A HANDBOOK OF HUMAN RESOURCE MANAGEMENT PRACTICE

Transcription

1 A HANDBOOK OF HUMAN RESOURCE MANAGEMENT PRACTICE 11th edition CONTENTS TEACHING NOTES 1. The practice of human resource management 2. Strategic human resource management 3. HR strategies 4. Human capital management 5. The role and organization of the HR function 6. The role of the HR practitioner 7. The impact of HRM on performance 8. International HRM 9. Corporate social responsibility 10. Human resource management research methods 11. Competency-based HRM 12. Knowledge management 13. High-performance work systems 14. Work 15. The employment relationship 16. The psychological contract 17. The essence of organizational behaviour 18. Characteristics of people 19. Motivation 20. Engagement and commitment 21. How organizations function 22. Organizational culture 23. Organization design 24. Organization development 25. Change management 26. Job, role, competency and skills analysis 27. Job and role design and development 28. People resourcing strategy

2 29. Human resource planning 30. People resourcing practice 31. Recruitment and selection 32. Selection interviewing 33. Selection tests 34. Talent management 35. Career management 36. Introduction to the organization 37. Release from the organization 38. The process of performance management degree feedback 40. Learning and development strategy 41. The process of learning and development 42. Learning and development programmes and events 43. How people learn 44. Organizational learning 45. Management development 46. Reward management 47. Job evaluation 48. Market rate analysis 49. Grade and pay structures 50. Contingent pay 51. Rewarding special groups 52. Employee benefits, pensions and allowances 53. Managing reward systems 54. The employee relations framework 55. Employee relations processes 56. Employee voice 57. Employee communications 58. Health and safety 59. Employee well-being 60. HR policies 61. HR procedures 62. HR information systems

3 Teaching notes 1. THE PRACTICE OF HUMAN RESOURCE MANAGEMENT Objective of the session Provide an overview of the concept of human resource management and its characteristics. Learning outcomes of the session The session will cover: The meaning of HRM The objectives of HRM The policy goals of HRM The characteristics of HRM How HRM developed as a concept Reservations expressed about HRM The context in which HRM operates The ethical dimensions of HRM Key concepts and terms In addition, definitions will be provided of the following concepts and terms: AMO theory Matching model of HRM Commitment Mutuality Contingency theory Pluralism Hard HRM Resource-based view Harvard framework Soft version of HRM HRM system Strategic integration Human resource management (HRM) Contents These notes contain: An outline of the session A concept map for HRM Definitions of key concepts and terms Questions and discussion points A bibliography

4 Session outline The meaning of human resource management (HRM) A strategic, integrated and coherent approach to the employment, development and well-being of the people working in organizations. Other definitions All management decisions and action that affect the nature of the relationship between the organization and its employees its human resources (Beer et al, 1984). A distinctive approach to employment management which seeks to achieve competitive advantage through the strategic deployment of a highly committed and capable workforce, using an integrated array of cultural, structural and personnel techniques (Storey, 1995). The management of work and people towards desired ends (Boxall et al, 2007). The objectives of HRM To ensure that the organization is able to achieve success through people. To increase organizational effectiveness and capability. To be concerned with the rights and needs of people in organizations through the exercise of social responsibility. The policy goals of HRM (David Guest) Strategic integration. High commitment. High quality. Flexibility. The characteristics of HRM Human resource management covers a vast array of activities and shows a huge range of variations across occupations, organizational levels, business units, firms, industries and societies (Boxall et al, 2007). It can:

5 be diverse (hard or soft); be strategic; be business-oriented; focus on mutuality a state that exists when management and employees are interdependent and both benefit from this interdependency; take a unitary view the belief that management and employees share the same concerns and it is therefore in both their interests to work together; treat people as assets or human capital. How HRM developed as a concept Emerged in the 1980s in the form of: the matching model HR systems and the organization structure should be managed in a way which is congruent with organizational strategy (Fombrun et al, 1984); the Harvard framework 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 policies and practices may achieve those goals (Beer et al, 1984). Reservations expressed about HRM Promises more than it can deliver HRM is an 'optimistic but ambiguous concept'; it is all hype and hope (David Guest, 1991). Manipulative control by compliance (Hugh Willmott, 1993). Hostile to interests of employees Sadly, in a world of intensified competition and scarce resources, it seems inevitable that, as employees are used as means to an end, there will be some who will lose out. They may even be in the majority. For these people, the soft version of HRM may be an irrelevancy, while the hard version is likely to be an uncomfortable experience (Karen Legge, 1998). The context in which HRM operates HRM practices are contingent on the circumstances in which the organization operates, ie the internal and external environment.

