Human resource management

Tony Keenan is Professor of Human Resource Management at Edinburgh Business School, Heriot-Watt University. Professor Keenan has published many papers on recruitment, managerial stress and the education, training and career development of professional eng

Resource Management

Tony Keenan is Professor of Human Resource Management at Edinburgh Business School,

Heriot-Watt University Professor Keenan has published many papers on recruitment,managerial stress and the education, training and career development of professionalengineers He has also acted as consultant to a number of international organisations

in these fields He has held the posts of Dean, Director of the Business School and Head

of Department

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Edinburgh Business School

Human Resource

c Tony Keenan 1998, 2003, 2005

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Module 1 The Origins and Nature of Human Resource Management 1/1

1.3 Philosophical and Theoretical Perspectives of HRM 1/5

4.2 Core Abilities, Skills and Motivational Characteristics 4/54.3 Trait Versus Behavioural Indicators of Performance 4/7

Module 6 Performance Appraisal and Performance Management 6/1

7.5 The Relationship between Training and Development 7/19

9.2 Philosophical Approaches to Employee Relations 9/3

9.8 Techniques for Increasing Involvement at Work 9/20

The Origins and Nature of Human

Resource Management

Contents

1.2.1 Business Strategy in an Increasingly Competitive Environment 1/2

1.3 Philosophical and Theoretical Perspectives of HRM 1/5

By the end of this module, you should be able to:

• understand what is meant by human resource management (HRM)

• describe the main factors which led to the emergence of HRM as a discipline

• explain how HRM is related to business strategy, organisational behaviour,and personnel management

• understand the difference between ‘hard’ and ‘soft’ HRM

• comprehend what is meant by strategic HRM

• explain what is meant by operational HRM

• describe the main activities involved in operational HRM

Despite the fact that ideas and techniques derived from human resource ment (HRM) have been adopted in a large number of organisations world-wide,the emergence of HRM as a field is a relatively recent phenomenon whoseorigins can be traced back to the early 1980s Indeed, because HRM is still in

manage-its formative stages, there are controversies about what exactly is meant by theterm itself, about precisely what should and should not be included within thescope of HRM, and even in some instances about the true benefits of some ofits proposed approaches and techniques for organisations and the individualsemployed in them.

Because there is no unanimously agreed definition as to what actually stitutes HRM and precisely how it differs from previous approaches to themanagement of people in organisations, no attempt will be made to provide acomprehensive definition of the term here However, one way to look at HRM

con-is as a set of loosely related ideas, concepts, and techniques held together by thecommon underlying premise that, within any organisation, maximisation of theutilisation of human resources is crucial to maintain and enhance competitive-ness in a world where those who do not compete successfully simply do notsurvive According to this view, unless organisations can make full use of thepotential of their employees, not only will they perform poorly, but their veryexistence will be threatened in today’s highly competitive world

In order to give the reader an insight into the nature of the field, we willfirst examine its evolution and development from related fields and activitiessuch as business strategy, personnel management, and organisational behaviour

We will then consider the various philosophical strands underpinning HRMthinking and practice Finally, the distinction between strategic and operationallevel HRM activities will be discussed briefly

One of the most important catalysts for the emergence of HRM came fromdevelopments in strategic thinking about how businesses would need to adaptand change to survive in the eighties and nineties This in turn led to questionsbeing asked about the role and function of traditional personnel managementapproaches to the management of people in organisations Although HRM wasessentially meant to replace traditional personnel management, the two havemuch in common and indeed some critics of HRM have questioned the extent

to which it really is fundamentally different from its predecessor Finally, many

of the theories and findings from the closely related field of organisationalbehaviour have been utilised by HRM theorists and practitioners and theserelationships are discussed briefly below

1.2.1 Business Strategy in an Increasingly Competitive Environment

From a Western perspective, the early eighties was a time of much soul searchingabout the future competitiveness of the Western economies in general, andWestern-based companies in particular In brief, the Far East, especially Japan,seemed to have gained significant competitive advantage over the West Thiswas seen as a particularly threatening phenomenon because of a number of otherfactors, especially the globalisation of markets and the associated intensification

of competition world-wide Analysis of the Japanese phenomenon seemed topoint towards better utilisation of people resources as a key factor in its success

