Assignment 83

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1: Introducing Human Resource Management

Dr. Mirna Safi

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Introduction

Human Resource Management (HRM) is the term most widely used to describe the activities a business engages in to manage its relationship with employees.

Organizations choose between a range of policies and practices that can assist in achieving this objective, such as how to recruit and select employees and how to pay and reward them.

HR philosophy: The principles that guide how the organization leads, manages, involves, treats and views all its employees, so that it can successfully achieve its business strategy.

Evolution of HRM as an organizational 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.

Industrial welfare

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.

Scientific management

Elton Mayo and the ‘Hawthorne Effect’

Experiments in Illinois, 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.

Behavioural science

HRM today

The 1960s and 1970s saw the introduction of a large body of legislation which provided rights for employees.

The 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.

HRM today

It is 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.

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.

HRM today

Decline in both trade union membership and 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.

Barney’s VRIO model (1991) - an organization’s employees are its single most important strategic differentiator.

They are:

Valuable

Rare

Inimitable (not easily copied)

Organised

The focus on HR as a strategic contributor to the organization is increasing.

HRM today

Strategic HRM

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 strategic HRM we are referring to the linkage between human resource management policies and practices and the strategic objectives of the organization.

In differentiating between strategic HRM and HRM we see that strategic HRM takes a macro level approach within the context of organizational performance, whereas HRM operates at the micro level.

HRM and the business context

Internal organizational environment

Organizations are effectively all distinctive. This distinctiveness is created by many different factors, including:

The size and structure of the organization

The sector the organization operates in

The length of time the organization has been operating

Workforce characteristics

The financial health of the organization

Established ‘custom and practice’

The organizational culture

The values and managerial ideology of the senior management team.

External organizational environment

The external context presents further opportunities and constraints. It is comprised of many different factors, including:

Competition

Technological

Labour market

Legislation and regulation

Ethics.

Features of HRM

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.

HRM policies and practices

Given how organizational context will influence the strategic HR choices the business will make, there are many different types of HR policies and practices in which the organization can engage.

Linking HR practices to organizational outcomes

HRM aims to enable everyone in the organization to contribute fully to meeting the organization’s strategic objectives.

The strategy will determine the development of a range of HR policies, setting out principles or guidelines for the various practices within HR.

Some policies will guide very tangible practices e.g. recruitment, pay

While others will guide more intangible practices e.g. motivation and engagement .

Each HR policy should guide a HR practice that creates an organisational behaviour that leads to a desired organizational outcome.

Structure and role of the HR function

How the HR function is configured often depends on the organization’s context, needs and preferences.

Specialist roles - often follow the lifecycle of the employee

Generalist roles - where an HR generalist works with a specific group of employees, for example production operators, and handles all the issues related to that group.

HR business partner is seen as a consultant to the organisation, working closely with line managers to ensure that HR practices enable the successful delivery of business strategy.

Structure and role of the HR function

Ulrich et al. (2012) suggest that the following competencies needed are needed in the mix of the HRM function :

Credible activists - deliver promises, trusted by the business, and take action in a positive manner as and when needed by the business.

Capability builders - identify the core processes which will positively impact on the business strategy and then deliver the appropriate HR practices.

Change champions - enable the organisation to respond to the external pressures and pace of change.

Innovators and integrators – use evidence and business insights to continuously develop new HR practices.

Technology - have the skills to leverage available technologies and use HR analytics.

The role of the line manager

The role of the line manager in feeding into the design of HR practices and their implementation and interpretation locally across the organization is critically important (Purcell et al., 2003).

Day-to-day HR practices need to be devolved to line managers in order to allow for faster decision-making that is more in tune with business needs.

The rationale is that the line manager is the person who works most closely with the employee (Whittaker and Marchington 2003, Trullen et al. 2016).

HR provide support and guidance to line managers in these activities which also allows HR the time to move towards aligning the people management agenda with the strategic goals of the organization.

Theoretical basis of HRM

The Michigan model

The Michigan model of HRM stresses the importance of alignment or ‘fit’ between:

the HR strategy and the business strategy (vertical integration or external alignment).

the HR practices themselves (horizontal integration or internal alignment).

Fit can be achieved with a relatively straightforward suite of HR practices:

Selection of the most suitable individuals

Managing performance

Appraising performance and providing feedback

Providing rewards for appropriate performance

Developing employees to meet the needs of the business.

‘Universal’ approach

The Harvard model recognizes the influence that various stakeholders and situational factors have on the development of HR policies and practices (Beer et al., 1984).

The model focusses specifically on how the development of HR practices, incorporating these stakeholder interests and situational factors, will lead to a change in organisational behaviours or the building of organisational capabilities, which in turn, lead to specific organisational outcomes.

The main contribution of this model was to highlight the potential benefits of adopting a ‘soft’ approach to HRM.

The Guest model

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 organizational effectiveness.

Strategic integration

High commitment

Flexibility

High quality.

Best achieved through appropriate HRM practices in the areas of:

Change management

Organizational and job design

Recruitment and selection

Appraisal, training and development

HR movement through, up and out of the organization

Reward and communication systems.

Strategic HRM contingency approach

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.

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.

Strategic HRM universalist approach

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 organizational 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.