Strategic Human Resource Management in South Africa: More Theorising, Less Theory

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1 Strategic Human Resource Management in South Africa: More Theorising, Less Theory Pearl Pugin Strategic human resource management (HRM) scholars need to be far more critical of our efforts thus far and our responsibility to grow the scholarship and practice of strategic HRM. If not in the form of practicable solutions that the human resource executive can implement in a firm, then at the very least we have to acknowledge that we don t like the answers we are getting and be brave enough to ask a different question. The different question from what are the components of a performance-enhancing HRM system is: Why and how does the HRM system work to support the firm s strategy? This paper attempts to encourage theorising in strategic HRM as opposed to yet another attempt to prove that one or other theory best explains and predicts the influence of HRM practices on firm performance. This shift from an identification of high performance work practices and their impact on firm performance, to explaining interactions that happen between firm and human resource management systems also requires a clear departure from the way in which the majority of strategic human resource management research is conducted. This study proposes the adoption of more appropriate research methods that capture the complexities of strategic HRM research. A deviation from the typical large-scale quantitative studies is a necessary one if research findings are to be of any further value to the practice and scholarship of strategic human resource management. Fast developing countries like South Africa are well-placed to learn from both the successes and mistakes of developed countries. The opportunity to theorise must not be lost in favour of HRM best-practice solutions that have no basis in theory. If we are to learn from the mistakes of others, we must be willing to theorise and not accept strategic HRM best practices uncritically. Keywords: Strategic human resource management; South Africa; Theorising; Resource-based perspective; Universalistic perspective; Contingency perspective, Configurational perspective, Contextual perspective; Qualitative Research. Field of Research: Management Introduction Strategic human resource management (HRM) scholars need to be far more critical of our efforts thus far and our responsibility to grow the scholarship and practice of strategic HRM. If not in the form of practicable solutions that the human resource executive can implement in a firm, then at the very least we have to acknowledge that we don t like the answers we are getting and be brave enough to ask a different question. The different question from what are the components of a performance-enhancing HRM system is: Why and how does the HRM system work to support the firm s strategy? This paper attempts to encourage theorising in strategic HRM as opposed to yet another attempt to prove that one or other theory best explains and predicts the influence of HRM practices on firm performance. Lecturer and PhD candidate; School of Business and Finance, The University of the Western Cape. pearlpugin@gmail.com 1

2 But while it appears as if both HRM practitioners and scholars are in agreement, sharing a fixation on discovering the perfect bundle of high-performance-workpractices (HPWP), there are still fundamental differences in how these two players theorise about HRM. This is evident in the way HRM is defined. According to Blyton and Turnbull (1992: 2) and still relevant today: The ways in which the term (HRM) is used by academics and practitioners indicates both variations in meaning and significantly different emphases on what constitutes its core components. This fundamental difference between HRM scholars and practitioners partly explains the disjoint between academic research and its perceived value to the practice of HRM in firms. It appears as if both strategic HRM scholars and HRM practitioners have stopped theorising and latched onto best-practice models and techniques developed by consultants, even though these best-practice solutions have no empirical evidence that unequivocally proves the link between the adoption of these bundles of HRM practices and firm performance. Bacharach (1989) suggests that both HRM practitioners and scholars need to reevaluate the theories on which they base research conclusions and management decisions. The consequences of using inaccurate findings based on poor theory, he explains, are far more serious for HRM practitioners than they are for HRM scholars. Some more forthright scholars have argued that the reason for this whole-sale adoption of HPWP is the need for HRM practitioners to prove their worth in their organisations and essentially justify their existence. Then there is the question of what makes HRM strategic? While there are many definitions of strategic HRM, the shared element of the definitions and what makes strategic HRM fundamentally different from traditional HRM is that resources must be combined for a strategic purpose or goal. Wright and McMahan (1992: 298) offer a succinct definition of strategic HRM that shows this goal-orientation as: the pattern of planned human resource deployments and activities intended to enable an organisation to achieve its goals. Theoretically then, following this definition of strategic HRM, it can be described as a best-fit rather than a best-practice approach as each organisation then needs to consider how to achieve a fit between their HRM system and the goals of the organisation. However, in reality, there is little congruence between this definition of strategic HRM and the methods employed to conduct research in this discipline. Structure of This Paper The first part of this paper lays the foundation for a more critical discussion of strategic HRM in South Africa. In the section that follows, I distinguish between a best-fit and best-practice approach to strategic HRM research. I then show how strategic HRM research concluded in the last three decades use theory, perspectives, approaches and lenses that do not correspond with a best-fit orientation. An argument is then presented to show the incongruence between the 2