It appeared that a number of Japanese management practices such as the focus onexcellence and continual improvement, the provision of an element of autonomyand influence on decisions for employees, the creation of a culture within theorganisation of shared commitment to the success of the organisation, and so

on, all served to ensure that each individual’s potential to contribute as fully

as possible to organisational success was realised This, the argument ran, waswhat gave Japanese organisations a competitive advantage over their Westerncounterparts

Further impetus to the view that optimisation of human resources is crucialfor success came in the form of the highly influential study of high performing

US companies carried out by Peters and Waterman (1982) The message fromthis study largely reinforced that coming from students of Japanese managementpractice, since once again, the conclusion was that how people are managed isthe key to competitive advantage and organisational success

Around this time the political climate in the West, particularly in the UK andthe USA, was changing in ways which encouraged the development of newthinking about how best to manage organisations This was the era of the so-called enterprise culture with its emphasis on individual entrepreneurial activity

as the engine of economic success In the UK in particular, the collectivismespoused by the Trade Union movement was seen as a barrier to economicprogress and a millstone around the neck of organisations trying to competeinternationally Other key elements of the new culture included the prime placegiven to market forces and the elevation of the status and role of the consumer

in the overall scheme of things A notable change here was the extension ofthe market-led philosophy and consumerism to the provision of services inthe public sector Thus, for example, in education students became ‘clients’ andeducational ‘products’ now had to be ‘consumer’, rather than ‘producer’ led All

of these politically inspired ideas served to create a climate which encouragedradical new thinking about how best to harness people’s abilities and energies

in the face of the perceived imperative for organisations to restore competitiveadvantage

The general view in all of this was that, as far as people management inorganisations was concerned, radical surgery was the order of the day Merelybolting a few new techniques on to an existing system on a piecemeal basiswould not be sufficient Rather, a whole new philosophy of how to managepeople most effectively was required In what has now become something of

a clich´e people were now ‘the organisation’s most important asset’ New andbetter ways to organise activities which would harness workers’ commitmentand energies would need to be developed Human resource considerationswould need to be linked into the design and implementation of overall businessstrategy in a way that had not been the case in the past Finally, management ofpeople could no longer be the sole prerogative of personnel specialists It wouldnow need to be much more the responsibility of all managers

1.2.2 Personnel Management

Traditionally, within large organisations at least, responsibility for human resourcematters lay within the personnel function A typical list of personnel manage-

ment functions carried out in organisations would be very wide and wouldinclude advising on activities such as: recruitment and selection, performanceappraisal, training and development, payment and pension systems, industrialrelations, and so on These are all critically important functions which are capa-

ble of being carried out at two levels At an operational level, all of these have

to be conducted as a part of the organisation’s everyday activities However,

most also have a strategic element, in the sense that they can be integrated into

the overall objectives of the organisation Take the example of training At theoperational level, the personnel department would be responsible for adminis-tering and running courses At a strategic level, a relevant issue might be thequestion of how much should be invested in training, given the direction inwhich the organisation is going and what it wants to achieve

From an HRM perspective, most, if not all, people management issues should

be considered from a strategic as well as an operational perspective A keyissue which now arises is the extent to which, in the past, traditional person-nel management has operated at a strategic level A number of writers havesuggested that the role of personnel in the past in most organisations has beenoperational and reactive, rather than pro-active and strategic (Torrington, 1995,Hendry, 1995) An example of the reactive nature of personnel management can

be seen in the field of industrial relations, an area which greatly pre-occupiedpersonnel managers in the UK in the seventies As Hendry (1995) points out,the majority of personnel managers during that period spent most of their timefire fighting A dispute would arise and personnel’s job would be to react to itand solve the immediate problem What rarely emerged from personnel depart-ments was a strategy for dealing with industrial relations problems To takeanother example, in the field of training and development, although personneldepartments frequently have large training and development budgets and areresponsible for running a wide variety of training courses, rarely does one find

a coherent strategy linking training to the organisation’s underlying objectives.Again personnel’s role is seen as operational, rather than strategic We sawabove that there was a view in the eighties that radical changes in the way inwhich human resources are managed would be needed to increase competitive-ness Presumably, personnel managers, with their specialist knowledge, would

