Introducing Human Resource

ManagementChapter One

• Define the term Human Resource Management

• Describe the main activities of the Human Resource Management function

• Outline the historical development of Human Resource Management

• Be able to engage with the ‘Personnel’ or ‘Human Resource Management’ debate

• Recognize what the term Strategic Human Resource Management means

• Describe the key models and theoretical underpinning in the study of Human Resource Management

• Contextualise Human Resource Management within the macro and micro environment

An Overview• Human Resource Management is essentially about

managing people in a way that both maximises and rewards the contribution each person makes to the organisation

• Organisations choose between a range of policies and practices that can assist in achieving this objective– policies and practices such as how to recruit and

select employees and how to pay and reward them

The nature of the employment relationship

• Important to understand the nature of the employment relationship that exists between employers and employees

• All employment relationships have to be regulated in some form or another so that each side understands its obligations– traditionally negotiated with trade unions

• Most analyses of the employment relationship focus on the concept of industrial relations

• Traditionally, most HR managers were essentially industrial relations managers where their main responsibility was to negotiate and interact with trade unions

The nature of the employment relationship cont’d

• Decline in both trade union membership & perceived significance of trade unions in managing the employment relationship has meant that managers, acting on behalf of employers, now have a significant amount of control over this relationship– the open door policy

• For this approach to be effective, it is important that employees are seen as assets that can be developed and nurtured, rather than resources to be exploited, and that a partnership exists between management and employees

What is Human Resource Management?

• Since the beginning of modern management theory the terms used to describe HRM have included: – personnel– industrial relations– employee relations– human resource management

• The term Human Resource Management highlights the importance placed on empowering employees to assist the organisation in the achievement of its strategic objectives

• People are viewed as an asset rather than a cost and are seen as providing a source of competitive advantage – the ‘human’ resources of the organisation should be managed as

carefully as other valuable resources

The impact of HRM on organisational performance

• The global financial crisis highlighted the need for organisations to focus on ways of improving competitiveness whilst at the same time keeping costs as low as possible:– employee salaries and related costs are often the single

most significant element of the expenditure involved in operating any business

The impact of HRM on organisational performance CONT’D

• Effectiveness is measured in different ways- The achievement and maintenance of sustainable

competitive advantage- Organisational survival- The development and maintenance of corporate

reputation

• The HR function has a key role to play in the achievement of all these goals

The impact of HRM on organisational performance CONT’D

• Many leading academics hold the view that HRM positively improves organisational performance (see for example Huselid, 1995; Huselid and Becker, 1996; Guest, 1997; Purcell, Kinne, Hutchinson, Rayton and Swart, 2003)

• The difficulty occurs when trying to identify which specific policies or practices are responsible given the integrated nature of work and the different industries and organisational contexts

• Despite the difficulties involved measurement has become one of the most critical aspects of HRM

Evolution of Human Resource Management as an organisational

function• During the Industrial Revolution in England in the late 19th century

the working conditions of men, women and children were dreadful

• Some enlightened employers, often Quakers, who wanted to improve the working conditions of their employees, providing workplace and family amenities for workers such as lunch rooms, medical care, company magazines, and housing

• The changes during this period to working conditions were driven by not just a welfare agenda, but also a drive to improve productivity

Evolution of HRM as an organisational function cont’d

• F.W. Taylor’s Scientific Management movement focused on developing a systematic approach to the design of jobs and to employment and pay systems– Allied to these were tight control of workers – Practices were often met with resistance from workers and

their union representatives

• Elton Mayo and his colleagues in the Hawthorne- Experiments in Illinois in the USA highlighted an emphasis on personal development, a better understanding of group work and the importance of working conditions as a means of motivating employees, all areas that are covered by the work undertaken by today’s HR function

Evolution of HRM as an organisational function cont’d

Evolution of HRM as an organisational function cont’d

• 1960s and 1970s - introduction of a large body of legislation which provided rights for employees

• 1980s recession led to high unemployment levels and significant competition in the marketplace led to a focus on productivity and ‘excellence’ associated with leading-edge companies

• This led to a shift from traditional manufacturing industries to growth in the service sector and a move towards a 24/7 society and an introduction of non-standard working hours

Development of the use of the term HRM

• The 1980s saw two separate lines of thought developed where there was a move to differentiate traditional Personnel Management (PM) from Human Resource Management

• Storey (1989) identified four features of HRM, which he believed differentiate HRM from traditional PM:

– HRM is explicitly linked with corporate strategy– HR focuses on commitment rather than compliance of

employees – Employee commitment is obtained through an integrated

approach to HR policies in the areas of rewards, selection, training and appraisal

– HR is not just the domain of specialists in the HR function, rather that HRM is owned by line managers as a means of fostering integration.

Development of the use of the term HRM cont’d

Characteristics of HRMA number of major characteristics are normally associated with HRM : • A strategic approach to the management of people• Line managers work in partnership with HR• HR policies and practices which are integrated and consistent with

the organisational culture:• Unitarist frame of reference:• A ‘soft’ HRM approach

• HRM is therefore not simply a set of individual practices, but rather must be viewed as a system, where the elements are integrated and mutually reinforcing in order to produce an effective outcome at an organisational level (Kepes and Delery, 2007).

Who is responsible for HRM in the organisation?