3 theoretical foundations of selected strategic HRM research findings and the methods used to conduct those studies. Finally, I show the importance of theorising in strategic HRM research to the practice of strategic HRM in South African firms. Approaches in Strategic HRM Research Research into the complex relationship between human resource management (HRM) practices and business strategy has largely been neglected during the last three decades. This in favour of an obsession with proving a link between HRM practices and firm performance. Leading to the widespread adoption of a universal bundle of HRM practices or high-performance work practices (HPWP) in firms, this best-practice approach to HRM research has dominated the scholarship and practice of HRM. Paradoxically, while a dominant approach has developed, there are still fundamental disagreements among HRM scholars. This explains the slow progress in strategic HRM research beyond the search for bundles of HRM best practices that supposedly explain and predict firm performance. Legge (1978), Dyer (1985) and then Wright and MacMahan (1992) are among many well-known scholars who questioned the narrow approach to HRM research. More recently, Becker and Huselid (2006) and Lengnick-Hall, M., Lengnick-Hall, C.A., Andrade and Drake (2009) have added their voices to strategic HRM scholars and extended the call for a deeper understanding of why and how HRM practices work to influence firm performance. The best-fit and best-practice approaches to strategic HRM research are discussed in the next section. The Best-Practice Approach Scholars and practitioners in the best-practice school of thought take a universalistic approach to which HR practices, processes and systems should be employed by firms. The argument from this perspective is that the context of a firm does not matter; that there are bundles of HRM practices that deliver performance improvement in all firms. Best-practice scholars include Delaney (1989), Huselid (1995), Osterman (1994) and Pfeffer (1994). The majority of HRM research has been concluded from this best-practice approach, answering the question of what the elements of a high-performance HRM system are. Scholars have extended their research efforts from defining the content of HRM systems to predicting firm performance based on ideal bundles of HR practices. Without delving into the question of why human resource executives choose a particular set of HR practices and how the HR system works to improve firm performance, the predictive power of the resultant strategic HRM models is highly questionable. The majority of these best-practice studies are either inconclusive or offer only partial confirmation of a HR-Firm Performance link. The great paradox in SHRM research is that research continues in this vein. 3

4 Scholars who question the best-practice approach to proving an HRM-performance link (Brown and Eisenhardt, 1998; Fleetwood and Hesketh, 2010) discuss the futility of measuring constantly changing and unpredictable social and firm environments. The Best-Fit Approach The opposite side of the SHRM coin, best-fit research, has understandably not enjoyed as much attention. It is far more difficult to conduct research into organisations as dynamic and complex open systems to explain how and why the firms works the way it does. The well-known but astonishingly unheeded reason for why the more logically compelling best-fit type research is neglected is that this type of complex research into interactions and mechanisms cannot be conducted as large-scale quantitative studies. So essentially, there is limited interest because of the difficulties associated with a more appropriate interpretivist approach required to answer why and how strategic HRM questions. Within the best-fit and best-practice schools of thought there are a number of theoretical perspectives used to theorise in strategic HRM research. The most-used among these theoretical perspectives, discussed later in this paper, are the universalistic, contingency, configuration and contextual perspectives. Matching Perspective with Method In addition to concerns about the lack of a theoretical underpinning for SHRM research, growing concerns from a small but increasing group of SHRM scholars regarding the methodologies used and conclusions drawn from logically-flawed SHRM research have been largely ignored. Calls for more in-depth, qualitative studies to explore and capture the complexities of organisational and HR system complexities have also been disregarded in favour of continued, superficial and methodologically-flawed research into limited HRM variables and how each impacts on firm performance. Guest (1997: 14) makes some suggestions on alternative approaches to SHRM research. He says: We need to develop theory which integrates aspects of strategy and strategic integration with something like expectance theory to create specific hypotheses about linkages. Case study research can help to generate some insights which can be more extensively tested. So too can studies of specific practices or issues such as quality or commitment where theory is sometimes more specific. To establish linkages, we also need longitudinal research designs, ideally with some sort of interventions to alter HRM practices. In summary, we need to improve our theory and empirical testing on all three fronts the nature of HRM, the nature of the outcomes and the nature of the linkages. As usual, we need to find the right combination of survey-based and casestudy based research. And we need to ensure that the research is not confined to the USA. We can say with increasing confidence that HRM 4