6 Contingency theory tells us that definitions of HR aims, policies and strategies, lists of activities and analyses of the role of the HR department are valid only if they are related to the situation of the organization. The ethical dimensions of HRM The application of HRM requires the exercise of social responsibility it must be concerned with the interests (well-being) of employees and act ethically with regard to the needs of people in the organization and the community.

7 HUMAN RESOURCE MANAGEMENT HR philosophies Human capital management HR strategies, policies, processes, practices and programmes Corporate social responsibility Organization Resourcing Learning and development Reward management Employee relations Design Human resource planning Organizational learning Job evaluation/ market surveys Industrial relations Development Recruitment & selection Individual learning Grade and pay structures Employee voice Job/role design Talent management Management development Contingent pay Communications Health and safety Performance management Employee benefits Employee well-being Knowledge management HR services The HRM system

8 Concepts Practices humanism organization development human capital management high performance resource-based view people resourcing psychological contract Human resource management learning and development mutuality performance management engagement and commitment reward motivation employee relations Concept map

9 Definitions of key concepts and terms AMO theory The formula Performance = Ability + Motivation + Opportunity to Participate provides the basis for developing HR systems that attend to employees interests, namely their skill requirements, motivations and the quality of their job. Commitment The strength of an individual's identification with, and involvement in, a particular organization. Contingency theory HRM practices are dependent on the organization s environment and circumstances. Definitions of HR aims, policies and strategies, lists of activities and analyses of the role of the HR department are valid only if they are related to the situation of the organization. Hard HRM People are important resources through which organizations achieve competitive advantage. The focus is on the quantitative, calculative and businessstrategic aspects of managing human resources in as 'rational' a way as for any other economic factor. Harvard framework The belief held by Michael Beer and his Harvard colleagues (1984) 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 policies and practices may achieve those goals. HR system HRM as an integrated and coherent bundle of mutually reinforcing practices. Human resource management (HRM) A strategic, integrated and coherent approach to the employment, development and well-being of the people working in organizations. Matching model of HRM The view held by the Michigan school (Fombrun et al, 1984) that HR systems and the organization structure should be managed in a way which is congruent with organizational strategy. Mutuality A state that exists when management and employees are interdependent and both benefit from this interdependency. Pluralism The belief that the interests of employees will not necessarily coincide with that of their employers. Resource-based view The view that it is the range of resources in an organization, including its human resources, that produces its unique character and creates competitive advantage.

10 Soft HRM Treating employees as valued assets, a source of competitive advantage through their commitment, adaptability and high quality (of skills, performance and so on) (Storey, 1989). Strategic integration The ability of the organization to integrate HRM issues into its strategic plans ensure that the various aspects of HRM cohere, and provide for line managers to incorporate an HRM perspective into their decision making.

11 Questions and discussion points 1. Describe the essential characteristics of human resource management (HRM). 2. What are the differences, if any, between HRM and personnel management? 3. In a seminal article (Personnel Management, 1987), Alan Fowler wrote that the real difference between HRM and personnel management is not what it is but who is saying it. In a nutshell, HRM represents the discovery of personnel management by chief executives. Keenoy (1997) referred to Storey s (1995) remark that HRM is a symbolic label and suggested that it masked managerial opportunism. To what extent are these statements valid today? 4. What are the key aims of human resource management? 5. One of your colleagues says to you that they dislike the term human resource management because it implies that employees are simply being treated as factors of production to be manipulated by management and not as human beings. How do you reply? 6. Comment on the following remark by Karen Legge (1995) The language of HRM is a most appropriate vehicle to represent optimum resource utilization in response to the bottom line. 7. Explain contingency theory. What is its relevance to human resource management?

