 80% of corporate personnel chiefs claimed to have an overall human resources policy very few, when asked, could describe it (Marginson et al., 1988). In 1990, two journals of HRM was launched, the Human Resource Management Journal (HRMJ) and the International Journal of Human Resource Management (IJHRM). Keith Sisson, editor of HRMJ applies the term HRM in most general of senses refer to the policies, procedures and processes involved in the management of people in work organisations (1990:1). As such, the term is able to embrace more traditional subject areas such as industrial relations, personnel

6 management, organisational behaviour and industrial sociology. Similarly, Michael Poole, editor of IJHRM, argues that beyond the central aspect of HRM being the link with business policy and strategic management, the subject is perhaps best viewed as involving a synthesis of elements from international business, organisational behaviour, personnel management and industrial relations (1990: 1-2). Sission (1990: 5) suggests that there are four main features increasingly associated with HRM: 1. a stress on the integration of personnel policies both with one another and with business planning more generally; 2. the locus of responsibility for personnel management no longer resides with (or is relegated to ) specialist managers, but is now assumed by senior line management; 3. the focus shifts from management-trade union relation to management employee relations, from collectivism to individualism; 4. there is a stress on commitment and the exercise of initiative, with managers now donning the role of enabler, empowerer, and facilitator. The first point suggests that HRM is not only a strategic acitivity in itself, but one which is now central to the achievement of business objectives: the human resource is now recognised, and utilised, as the most valuable of all

7 organisational assets. The second point identifies the need for personnel mmanagers to give away responsibility for the management of human assets to senior (line) management. The third point indicates a general move away from industrial relations to employee relations, while the fourth points suggest that the creation and management of organisational culture are as important as the organisation s work itself, ith individuals offered the opportunity to realise their full potential, ably assisted by line management. Similar points emerge from the Harvard model (Beer et al., 1984) which Poole (1990: 3) endorses as the most influential and familiar approach to HRM. Thus: human resource management is vieved as strategic; it involves all managerial personnel (and especially general managers); it regard people as the most important single asset of the organisation; it is proactive in its relationship with people; and it seeks to enhance company performance, employee needs and societal well being. (Poole, 1990: 3). According to Blyton and Turnbull (1992: 4), the Harvard model is widely recognised as drawing its academic lineage from the human relations school, with a consequent emphasis on communications, teamwork and utilisation of individual talents. In contrast to the Harvard model, the more strategic approach emphasised by the Michigan School (Fombrun et al., 1984) is avowedly unitarist in outlook: a form of utilitarian-intrumentalism which

8 provides a singular endorsement of manageralist views according to Hendry and Pettigrew, (1990). Extensive and detailed consideration of the definition and meaning of HRM has been made by David Guest. In a series of articles (1987, 1989a,b, 1990, 1991), Guest defines HRM essentially in terms of four key policy goals: high commitment, high quality, flexibility and strategic integration. He argues that only when coherent strategy, directed towards these four policy goals, fully integrated into business strategy and fully sponsored by line management at all levels is applied, will the high productivity and related outcomes sought by management be achieved. Such a strategy is only likely in the presence of supportive leadership from the top. (Guest. 1990: 378). Drawing on the Harvard model, Guest also seeks to give HRM the status of a theory, thereby taking us full circle from everyday term to denote any or all of the policies, procedures involved in management of people at work to a full blown theory of management. Is there a difference between HRM and Personnel Management? What actually is the difference between HRM and personnel management? By imposing particular conditions on HRM, it is possible to argue that it is significantly different from personnel management. Moreover, the

9 contentions that HRM is proactive rather than reactive, system-wide rather than piecemeal, treats labour as social capital rather than as a variable cost, is goal orientated rather than relationship-oriented, and ultimately is based on commitment rather than compliance (Beer and Spector, 1985; Guest, 1991;Walton, 1985), Suggest that it is better than personnel management. According to Torrington (1989:65-6), personnel management has grown through assimilating a number of additional emphases to produce an everricher combination of expertise... HRM is no revolution but a further dimension to multi-faceted role. This point is echoed by Guest (1991:169) who notes that, Chameleon-like, personnel managers will innovate if others decide that innovations are required. But while suggesting that HRM is simply the latest elaboration of personnel management, Torington also acknowledges that while personnel management is supply driven, HRM is demand driven: Personnel management is directed mainly at the employees of the organisation, finding and training them, arranging their pay and contracts of employment, explaining what is expected of them, justifying what the management is doing and trying to modify any management action that could produce an unwelcome response from the employees. In contrast, the human resource manager starts not from the organisation s employees, but from the organisation s need for human resources: with the demand rather than the supply.(1989:60).