5 works. But this is a skeletal finding and we need to put a lot of flesh on the bones. Note however, the contradiction of having complete confidence that HRM works and then acknowledging that this is a skeletal finding. SHRM study conclusions are riddled with these types of contradictions. A further contradiction lies in abundance of research conducted and often-cited as seminal works, is the obsession with designs that include large samples and quantitative methodologies proving the HRM-Performance link. Even in studies where the theoretical framework argues for a deeper understanding of complex interactions between elements of open systems like organisations, the counterintuitive quantitative studies are undertaken with no regard for constantly changing firm environments and an unpredictable human element. HR s influence on firm performance is notoriously difficult to prove empirically. This difficulty is created mainly by theorists attempting to measure intangible resources and capabilities using resource-based theory to frame a thesis while there are so many challenges to its status as a theory (Porter, 1994; Williamson, 1999). This paper suggests an alternative to the large-scale quantitative studies and selective sampling that have resulted in criticisms spanning more than three decades. A predominantly qualitative, interpretivist approach is suggested along with a return to theorising rather than trying to fit various theories into findings that do not explain or predict the interactions between HRM and firm processes. In the section that follows, the importance of a theoretical framework to the development of research in strategic HRM is first discussed. Then each of the theoretical perspectives previously listed are explained in terms of their application to strategic HRM research. Theoretical Frameworks in Strategic HRM Research Strategic HRM research is widely considered to be atheoretical. A number of respected strategic HRM researchers agree that there is no theory that convincingly explains the often purported but never proven HR Firm Performance link. Weick (1979) expands on the relationship between decision-making and theory by pointing out the consequences to both practitioners and scholars. Because the consequences of using inaccurate theory for decision making are greater for practitioners that for researchers, theories that provide understanding may have even greater value to practitioners. If one relies only on the ability to predict events without understanding them, there is a greater potential for making poor, or at least inefficient decisions." Delery & Doty (1996: 28) disagree with scholars who claim that the strategic HRM research is largely atheoretical. They conclude in their seminal work that: The primary purpose of this study was to demonstrate that, contrary to current criticisms, the strategic human resource management literature 5

6 is not an atheoretical wasteland. We have demonstrated that three different modes of theorizing are incorporated in that literature: universalistic, contingency, and configurational perspectives. The results reported in this study indicate that each of these perspectives is viable and leads to different assumptions about the relationships among HR practices, strategy, and organizational performance. Future theorists should clearly articulate the perspective they are using to structure their arguments and test their arguments with an analytical strategy that is consistent with the relevant perspective. This paper argues that the disagreement among scholars is possibly caused by the lack of a distinction between theory and theorising. When scholars theorise they merely choose a theoretical perspective from which to view and analyse a phenomenon. Scholars engaged in theorising are adding valuable insights because they are not allowing existing theory to constrain their thinking. In contrast to theorising, a theory is used to explain a phenomenon and design models used to predict future behaviour in firms. With this function of theory in mind, the very notion of generalising from large-scale quantitative studies to explain the HRM-performance link and develop predictive models from generalised findings becomes counter-intuitive in firms, widely-acknowledged as complex entities with infinite variations in the interactions between firm processes. Large-scale quantitative studies get us no closer to explaining these variations if we accept that the interactions cannot possibly be identical in each firm. Without being able to generalise about these interactions, predictive models are therefore also not possible if it logically follows explanation. Legge (2001: 23) uncharitably describes this common approach to strategic HRM research as: the search for the Holy Grail of establishing a causal link between HRM and performance. This paper does not support one or other theory as the one that should guide strategic HRM research. Rather, each of the theories are discussed here as a perspective from which to undertake strategic HRM research. Theorising in this way about strategic HRM research means allowing the theories that have commonly been used to explain strategic HRM phenomenon to inform but not constrain. With no pressure to meet the requirements of developing a new theory, existing concepts from various fields of study can be used. There is also no expectation that findings must be generalised if courageous scholars are encouraged to follow more appropriate methodologies. In the section that follows, the most exciting development in strategic HRM, i.e. the possibility that resource-based theory is the one that will at last address the criticisms of strategic HRM as an atheoretical field of study is discussed as a theoretical perspective rather than the answer to fervent prayers for legitimising strategic HRM theory. The other most commonly-used theories are then also discussed as appropriate perspectives in strategic HRM and the appropriateness of the methods used to arrive at findings using each perspective. 6