be well placed to initiate and influence these changes Yet Evans and Cowling(1985) in a study of British personnel managers, found that they were not gen-erally initiators of major change Nor were they given a large role in advising

on the form such changes should take

In summary, it appears that, historically, personnel management has hadonly a partial role in the management of people in organisations It has had

an essential role at the operational level in, for example, advising on andimplementing selection systems, payment methods, training and developmentprogrammes, welfare arrangements, and a host of other activities It has hadmuch less impact, however, at the strategic level Thus its role has been seen

as specialist and technical, rather than strategic This is seen by many as a keydifference between HRM and personnel management and the rise in popularity

of HRM can be seen as largely a response to the need for a more all-embracingapproach to the management of people in organisations

1.2.3 Organisational Behaviour

The mission of HRM is to maximise the utilisation of human resources A keyissue is, of course, how this is to be achieved There are a number of approacheswhich can be taken here, but many of them have their origins in theories andresearch findings in the field of organisational behaviour (OB) OB is the study

of human behaviour and experiences in organisations An example of the linkbetween OB and HRM is in the area of employee motivation Many HRMinterventions are designed to increase employee motivation and commitment,and OB has provided rich insights into the nature of both of these phenomena.The same can be said for the management of rewards As we shall see later

in this text, the introduction of team working, which is another popular HRMinnovation, has its origins in classical OB studies of autonomous work groups.Many HRM theorists stress the importance of culture change in managing peoplemore effectively, and this is another area where many of the building blocksrelating to both theory and practice come from OB Many other examples could

be given, but these should suffice to make the point that much of HRM relies

on prior work in organisational behaviour

In summary, at least three main influences on the field of HRM can be

iden-tified From the area of strategy, the economic imperative to gain competitive

advantage, both nationally and internationally, led to the realisation of the vitalimportance of the need to maximise the utilisation of human resources Thisgave a more central and strategic role to HRM in people management than had

ever been the case for personnel management Despite the past shortcomings of

personnel management at the strategic level, the techniques used in personnelmanagement at the operational level have of course had to be absorbed intoHRM in order to ensure the successful implementation of strategic objectives.Finally, many of the techniques used in HRM are underpinned by theory andresearch in OB

1.3.1 Hard Versus Soft HRM

As indicated above, a unifying theme of all HRM approaches is the belief in thecritical importance of human resource utilisation in determining organisationalperformance However, when it comes to the question of how these resources canbest be utilised, two distinct approaches have developed The ‘hard’ approachsees people as resources just like any other resource possessed by the organi-sation, the objective being to maximise their benefits and minimise their costs

to the organisation This goes hand in hand with an emphasis on profit as theso-called ‘bottom line’ Some examples of the kind of approach taken by propo-nents of hard HRM will illustrate this emphasis on human resources as costs and

on bottom line profits Hard HRM might emphasise the desirability of ing work practices so that fewer people could produce the required amount

chang-of goods or services This would be seen as to the benefit chang-of the organisationsince surplus employees could be laid off to reduce costs Full-time employees

cost more than part-time ones, so that a shift to more part-time workers wouldalso be advantageous from a hard HRM perspective, as would outsourcing Thelatter involves contracting work out to agencies, giving the organisation flexi-bility to increase or decrease numbers of employees as the need arises withoutredundancy or other costs These few examples should have given the readerthe flavour of the ‘hard’ approach to HRM.

The ‘soft’ approach to HRM, on the other hand, emphasises the human, ratherthan the resource, element of the equation According to this view, peoplehave enormous potential to increase their contribution to the organisation if theconditions can be set up to release this potential In this sense people should

be seen as qualitatively different from other resources If the organisation canharness employees’ reserves of creativity and energy, maximise their skills, andenhance their commitment then this will provide the key competitive advantagethat is required The emphasis here is much less on people as cost items andmuch more on how to increase their productivity by enhancing their ability tocontribute to the organisation Consequently, proponents of ‘soft’ HRM tend

to focus on methods of enhancing motivation and capability, such as rewardmanagement, training and development, and so on