• The types of activities normally devolved to line managers include employee selection, discipline, and performance management with HR providing support and guidance

• This approach requires that line managers are equipped with the appropriate skills, knowledge and attitudes to effectively manage and develop their staff

• It is the overall vision, values and managerial ideology of the owner, however, which has the critical influence on the way in which HRM operates in an organisation

Key Human Resource Management activities

• The key role of the HRM function is to enable the organisation to achieve its strategic objectives and to positively impact organisational effectiveness by dealing effectively with all aspects of the employment relationship

• HRM strategies are plans that address and solve fundamental strategic issues related to the management of human resources in an organisation

• HRM strategy is used to create a set of HRM policies designed to achieve the organisation’s strategic goals

• These policies are then translated into specific HRM practices, again aimed at meeting the strategic goals

Key Human Resource Management activities CONT’D

Evolution of Human Resource Management roles

Roles for twenty-first century HR reflecting changing roles in organisations (Ulrich and Brockbank , 2005)– Strategic partner: strategy formulators, strategy

implementers, and strategy facilitators– Employee advocate: focus on meeting the current needs

of employees

• Human capital developer: focus on meeting the future needs of employees in terms of their learning and development

• Functional expert: increase the administrative efficiency of the HR function by designing effective HR policies and practices

• Leader: requires mastering the previous four roles and working in collaboration with other business functions to set standards for strategic thinking and corporate governance

Evolution of Human Resource Management roles cont’d

Theoretical basis of HRM• The matching model of HRM (Fombrun, Tichy and Devanna,

1984) or Michigan model of HRM proposed that an important source of competitive advantage lay in the alignment of HR strategy, employee management activities and corporate strategy

• The Harvard model recognised the influence that various stakeholders have on the development of HR policies (Beer et al. 1984)– The model suggested that effective implementation of HR

policies had a number of long-term consequences, one of which was organisational effectiveness

David Guest (Guest, 1989) in the UK built upon this model to develop a theory of HRM founded on four key policy propositions that he proposed, if followed, will combine to increase organisational effectiveness

- Strategic integration- High Commitment- Flexibility- High Quality

Theoretical basis of HRM cont’d

• The integration between HRM and business strategy is believed to contribute to the effective management of human resources, to an improvement in organisational performance and finally to the success of a particular business

• When referring to SHRM we are referring to the linkage between human resource management policies and practices and the strategic objectives of the organisation

• In differentiating between SHRM and HRM we see that SHRM takes a macro level approach within the context of organisational performance, whereas HRM operates at the micro level

Strategic Human Resource Management (SHRM)

• Proponents of this view believe there is no universal answer to the choice of HRM polices and practices – the choice is contingent on the context of the organisation

and its business strategy (external fit)

• Each organisation can choose a different set of polices and practices, depending on their organisational specific context and strategy

SHRM Perspectives: Contingency

• The adoption of a contingency HRM strategy is then associated with optimised organisational performance, where the effectiveness of individual HR practices is contingent on firm specific strategy

• The most effective way to manage people will depend on issues specific to the organisation, such as industry sector, organisational size and economic conditions - Best-fit approach

SHRM Perspectives: Contingency cont’d

SHRM Perspectives: Universalism

• Focuses on the existence of one set of HRM ‘best practices’ aimed at creating and enhancing high levels of employee commitment and performance– These will result in superior levels of organisational

performance, regardless of the context in which the organisation operates and the competitive strategy of the firm

Pfeffer’s (1998) work identified seven practices which result in higher performance

- Recruiting the right people- High wages clearly linked to organisational

performance- Employment security- Information sharing- Investment in training and skill development- Self managed teams and decentralised decision

making- Reduced status differentials

SHRM Perspectives: Universalism cont’d

SHRM Perspectives: Configurations• In the configurational or ‘bundling’ approach “the distinction

between best practice and contingency models begins to blur” (Becker & Gerhart 1996:788)

• The view is that effective combinations, or arrangements of HR practices will work by supporting and complementing each other (Huselid & Becker, 1995; Delery & Doty, 1996)

• MacDuffie (1995) highlights that implicit in the idea of a bundle is that HR practices within a bundle are internally consistent and interrelated

Impact of environmental context on HRM choices

• At its simplest, the environment is anything outside an organisation which can affect an organization’s present or its future activities

• The environment is context dependent and is unique to each organisation

• Organisations have one of two choices about how they manage their relationships with their environment– Reactive– Proactive

• This context is normally identified as comprising (i) the internal organisational environment and (ii) the external organisational environment

Internal organisational environment Organisations are effectively all distinctive

This distinctiveness is created by many different factors– The size and structure of the organisation– The sector the organisation operates in– The length of time the organisation has been operating– Workforce characteristics– The financial health of the organisation – Established ‘custom and practice’– The organisational culture– The values and managerial ideology of the senior management team

External organisational environment The factors are often classified as PESTLE or more recently as

STEEPLE:– Social– Technological– Economic– Environmental– Political– Legal– Ethical

• Can you define the term Human Resource Management?

• Describe the main activities of the Human Resource Management function

• Can you outline the historical development of Human Resource Management?

• Do you now know how to engage with the ‘Personnel’ or ‘Human Resource Management’ debate?

• Can you recognize what the term Strategic Human Resource Management means?

• Describe the key models and theoretical underpinning in the study of Human Resource Management

• Can you contextualise Human Resource Management within the macro and micro environment ?