7 The first perspective that must be discussed is the resource-based perspective. This is because the resource-based perspective is widely considered to be the closest to explaining the nature of the firm, from an inside-out rather than the outside-in approach famously advocated by Porter (1985). The Resource-Based Perspective Resource-based theory argues that firms should look to their internal resources as the key source of competitive advantage (Teece, 1980; Wernerfelt, 1984; Barney, 1991). This is in contrast to Porter s (1985) theory that the source of competitive advantage is the external environment. Building on this fundamental shift in focus, Barney (1991), in his seminal work, expands on the notion of how firm-specific resources lead to unique capabilities that can be used to establish competitive advantage. Barney s basic resource-based argument is that resources can be efficiently combined (including human resources) to create an organisational capability that cannot be imitated by rivals to its firmspecific uniqueness. This capability may for example be the ability to be innovative and produce new products or enter new markets quicker than one s rivals. From a resource-based view of the firm, even this ability to combine unique firmspecific resources to meet the firm s strategic objectives, is a capability that is difficult to imitate, therefore translating to a competitive advantage over rivals. Theorising from this resource-based perspective, with its acknowledgement of the complex and unique nature of firms, a quantitative, positivistic methodology is not appropriate. If each firm and its resources are unique, then what is the purpose of generalising findings and creating predictive models based on generalised findings that do not capture this complexity? A theoretical perspective that ignores the complexity of firms is the universalistic perspective, discussed next. The Universalistic Perspective Universalistic scholars (Delaney, 1989; Huselid, 1993, 1995; Osterman, 1994; and Pfeffer, 1994) argue for the adoption of a set of HR practices regardless of the context of a firm. Despite no agreement on what HRM practices should theoretically be included as best practices, this is still the perspective that is most commonly used in strategic HRM research. Theorising from this perspective, strategic HRM scholars are justified in conducting large-scale quantitative studies to test the extent of the adoption of bundles of HRM practices to improve performance in firms. There is value in this research as the first step in developing theory. But if this first exploratory step in strategic HRM research does not lead to explanation and prediction, then the conclusion from various critics about the slow pace of strategic HRM research is reasonable. 7

8 The more strategic contingency perspective discussed next was a step in the right direction from the superficial universalistic perspective. The Contingency Perspective Contingency scholars include Butler et al. (1991); Dyer (1985); Fombrum, et al. (1984); Golden & Ramanujam (1985); Gomez-Mejia & Balkin (1992); Lengnick-Hall & Lengnick- Hall (1988); Milkovich (1988) and Schuler & Jackson (1987). From this perspective, HR practices should be consistent with the type of strategy employed by a firm. If a firm pursues an innovation strategy for example, then HR practices should include incentives that reward employees who are innovative. Theorising from this perspective, strategic HRM scholars conduct large-scale quantitative studies using increasingly complex statistical regression analysis to establish clear relationships between strategy decisions and the HR practices that are adopted in a firm. But, as with the other perspectives discussed above, there is no evidence clearly linking the choice of HR practices to strategy (also referred to as vertical fit) with improved performance. The question of how these practices influence firm performance and the process through which this influence occurs remains unanswered from this perspective. The configurational (architecture) perspective is discussed in the next section as a perspective that starts to uncover the complex interactions between the processes within a firm. The Configurational Perspective Configuration scholars (Meyer, Tsui,& Hinings (1993: 1175) explain that we can understand configuration of firms by thinking of configurations as: any multidimensional constellation of conceptually distinct characteristics that commonly occur together. From this perspective, the firm can be understood in terms of its architecture and building blocks. The interaction between the building blocks explain how firm-level systems work together to achieve the firm s performance goals. The most-cited source for this perspective which has complementaries in complexity theory, systems theory and resource-based theory is the 1996 article by Delery and Doty, (1996). In this article, Delery and Doty explain the move from the macro focus in past research to the current strategic focus. They explain that the origin of this shift in focus resulted from a growing interest in linking HRM practices, process and systems to firm performance. Theorising from this perspective, strategic HRM scholars are immediately constrained in their research approach. If they are linking HRM practices to firm performance then it is reasonable to expect quantitative studies seeking to confirm this relationship. 8