1.3.2 The Nature of Work Motivation and Behaviour

Underpinning HRM theories is a set of assumptions about the nature of peopleand what stimulates and motivates them in the work environment However,

as one might expect, not all theories make precisely the same assumptions

As we shall see later, a common assumption is that the key to producingenhanced performance is to create the conditions where employees will have ahigh level of commitment to the organisation If commitment is high, a wholeseries of positive benefits will flow from this, so the theory goes Anothercommon assumption is that people will respond positively if they are givenmore power over decision making in the workplace The reader will be able

to detect other examples of assumptions about human behaviour in relation toHRM theories later in the text An important issue to which we will return

in later modules is the extent to which the empirical evidence supports thesebeliefs and assumptions

1.3.3 Organisational Conditions and Effectiveness

An integral part of many HRM approaches is a further set of assumptionsabout the ideal organisational conditions required to optimise the management

of people

For example, it is argued that a key pre-requisite for the development ofemployee commitment is the creation of the right kind of organisational culture.Although, as we shall see later, changing culture is easier said than done,organisational arrangements to facilitate communications at all levels, systemsdesigned to provide managers with appropriate leadership skills, and so on, havebeen introduced with this aim in mind The emphasis on culture change is reallypart of a more general change theme which views the future as characterised

by an environment which is in a constant state of evolution This creates a needfor organisations continually to adapt and develop in all sorts of ways if theyare to remain competitive.

HRM is often associated with the introduction of new and innovative forms

of work organisation, such as the introduction of various forms of flexibleworking arrangements One example of this is task flexibility, where traditionalboundaries between jobs are reduced or removed so that, for example, within

a work group, each individual is expected to be able to carry out most or all

of the different work roles Another influential set of innovations can be seen

in the introduction of a variety of forms of team working One mechanism forcreating the kind of power over decision making described above is the use ofself-managing work teams in which much of the authority previously invested

in management is devolved to the team

Proponents of HRM frequently advocate an element of decentralisation wherepolicies and procedures are determined locally at the level of operating units,rather than centrally In this way HRM arrangements can be tailor made tomeet the needs and requirements of individual operating units A good examplewhere this approach could be applied is in the matter of the determination ofrates and methods of payment According to this view, pay bargaining shouldtake place between employees and management within the operating unit in thecontext of local HRM priorities and the prevailing local context This contrastswith more collectivist approaches, notably where, for example, pay is determined

on a national level in negotiation with trade unions

A variant on the theme of decentralisation of activities is the notion thatresponsibility for HRM matters should not rest solely with the HRM depart-ment within organisations Rather, because of the crucial importance of humanresources, all managers should take some responsibility for HRM

What is the linchpin which puts a particular set of HRM philosophies, approachesand techniques within the context of a specific organisation? According to thetheories, this is driven by the strategic role of HRM It is proposed that all HRMsystems and practices should be integrated into a coherent policy and that this

is derived from the overall business strategy of the organisation The overallbusiness strategy provides a vision of what the business is about, about where

it should be going in the future, and about how it should go about setting andachieving objectives to realise the vision The process of strategy formulationinvolves a variety of activities, including the analysis of current strengths andweaknesses, the evaluation of threats from competitors, and the identification

of potential opportunities for the future The end result of this process is theformulation of a set of strategic goals or objectives and the development of aset of policies and procedures to implement these Since any strategy can onlyrealistically be successfully implemented through the people who make up theorganisation, HRM clearly has a critical role to play here But precisely howdoes HRM strategy link into this process of overall strategy formulation?

At one level, the role of HRM is restricted to that of facilitating a determined business strategy For example, suppose an organisation develops

pre-a business strpre-ategy which pre-aims to gpre-ain competitive pre-advpre-antpre-age by producing,high value added, high quality products Part of an HRM strategic objective

to support this might be the development of a quality oriented culture withinthe organisation A number of changes could be introduced to help achieve thisobjective For example, communication systems could be introduced continually

to reinforce the quality message Self-managed teams with responsibility for theirown quality control could be set up In order to back up the introduction ofself-managed teams, appraisal systems designed to monitor performance might

be changed from being carried out on an individual basis to being done on agroup basis This example illustrates both the strategic support role of HRMand the integrative nature of strategic HRM where communication systems,team working, and appraisal systems are considered as a whole in the light ofthe strategic objective The reader might like to try to map out an HRM strategywhere the strategic plan emphasised high volume low cost products