10 One of the distinction between the ways in which personnel management and HRM are typically conceived is that while personnel management is something that managers do to employees, HRM is applied to management and workforce alike. This distinction is elaborated by Legge (1989) who compares personnel management and HRM as normative models and actual practices. Though there are no single models of either personnel management or HRM, Legge concludes that at a normative level there is relatively little which differentiates the two. Only three significant differences are identified: that HRM is applied to managers as well as employees; that HRM concerns the management of people and all other resources in a business unit, and always in pursuit of the bottom line; and that HRM emphasizes the management of organisational culture as the central activity of senior management (Legge, 1989:27-8). The difference between personnel management and the human resource management had gained great importance for both academics and managers, according Fowler (1987): What s new (personnel managers will ask) about the concept that the business of personnel is the business. What is new about the view that employees give of their best when they are treated as responsible adults? Haven t these been at the heart of good personnel practice for decades? To which the answer is, of course, yes.

11 Such words are echoed by Armstrong s (1987) comment that: It could indeed be no more and no less than another name for personnel management, but, as usually perceived, at least it has the virtue of emphasising the need to treat people as key resource, the management of which is direct concern of top management as part of the strategic planning process of the enterprise. Although there is nothing new in the idea, insufficient attention has been paid to it in many organisations. The new bottle or label can help to overcome this deficiency. According to Beer and Spector, 1985: We have come to believe that the transformation we are observing amounts to more that a subtle shift in the traditional practices of personnel or the substitution of new terms for unchanging practices. Instead the transformation amounts to a new model regarding the management of human resources in organisations. Although the model is still emerging, and inconsistencies in its practice are often seen, we believe that a set of basic assumptions can be identified that underlie the policies that we have observed to be part of the HRM transformation. The new assumptions are: proactive, system-wide interventions with emphasis on fit, linking HRM with strategic planning cultural change people are social capital capable of development coincidence of interest between stakeholders can be developed seeks power equalisation for trust and collaboration open channels of communication to build trust, commitment goal orientation participation and informed choice HRM model according to Walton, 1985, is composed of policies that promote mutuality - mutual goals, mutual influence, mutual respect, mutual rewards, mutual responsibility. The theory is that policies of mutuality will elicit commitment which in turn will yield both better economic

12 performance and greater human development. In the words of Foulkes, 1986, effective HRM does not exist in a vaccuum but must be related to overall strategy of the organisation... To many personnel managers have a tendency to create and function in their own little worlds, forgetting that their primary value is helping to realise top and line management goals. In some of the U.K definition and the concept of strategic HRM in the words of Hendry and Pettigrew, 1986 are the following: what, from a review of the existing literature does strategic HRM appear to mean? We start out by noting that there are two themes which overlap one another; the first contained in the term strategic, the second in the idea, or philosophy, of human resources. The latter suggests people are a valued resource, a critical investment in an organisation s current performance and future growth. The term strategic... in this context has both established and new connotations (these are) 1. the use of planning; 2. a coherent approach to the design and management of personnel systems based on an employment policy and manpower strategy, and often underpinned by a philosophy ; 3. matching HRM activities and policies to some explicit business strategy; and 4. seeing the people of the organisation as a strategic resource for achieving competitive advantage According Torrington and Hall, 1989, HRM is directed mainly at management needs of human resources (not necessarily employees) to be provided and deployed. Threr is greater emphasis on planning, monitoring, and control, rather than on problem solving and mediation. It is totally

13 identified with management interests, being a general management activity and is relatively distant from the workforce as a whole. Underpinning personnel management are the twin ideas that people have a right to proper treatment as dignified human beings while at work, and that they are only effective as employees when their job-related personal needs are met. Underpinning human resources management is the idea that management of human resources is much the same as any other aspect of management, and getting the deployment of right numbers and skills at the right place is more important than interfering with people s personal affairs. Guest, 1990, again mentioned that the main dimension of HRM (involve) the goal of integration [ie if human resources can be integrated into strategic plans, if human resources policies cohere, if line managers have internalised the importance of human resources and this is reflected in their behaviour and if employees identify with the company, then the company s strategic plans are likely to be more successfully implemented], the goal of employed commitment, the goal of flexibility/adaptability [ie organic structures, functional flexibility], the goal of quality [ie quality of staff, performance, standards and public image].