12 Bibliography Armstrong, M (1987) Human resource management: a case of the emperor's new clothes, Personnel Management, August, pp Armstrong, M (2000) The name has changed but has the game remained the same?, Employee Relations, 22 (6), pp Beer, M, Spector, B, Lawrence P, Quinn Mills, D and Walton, R (1984) Managing Human Assets, The Free Press, New York Boselie, P, Dietz, G and Boon, C (2005) Commonalities and contradictions in HRM and performance research, Human Resource Management Journal, 15 (3), pp Boxall, P F (1993) The significance of human resource management: a reconsideration of the evidence, The International Journal of Human Resource Management, 4 (3), pp Boxall, P F, Purcell, J and Wright, P (2007) The goals of HRM, in (ed) P Boxall, J Purcell and P Wright, Oxford Handbook of Human Resource Management, Oxford University Press, Oxford Caldwell, R (2001) Champions, adapters, consultants and synergists: the new change agents in HRM, Human Resource Management Journal, 11 (3), pp Caldwell, R (2004) Rhetoric, facts and self-fulfilling prophesies: exploring practitioners perceptions of progress in implementing HRM, Industrial Relations Journal, 35 (3), pp Fombrun, C J, Tichy, N M, and Devanna, M A (1984) Strategic Human Resource Management, Wiley, New York Fowler, A (1987) When chief executives discover HRM, Personnel Management, January, p 3 Francis, H and Keegan, A (2006) The changing face of HRM: in search of balance, Human Resource Management Journal, 16 (3), pp Guest, D E (1987) Human resource management and industrial relations, Journal of Management Studies, 14 (5), pp Guest, D E (1989a) Human resource management: its implications for industrial relations, in (ed) J Storey, New Perspectives in Human Resource Management, Routledge, London Guest, D E (1989b) Personnel and HRM: can you tell the difference? Personnel Management, January, pp 48 51

13 Guest, D E (1991) Personnel management: the end of orthodoxy, British Journal of Industrial Relations, 29 (2), pp Guest, D E (1997) Human resource management and performance; a review of the research agenda, The International Journal of Human Resource Management, 8 (3), pp Guest, D E (1999) Human resource management: the workers verdict, Human Resource Management Journal, 9 (2), pp 5 25 Guest, D E and Peccei, R (1994) The nature and causes of effective human resource management, British Journal of Industrial Relations, June, pp Hope-Hailey, V, Gratton, L, McGovern, P, Stiles, P and Truss, C (1998) A chameleon function? HRM in the 90s, Human Resource Management Journal, 7 (3), pp 5 18 Keenoy, T (1990) HRM: a case of the wolf in sheep's clothing, Personnel Review, 19 (2), pp 3 9 Keenoy, T (1997) HRMism and the images of re-presentation, Journal of Management Studies, 4 (5), pp Legge, K (1989) Human resource management: a critical analysis, in (ed) J Storey, New Perspectives in Human Resource Management, Routledge, London Legge, K (1995) Human Resource Management: Rhetorics and realities, Macmillan, London Legge, K (1998) The morality of HRM, in (ed) C Mabey, D Skinner and T Clark, Experiencing Human Resource Management, Sage, London Mabey, C, Skinner, D and Clark, T (1998) Experiencing Human Resource Management, Sage, London Mackay, L and Torrington, D (1986) The Changing Nature of Personnel Management, IPD, London Mohrman, S A and Lawler, E E (1998) The new human resources management: creating the strategic business partnership, in (ed) S A Mohrman, J R Galbraith and E E Lawler, Tomorrow s Organization: Crafting winning capabilities in a dynamic world, Jossey-Bass, San Francisco, CA Noon, M (1992) HRM: a map, model or theory?, in (ed) P Blyton, and P Turnbull, Reassessing Human Resource Management, Sage Publications, London Sisson, K (1990) Introducing the Human Resource Management Journal, Human Resource Management Journal, 1 (1), pp 1 11