9 From a configuration and complexity perspective however, the constantly changing firm environment makes it virtually impossible to prove this link. There are also so many other factors impacting on the firm s performance that a conclusive link between HRM and firm performance cannot be proven conclusively. The contextual approach discussed next takes this firm complexity into consideration and is virtually the only approach which does not start from the premise of proving the HRM-performance link. The Contextual Perspective Fleetwood and Hesketh (2010) describe this emerging combination of perspectives as drawing on elements of the contingency and configuration perspectives. In this way, the contextual perspective addresses some of the shortcomings outlined in the contextual perspective preceding discussion. Notable contributor Paauwe (2004: 100) defines this perspective as: a theoretical framework that enables a complete overview of the factors influencing the shaping of HRM policies and practices. Moreover, the theory emphasizes different rationalities and resulting outcomes. It also takes into account the various actors involved and their interactions with strategy and the wider societal context. Theorising from this perspective it is still concerning that a positivist approach to the investigating a wider scope of elements and interactions is still used. Disappointingly, despite the progress realised through this perspective, the methods used to investigate the elements defined in the theoretical framework still reveals a positivistic approach to the investigation of complex interactions within firms. In the section that follows, further evidence of the calls for an alternative approaches to research in strategic HRM is provided. Concluding on Strategic HRM Research in South Africa A best-practice approach to strategic HRM as promoted by HR consultants in South Africa has resulted in a stagnation of theory development here as well. The logic of capabilities requires that understanding how the process of developing capabilities i.e. the ability to combine the right resources for the right purpose at the right time, is crucial to maintaining it. Theorising to include the mechanisms through which HR influences firm performance is an important step towards addressing the complacency that comes with ticking the boxes of High-Performance work Practices (HPWP). By ticking the boxes of HR practices, you only understand WHAT HR practices are most likely to support the organisation s objectives. Asking WHY HR practices are adopted i.e. whether it is for strategic or non-strategic reasons (e.g. compliance) helps us understand the determinants of HR practices and therefore how these HR systems are developed. Using this logic, poor alignment may therefore be unavoidable but this misalignment between the HR and organisational architectures can be managed if better understood. 9

10 This more critical question takes this research into new and exciting area of SHRM theory and practice, long derided as being devoid of a strong theoretical basis and therefore of questionable practical use to HR managers. Literature Sources Alasuutari, P Theorizing in qualitative research, Qualitative Inquiry, 2 (4) Bacharach, S In Wright, P.M. and McMahan, G.C. (1992). Theoretical Perspective for Strategic Human Resource Management, Journal of Management, 18: Barney, J.B Firms resources and sustained competitive advantage, Journal of Management, 17: Becker, B.E. and Huselid, M.A Strategic human resource management: Where do we go from here? Journal of Management, 32, Blyton, P. and Turnbull, P HRM: Debates, dilemmas and contradictions, in P. Blyton and P. Turnbull (Eds), Reassessing Human Resource Management, Sage: London. Brown, S. and Eisenhardt,K Competing on the edge: Strategy as structured chaos, Cambridge, MA: Harvard Business School press. New York. Butler, J.E., Ferris, G.R., & Napier, N.K Strategy and Human resource management, Southwestern Publishing Company: Cincinnati, OH. Collings, D.G. and Wood, G HRM: A critical approach, in D.G. Collings and G. Wood (Eds), Human resource management: A critical approach, Routledge: New York. Delery, J.E. and Doty, D.H Modes of theorizing in human resource management: Tests of universalistic, contingency and configurational performance predictions, The Academy of Management Journal, 39 (4) Dyer, L Strategic Human resource management and Planning. In K.Rowland & G. Ferris (Eds.), Research in Personnel and Human Resource Management, 3: JAI Press: Greenwich, CT. Fleetwood, S. and Hesketh, A Explaining the performance of human resource management, Cambridge university press: New York. Foucalt, M The history of sexuality: The use of pleasure, Volume 2, Viking: New York. Guest, D.E Human resource management and performance: a review and research agenda, The International Journal of Human Resource Management, 8 (3),

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