14 In majority of these definitions several common themes stands out: that human resources policies should be integrated with strategic business planning and used to reinforce an appropriate organisational culture, that human resources are valuable and a source of competitive advantage, that they may be tapped most effectively by mutually consistent policies that promote commitment and which, as a consequence, foster a willingness in employees to act flexibly in the interests of organisation. Most HRM models, whether the U.K or the U.S, assert that employees are valued assets and, with the emphasis on commitment, adaptability and employees as a source of competitive advantage, the image might equally be presented as resourceful humans. HRM and the Labour Market Very little attempts have been made to link or relate labour market to HRM debate. There are a number of differentiated and often competing approaches, three of which include the perspectives identified as: the competitive market approach, (which sees the labour market as an arena in which competing individuals - both workers and employers - seek to maximise the benefits they can obtain from the effort-reward exchange);

15 the institutionalist approach, (which rejects the concept of individual maximising behaviour, arguing that individual preferences and decision making do not effected in isolation, but are often dependent on others); and the radical perspective. (which uses the class nature of a capitalist society as its starting point and follows the arguments that the condition for the accumulation of capital and the survival of the capitalist class, is the exploitation of labour). Each of these perspectives provides a particular focus on the HRM debate. (i) competitive perspectives which identifies HRM policies that reduce the inefficiencies of the employment relationship eg. Individual performance pay; relaxation of job demarcation and participative approaches to work reorganisation; (ii) the institutionalist approach which sees HRM initiatives aiming to promote the acceptance of managerially defined goals and priorities, and emphasisses the alteration of the perceptions of power and conflict; whilst (iii) the radical perspectives sees HRM as an attempt to reshape labour markets in order to further divide workers and create a more effective base for the exploitation of labour. HRM is more likely to be attempted where bureaucratic forms of labour management have replaced direct labour market competition. In addition, however, HRM initiatives are more likely to occur where workers have a

16 high degree of discretion in their jobs. It is interesting that these outcomes appear to follow from whichever theoretical approach is used to analyse the market. It is the evaluation of HRM in terms of the distribution of benefits between employers and employees, and between the different groups of workers, that the three perspectives differ significantly. Beardwell and Holden argue that weakness of HRM theory lies in the lack of attention it pays to workers roles in shaping the employment relationship and the effort-reward outcomes. A central question still to be answered is just how far HRM s emphasis on active worker cooperation with management is compatible with the concern to maximise the efficient utilisation of labour force as a resource. HRM and Human Resource Planning According to Beardwell and Holden, traditionally manpower planning has attempted to reconcile the availability of the supply of labour, both in the local and national labour markets, with an organisational need for the human resource. This matching process means that an organisation s management must be aware of its human resource, including numbers of employeess and their age, location in the organisation, the level of skill and knowledge and

17 the degree of and reasons for, the turnover of labour as well as both the short and longer terms needs of the organisation. Whatever systems of manpower or human resource planning prevail, the key to success is to have the right labour, in the right place, at the right time and cost. This requires forecasting, which has traditionally relied on the manpower planning statistical methodologies utilised by specialist. However, these mechanistic approaches have recently fallen from favour and a more organic processes of human resource planning have become the trend. Despite the criticisms levelled against these inflexible practices, many would argue that there is still a need to utilise some formal elements of human resource accounting if an effective HRM strategy is to be created. Manpower planning does provide management with the information needed on human resource flows for numerous crucial decision-making processes, such as recruitment and succession planning, in order to reduce shocks and disturbances within the organisation.

18 Job Design and HRM The promise of job redesign and design to provide workers with stimulating and enriched jobs, enabling both quantitative and qualitative performance improvements has been heralded by many as the means by which organisations will become more competitive. It is held that multi-skilled, highly discretionary jobs will influence the psychological state of an employee, promoting a sense of meaningfulness, responsibility and value, in which in turn is expected to produce performance improvement. Recruitment and Selection and HRM People constitute the main asset of any organisation and during conditions of intensifying national, international and global competition one of the ways companies can outstrip the competition is by attracting and retaining better teams of employees, supervisors, managers and directors. Good recruitment and selection strategy and practice therefore play a crucial role in an organisation s performance and are essential in good HRM practice. HRM and Human Resource Development(HRD) To achieve and maintain the survival of any organisation, managers have not only acquire appropriate people to resource it, they also need to train and