14 Sisson, K (1995) Human resource management and the personnel function, in (ed) J Storey, Human Resource Management: A critical text, Routledge, London Storey, J (1989) From personnel management to human resource management, in (ed) J Storey, New Perspectives on Human Resource Management, Routledge, London Storey, J (1992a) New Developments in the Management of Human Resources, Blackwell, Oxford Storey, J (1992b) HRM in action: the truth is out at last, Personnel Management, April, pp Storey, J (1995) Human resource management: still marching on or marching out?, in (ed) J Storey, Human Resource Management: A critical text, Routledge, London Thompson, P and Harley, B (2007) HRM and the worker: labour process perspectives, in (ed) P Boxall, J Purcell and P Wright, Oxford Handbook of Human Resource Management, Oxford University Press, Oxford Ulrich, D (1998) A new mandate for human resources, Harvard Business Review, January-February, pp Ulrich, D and Brockbank, W (2005a) The HR Value Proposition, Harvard Press, Cambridge, MA Walton, R E (1985) From control to commitment in the workplace, Harvard Business Review, March April, pp Willmott, H (1993) Strength is ignorance, slavery is freedom: managing culture in modern organizations, Journal of Management Studies, 30 (4), pp

15 2. STRATEGIC HUMAN RESOURCE MANAGEMENT Teaching notes Objective of the session Explain the meaning and practical application of strategic human resource management (strategic HRM) within its conceptual framework. Learning outcomes of the session The session will cover: The conceptual basis of strategic HRM The fundamental characteristics of strategy How strategy is formulated The aims of strategic HRM The resource-based view and its implications The three HRM perspectives of Delery and Doty The significance of the concepts of best practice and best fit The significance of bundling The practical implications of strategic HRM theory Key concepts and terms In addition, definitions will be provided of the following concepts and terms: Best fit Resource-based view Best practice Strategic configuration Bundling Strategic fit Competitive advantage Strategic HRM Configuration Human resource advantage Strategy Lifecycle model Contents These notes contain: An outline of the session A concept map for the resource-based view Definitions of key concepts and terms Questions and discussion points A bibliography

16 Session outline The conceptual basis of strategic HRM Strategic HRM is the interface between HRM and strategic management. It takes the notion of HRM as a strategic, integrated and coherent approach and develops that in line with the concept of strategic management (Boxall, 1996). Strategy Strategy is a forward-looking approach selected to achieve defined goals in the future. Strategy is formulated through an emergent and flexible process of developing a sense of direction, making the best use of resources and ensuring strategic fit. The meaning of strategic HRM Strategic human resource management (strategic HRM) defines how the organization s goals will be achieved through people by means of HR strategies and integrated HR policies and practices. Main concerns of strategic HRM Strategic planning. The formulation of HR strategies. The implementation of HR strategies. The strategic behaviour of HR specialists. Propositions of strategic HRM The human resources of an organization play a strategic role in its success and are a major source of competitive advantage. It is people who implement the strategic plan. HR strategies should be integrated with business plans (vertical integration). Individual HR strategies should cohere by being linked to one other to provide mutual support (horizontal integration).

17 The aims of strategic HRM To generate strategic capability by ensuring that the organization has the skilled, committed and well-motivated employees it needs to achieve sustained competitive advantage. To provide unifying frameworks which are at once broad, contingency based and integrative (Dyer and Holder, 1988). The resource-based view and its implications It is the range of resources in an organization, including its human resources, that produces its unique character and creates competitive advantage. HRM delivers added value and helps to achieve sustainable competitive advantage through the strategic development of the organization s rare, hard to imitate and hard to substitute human resources. For a resource to have the potential for creating sustained competitive advantage it should have four attributes: it must be a) valuable, b) rare, c) imperfectly imitable and d) non-substitutable (Jay Barney, 1991, 1995). Resource-based strategic HRM produces what Boxall (1996) refers to as human resource advantage. It provides a practical justification for key aspects of a firm s HR policies and practices such as human capital management, talent management, knowledge management, and learning and development. HRM perspectives Delery and Doty (1996) identify three HRM perspectives: 1. The universalistic perspective some HR practices are better than others and all organizations should adopt these best practices. 2. The contingency perspective in order to be effective, an organization s HR policies must be consistent with other aspects of the organization especially its strategy ( vertical fit ). 3. The configurational perspective this is a holistic approach that emphasizes the importance of the pattern of HR practices and is concerned with how this pattern is related to organizational performance.

18 These perspectives can be interpreted as best practice, best fit and bundling (Richardson and Thompson 1999). Best practice This approach is based on the assumption that there is a set of best HRM practices. A number of lists of best practices have been produced, the best known of which was produced by Pfeffer (1994), namely: employment security; selective hiring; self-managed teams; high compensation contingent on performance; training to provide a skilled and motivated workforce; reduction of status differentials; sharing information. Other lists have been produced by Guest (1999), the US Department of Labor (1993), Wood and Albanese (1995), Appelbaum et al (2000), Sung and Ashton (2000) and Thompson and Heron (2005). It is difficult to accept that there is any such thing as universal best practice. What works well in one organization will not necessarily work well in another because it may not fit its strategy, culture, management style, technology or working practices. Best fit The best fit approach emphasizes that HR strategies should be contingent on the context and circumstances of the organization and its type. Best fit can be perceived in terms of vertical integration or alignment between the organization s business and HR strategies. There is a choice of models, namely: lifecycle, competitive strategy, and strategic configuration. 1. The lifecycle model The lifecycle model is based on the theory that the development of a firm takes place in four stages: start-up, growth, maturity and decline. This is in line with product lifecycle theory.

19 2. Competitive strategies Three strategies aimed at achieving competitive advantage have been identified by Porter (1985): a. Innovation being the unique producer. b. Quality delivering high-quality goods and services to customers. c. Cost leadership the planned result of policies aimed at 'managing away expense. 3. Strategic configuration This proposition states that organizations will be more effective if they adopt a policy of strategic configuration (Delery and Doty, 1996). This is achieved by matching strategy to one of the ideal types defined by theories such as those produced by Miles and Snow (1978), who identified three types: prospectors, defenders and analysers. Limitations to the concept of best fit The danger of contingent determinism (Paawue, 2004) claiming that the context determines the strategy. The risk of mechanistically matching HR policies and practices with strategy. It is not credible to claim that there are single contextual factors that determine HR strategy, and internal fit cannot therefore be complete. Tendency to be static not taking into account the processes of change. Neglects the fact that institutional forces shape HRM it cannot be assumed that employers are free agents able to make independent decisions. Bundling Bundling is the development and implementation of several HR practices together so that they are interrelated and therefore complement and reinforce each other. Research conducted by MacDuffie (1995) and others showed that bundling improved performance significantly.

20 The practical implications of strategic HRM theory Emphasizes that the achievement of sustained competitive advantage depends on the unique resources and capabilities that a firm brings to competition in its environment. Provides a rationale for generating strategic capability and ensuring that the organization has the people it needs to achieve sustained competitive advantage. Stresses that business and HR strategy and functional HR strategies should be aligned with one another. Strategic HRM HR strategies overall/specific Strategic management strategic role of HR Strategic choice Strategic analysis Strategic HRM model

21 RESOURCE-BASED VIEW relates to relates to financial and other resources human resources produce produce produce competitive advantage unique character of organization human capital advantage human process advantage arises when achieved when resources are derives from by resources are heterogeneous valuable strategic capability rare strategic fit means resources are not perfectly mobile imperfectly imitatable nonsubstitutable creates firms more intelligent and flexible than competitors by hiring and developing more capable people extending skills base Concept Map implementing good HR practices

22 Definitions of key concepts and terms Best fit HR strategies should be congruent with the context and circumstances of the organization. Best fit can be perceived in terms of vertical integration or alignment between the organization s business and HR strategies. Best practice The assumption that there is a set of best HRM practices and that adopting them will inevitably lead to superior organizational performance. They are universal in the sense that they are best in any situation. Bundling The development and implementation of several HR practices together so that they are interrelated and therefore complement and reinforce each other. Competitive advantage Achieving and sustaining better results than business rivals and thus developing competitive edge. Configuration The structures, processes, relationships and boundaries through which an organization operates. The term is used in two special senses: 1) the fit between an organization s HR strategy and its business strategy (Delery and Doty, 1996), and 2) the fit of different HR practices with one another (bundling, qv). Human resource advantage The concept following the resource-based view that competitive advantage is achieved when firms have more skilled, intelligent and effective staff than their competitors. Lifecycle model The theory that the development of a firm takes place in four stages: start-up, growth, maturity and decline. Resource-based view The view that it is the range of resources in an organization, including its human resources, that produces its unique character and creates competitive advantage. HRM delivers added value and helps to achieve sustainable competitive advantage through the strategic development of the organization s rare, hard to imitate and hard to substitute human resources. Strategic configuration The proposition that organizations will be more effective if they match their strategy to one of the ideal types such as the prospectors, defenders and analysers identified by Miles and Snow (1978). Strategic fit The need when developing HR strategies to achieve congruence between them and the organization s business strategies within the context of its external and internal environment. Strategic fit refers to the two dimensions that distinguish strategic HRM: First, vertically, it entails the linking of human resource management practices with the strategic management processes of the organization. Second,