19 develop their employees if they are to adapt successfully to their dynamic and competitive environment. HRD, and its three key elements of learning, training and management development, is of considerable significance in today s organisations. Performance Appraisal and HRM Performance appraisal is the name given to procedures which make regular assessments of employee performance. It can be seen as a formal process for collecting information from and about staff for decision making purposes. From analysis of many organisations procedures and review of the literature on the topic, one over-riding purpose of this decision making emerges - to improve peoples performance in their exiting jobs. However, performance appraisal can achieve other objectives, such as performance review; salary review; goal setting; counselling and career guidence; feedback and identification of either trainig needs or employee potential. Employee Involvement and HRM All organisations need communication systems, whether formal or informal, to function, and over the past decade there has been an increase in

20 recognition by both management and employers the creation of an effective communication structure is vital importance. Communication is a highly complex process which can operate either formally (eg. Joint Consultative Committee, JCC), or informally, at any and all levels of an organisation. This can be either one or two way in nature and can also be influenced perceptionally by external factors. These processes have considerable and significant influence on an organisation and its workforce, and their related policies are being heavily influenced by HRM practices. Due to complex nature of communication, even the simplest method is open to be misundersood or misconstrued, or of even sending conflicting messages, all of which detract from organisational effectiveness. In an attempt to overcome these misconceptions and in recognition of the importance of communication, over recent years employee involvement has been recognised as one of the important instruments of communication.

21 Bibliography 1. Beardwell, I. and Holden, L. (1994), Human Resource Management. A Contemporary Perspective. Pitman Publishing. 2. Beer, M and Spector, B. (1985) Corporatewide transformations in HRM, in Blyton, P and Turnball, P. (1992) Reassessing HRM, Sage Publication, U.K. 3. Blyton, P and Turnball, P. (1992) Reassessing Human Resource Management, Sage Publication, U.K. 4. Dessler (1991), Personnel/Human Resource Management, Prentice Hall 5. Fombrun, C., Tichy, N.M. and Devanna, M.A. (1984) Strategic HRM. New York: Jon Wiley. 6. Fowler, A. (1987) when CEO Discover HRM, Personnel Management, in Blyton, P and Turnball, P. (1992) Reassessing HRM, Sage Publication, U.K. 7. Guest, D (1987) Human Resource Management and Industrial Relations, Journal of Management Studies, in Blyton, P and Turnball, P. (1992) Reassessing HRM, Sage Publication, U.K.

22 8. Guest, D.E (1989) Human Resource Management: Its Implications for Industrial Relations and Trade Unions in J. Storey, New Perspectives On HRM. London. 9. Guest, D.E (1989) Personnel and HRM: can you tell the difference? Personnel Management in Blyton, P and Turnball, P. (1992) Reassessing HRM, Sage Publication, U.K. 10. Hendry, C and Pettigrew, A. (1990) Human resource management: an agenda for the 1990s, International Journal Of HRM in Blyton, P and Turnball, P. (1992). Reassessing HRM, Sage Publication. U.K. 11. Keenoy, T (1990). HRM: a case of the wolf in sheep clothing? Personnel Review in Blyton, P and Turnball, P. (1992). Reassessing HRM, Sage Publication. U.K. 12. Keenoy, T (1990) HRM: rhetoric, reality and contractions, International Journal Of HRM in Blyton, P and Turnball, P. (1992). Reassessing HRM, Sage Publication. U.K. 13. Legge, K (1989) HRM: a critical analysis, in J. Storey, new Perspectives on HRM. London. 14. Nankervis, A and Compton, R (1994), Readings in Strategic Human Resource Management, Nelson, Melbourne, Australia. 15. Poole, M (1990) Editorial: HRM in international perspective. International Journal of HRM in Blyton, P and Turnball, P. (1992). Reassessing HRM, Sage Publication. U.K. 16. Sission, K (1990), Introducing the HRM Journal, Human Resource management Journal in Blyton, P and Turnball, P. (1992). Reassessing HRM, Sage Publication. U.K. 17. Storey, J (1989), New perspectives on HRM. London: Routledge. 18. Storey, J and Sission, K. (1990) Limits to transformation: human resource management in the British context, Industrial Relations Journal

23 in Blyton, P and Turnball, P. (1992). Reassessing HRM, Sage Publication. U.K. 19. Torrington, D and Hall, L (1989) Personnel Management, A new approach, Prentice Hall, London. 20. Walton, R.E(1985) From control to commitment in the workplace Harvard Business Review in Blyton, P and Turnball, P. (1992). Reassessing HRM, Sage Publication. U.K.