23 horizontally, it emphasizes the coordination or congruence among the various human resource management practices (Wright and McMahan, 1992). Strategic human resource management (HRM) An approach that defines how the organization s goals will be achieved through people by means of HR strategies and integrated HR policies and practices. It involves the delivery of services in a way that supports the implementation of the firm s strategy. Strategy The approach selected to achieve defined goals in the future; a declaration of intent.

24 Questions and discussion points 1. Describe the main features of a strategic HRM approach. 2. Prepare for a chief executive the business case for adopting a strategic human resource management approach. 3. What is the resource-based view and what is its practical significance? 4. What is meant by the concept of fit in strategic HRM and what is its practical significance? 5. How important is flexibility in strategic HRM and how can considerations of flexibility be reconciled with the need for strategic fit? 6. What does the concept of best practice mean? Give examples. 7. Are there any problems with the concept of best practice? If so, what are they? 8. What does the concept of best fit mean? 9. What are the main best fit models? 10. Are there any problems with the concept of best fit? If so, what are they? 11. What does bundling mean and why is it important? Give examples. 12. What problems may arise when bundling? How can they be overcome? 13. What are the main practical implications of strategic HRM theory?

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29 Penrose, E (1959) The Theory of the Growth of the Firm, Blackwell, Oxford Pettigrew, A and Whipp, R (1991) Managing Change for Strategic Success, Blackwell, Oxford Pfeffer, J (1994) Competitive Advantage through People, Harvard Business School Press, Boston, MA Pil, F K and MacDuffie, J P (1996) The adoption of high-involvement work practices, Industrial Relations, 35 (3), pp Porter, M E (1985) Competitive Advantage: Creating and sustaining superior performance, The Free Press, New York Prahalad, C K and Hamel, G (1990) The core competences of the organization, Harvard Business Review, May June, pp Purcell, J (1989) The impact of corporate strategy on human resource management, in (ed) J Storey, New Perspectives on Human Resource Management, Routledge, London Purcell, J (1999) Best practice or best fit: chimera or cul-de-sac, Human Resource Management Journal, 9 (3), pp Purcell, J (2001) The meaning of strategy in human resource management, in (ed) J Storey, Human Resource Management: A critical text, Thompson Learning, London Purcell, J, Kinnie, K, Hutchinson, S, Rayton, B and Swart, J (2003) Understanding the People and Performance Link: Unlocking the black box, CIPD, London Quinn, J B (1980) Strategies for Change: Logical incrementalism, Irwin, Georgetown, Ontario Quinn Mills, D (1983) Planning with people in mind, Harvard Business Review, November December, pp Richardson, R and Thompson, M (1999) The Impact of People Management Practices on Business Performance: A literature review, Institute of Personnel and Development, London Rumelt, R P (1984) Towards a strategic theory of the firm, in (ed) P C Nystrom and W H Starbuck, Competitive Strategic Management, Prentice-Hall, Englewood Cliffs, NJ Russo, M V and Fouts, P A (1997) A resource-based perspective on corporate environmental performance and profitability, Academy of Management Review, 40 (3), pp Salaman, G (1992) Human Resource Strategies, Sage, London

30 Schuler, R S (1992) Strategic human resource management: linking people with the strategic needs of the business, Organizational Dynamics, 21 (1), pp Schuler, R S and Jackson, S E (1987) Linking competitive strategies with human resource management practices, Academy of Management Executive, 9 (3), pp Schuler, R S and Jackson, S E (1999) Strategic Human Resource Management, Blackwell, Oxford Schuler, R S and Walker, J (1990) Human resources strategy: focusing on issues and actions, Organization Dynamics, Summer, pp 5 19 Smith, E C (1982) Strategic business planning and human resources, Personnel Journal, 61 (8), pp Sung, J and Ashton, D (2005) High Performance Work Practices: Linking strategy and skills to performance outcomes, DTI in association with CIPD, available at Thompson, M and Heron, P (2005) Management capability and high performance work organization, International Journal of Human Resource Management, 16 (6), pp Tyson, S (1997) Human resource strategy: a process for managing the contribution of HRM to organizational performance, International Journal of Human Resource Management, 8 (3), pp Tyson, S and Witcher, M (1994) Human resource strategy emerging from the recession, Personnel Management, August, pp US Department of Labor (1993) High Performance Work Practices and Work Performance, US Government Printing Office, Washington DC Wernerfelt, B (1984) A resource-based view of the firm, Strategic Management Journal, 5 (2), pp Whittington, R (1993) What is Strategy and Does it Matter?, Routledge, London Wood, S and Albanese, M (1995) Can we speak of a high commitment management on the shop floor?, Journal of Management Studies, 32 (2), pp Wright, P M and McMahan, G C (1992) Theoretical perspectives for SHRM, Journal of Management, 18 (2), pp Wright, P M and Snell, S A (1998) Towards a unifying framework for exploring fit and flexibility in strategic human resource management, Academy of Management Review, 23 (4), pp

31 Wright, P M, Snell, S A and Jacobsen, H H (2004) Current approaches to HR strategies: inside-out versus outside-in, Human Resource Planning, 27 (4), pp Youndt, M, Snell, S A, Dean, J W and Lepak, D P (1996) Human resource management, manufacturing strategy and firm performance, Academy of Management Journal, 39 (4), pp Teaching notes 3. HR STRATEGIES Objective of the session Describe HR strategies their purpose, how they are formulated and what they contain. Learning outcomes of the session The session will cover: Purpose of HR strategy General HR strategy areas high-performance management, high-commitment management and high-involvement management Specific HR strategy areas Criteria for an effective HR strategy Key concepts How HR and strategy terms is formulated Fundamental questions on the development of HR strategy In addition, How definitions the vertical will integration be provided of business of the following and HR concepts strategies and is achieved terms: How High-commitment horizontal fit (bundling) management is achieved How High-involvement HR strategies management can be set out How High-performance HR strategies management can be implemented Horizontal fit or integration HR strategy Contents Vertical fit or integration These notes contain: An outline of the session Definitions of key concepts and terms Questions and discussion points A bibliography

32 Session outline Purpose of HR strategy HR strategies set out what the organization intends to do now and in the longer term about its human resource management policies and practices and how they should be integrated with the business strategy and each other. General HR strategy areas high-performance management An approach to HRM that aims to make an impact on the performance of the organization through its people in such areas as productivity, quality, levels of customer service, growth and profits. High-performance management practices include rigorous recruitment and selection procedures, extensive and relevant training and management development activities, incentive pay systems and performance management. Note that the term high performance is often associated with high commitment or high involvement and there may be some overlap between these concepts. General HR strategy areas high-commitment management A form of management which is aimed at eliciting a commitment so that behaviour is primarily self-regulated rather than controlled by sanctions and pressures external to the individual, and relations within the organization are based on high levels of trust (Wood, 1996). General HR strategy areas high-involvement management High-involvement work practices are a specific set of human resource practices that focus on employee decision-making, power, access to information, training and incentives (Benson et al, 2006). Specific HR strategy areas Specific strategy areas include: human capital management; corporate social responsibility;

33 organization development; engagement; knowledge management; employee resourcing; talent management; learning and development; reward; employee relations; employee well-being. Criteria for an effective HR strategy Satisfies business needs. Founded on detailed analysis and study. Can be turned into actionable programmes. Is coherent and integrated. Takes account of the needs of line managers and employees generally as well as those of the organization and its other stakeholders. Fundamental questions on the development of HR strategy What are the firm s strategic objectives and how are these translated into unit objectives? What are the performance drivers of those objectives and how do the skills, motivation and structure of the firm s workforce influence these performance drivers? How does the HR system influence the skills, motivation and structure of the workforce? How the vertical integration of business and HR strategies is achieved Understand the business strategy. Identify the skills and behaviour necessary to implement the business strategy. Understand and develop the HRM practices necessary to elicit those skills and behaviours. The business strategy may not be clearly defined it could be in an

34 emergent or evolutionary state, which would mean that there would be little or nothing with which to fit the HR strategy. Problems of achieving vertical integration The business strategy may not be clear. Even if clear, it may be difficult to determine precisely how HR strategies could help in specific ways to support the achievement of particular business objectives. HR specialists do not always have the strategic capability to make the connection between business and HR strategies. Barriers may exist between top management and HR on strategic issues. Overcoming the problems It is up to HR practitioners in their strategic role to overcome these problems by: getting to know what the business is aiming to do and what drives it; understanding how HR practices make an impact; achieving access to strategic business decision making by demonstrating their credibility as an integral part of the management of the business. How horizontal fit (bundling) is achieved Identify appropriate HR practices. Assess how these items can be bundled together so that they become mutually reinforcing. Draw up programmes for the development of these practices, paying particular attention to the links between them. How HR strategies can be set out The format will vary but may typically be set out under the following headings: Basic considerations. Content. Rationale. Implementation plan. Costs and benefits analysis.

35 How HR strategies can be implemented Analyse business needs and how the HR strategy will help to meet them. Communicate full information on the strategy and what it is expected to achieve. Involve those concerned in identifying implementation problems and how they should be dealt with. Prepare action plans. Project manage the implementation in a way that ensures the action plans are achieved.

36 Definitions of key concepts and terms High-commitment management A form of management aimed at eliciting a commitment so that behaviour is primarily self-regulated rather than controlled by sanctions and pressures external to the individual, and relations within the organization are based on high levels of trust (Wood, 1996). High-involvement management A specific set of human resource practices that focus on employee decision making, power, access to information, training and incentives. High-performance management An approach that aims to make an impact on the performance of the organization through its people in such areas as productivity, quality, levels of customer service, growth and profits. Horizontal fit or integration Linking different HR practices together (also known as bundling ). HR strategy Sets out what the organization intends to do about its human resource management policies and practices and how they should be integrated with the business strategy and each other. Vertical fit or integration Aligning HR strategy with the business strategy.

37 Questions and discussion points 1. What is the purpose of HR strategy? 2. What are the main areas in which general HR strategies might be developed? 3. What are the main characteristics of high-performance management? 4. What are the main characteristics of high-commitment management? 5. What are the main characteristics of high-involvement management? 6. What are the main areas in which specific HR strategies might be developed? 7. What are the criteria for an effective HR strategy? 8. What are the problems of achieving vertical integration and how can they be overcome? 9. Under what headings might an HR strategy be set out? 10. How should HR strategies be implemented?

38 Bibliography Abell, D F (1993) Managing with Dual Strategies: Mastering the present, pre-empting the future, Free Press, New York Appelbaum, E, Bailey, T, Berg, P and Kalleberg, A L (2000) Manufacturing Advantage: Why high performance work systems pay off, ILR Press, Ithaca, NY Baird, L and Meshoulam, I (1988) Managing two fits of strategic human resource management, Academy of Management Review, 13 (1), pp Baron, D (2001) Private policies, corporate policies and integrated strategy, Journal of Economics and Management Strategy, 10 (7), pp 7 45 Becker, B E and Huselid, M A (1998) High performance work systems and firm performance: a synthesis of research and managerial implications, Research on Personnel and Human Resource Management, 16, pp Benson, G S, Young, S M and Lawler, E E (2006) High involvement work practices and analysts forecasts of corporate performance, Human Resource Management, 45 (4), pp Boxall, P (1999) Human resource strategy and competitive advantage: a longitudinal study of engineering consultancies, Journal of Management Studies, 36 (4), pp Boxall, P F and Purcell, J (2003) Strategy and Human Resource Management, Palgrave Macmillan, Basingstoke Gratton, L A (1999) People processes as a source of competitive advantage, in (ed) L Gratton, V H Hailey, P Stiles and C Truss, Strategic Human Resource Management, Oxford University Press, Oxford Gratton, L A, Hailey, V H, Stiles, P and Truss, C (1999) Strategic Human Resource Management, Oxford University Press, Oxford Kepes, S and Delery, J E (2007) HRM systems and the problem of internal fit, in (ed) P Boxall, J Purcell and P Wright, Oxford Handbook of Human Resource Management, Oxford University Press, Oxford Lawler, E E (1986) High Involvement Management, Jossey-Bass, San Francisco, CA Lawler, E E, Mohrman, S and Ledford, G (1998) Strategies for High Performance Organizations: Employee involvement, TQM, and re-engineering programs in Fortune 1000, Jossey-Bass, San Francisco, CA