Strategic HRM as outlined above has essentially an enabling role in the sense

that it only becomes involved in the process after the overall business strategy

has been formulated However, there are strong arguments for the inclusion

of HRM at the strategy formulation stage As indicated above, the analysis

of the organisation’s existing strengths and weaknesses is central to strategyformulation Since the organisation’s human resources are a key aspect of itsstrengths and weaknesses, the nature of these must influence strategic choices

To take just one example, the optimal strategic direction for an organisationwith a large pool of highly educated and skilled employees may be quitedifferent from one where there is a very small pool of such people At worst,failure to recognise the people resource input into strategic decisions may meanthat strategic plans are simply not capable of being implemented At best,the integration of HRM strategy with overall strategy can optimise the wholeformulation and implementation process

The notion of strategic HRM as an integrated, universally applicable, approach

to people management is a seductive one However, some words of caution are

in order here before we proceed to a more detailed examination of what HRMhas to offer Historically, most HRM concepts and theories originated in theUSA and this raises the question of how far the theories are really applicable inother cultures For example, as Guest (1994) has pointed out, there is often an

emphasis on individualism, rather than collectivism in HRM writings (see the

discussion of de-centralisation and local, rather than national, pay bargainingabove for an example) Guest shows how this fits well with American valuesbut in Europe there is much more of a tradition of collectivism than in America.This is exemplified by the greater role of the trade unions in many Europeancountries Much is made, especially with soft HRM approaches, of the idea thatHRM is mutually beneficial both for the employee and the organisation but somecritics have questioned whether this is always the case as far as employees areconcerned A cynical view of the techniques advocated might see them as ways

of getting more out of employees without a corresponding increase in rewards

to them Much is also made of the integrative nature of HRM It is hard to arguewith the logic of such an approach, but how often does it actually happen in

practice? Some argue that a piecemeal approach to the introduction of many ofthe innovative practices we shall be discussing in more detail later in the text isactually much more the norm than an integrated one It is also questionable towhat extent human resource strategy is to be found in practice, as opposed to

in theory

Criticism of HRM has largely focused on strategic level issues and the theoriesand philosophies which underpin strategic HRM On the whole, operationallevel issues have been less contentious, especially where, as is often the case, thepractices are already well established from prior use in a personnel managementcontext In any case, irrespective of whether or not a practising manager adheres

to a particular HRM theory or philosophy, the operational issues have to be dealtwith effectively on a day-to-day basis It is to these that we now turn

The scope of HRM at an operational level is very wide and some selectivity

in what can be covered in this relatively short text is inevitable This will bedone on the following basis Areas of activity where well established tools andtechniques exist will be favoured, especially where they are broadly applicableacross different countries and cultures On the other hand, procedures whichare very culture specific are beyond the scope of the text and these will not

be covered in detail Finally, some topics have already been comprehensivelycovered elsewhere in the MBA Distance Learning series and these will be not

be dealt with in depth in this text

At the operational level, HRM has much in common with conventionalapproaches to personnel management Nevertheless, an HRM perspective willoften influence both the relative importance attributed to a particular activity andthe precise way in which it is carried out Thus, while both traditional person-nel management and HRM accept the importance of effective recruitment andselection for organisational performance, the emphasis on the qualities sought

in recruits may be different For example, strategic considerations frequentlyemphasise the need for organisations continually to adapt and change to meetthe demands of a changing environment This implies a greater focus on attitu-dinal qualities in selection, such as an openness to new ideas and a willingness

to accept and even welcome change, than might have been the case in the past

To take another example, in the UK and Western Europe the management ofindustrial relations and collective negotiations with trade unions has tradition-ally been central stage in the work of personnel managers However, some haveargued that the individualistic orientation of HRM and its tendency to assumethat management and workers have common interests serves to undermine theimportance of traditional collective industrial relations As Guest (1989) puts

it ‘its underlying values would appear to be essentially unitarist and vidualistic in contrast to the more pluralist and collective values of traditionalindustrial relations’ It follows from this that the approach of HRM to industrialrelations would be quite different from that of personnel management

indi-We noted above that a key element in strategy formulation was the fication of the organisation’s strengths and weaknesses Of course to do this

identi-effectively methods need to be developed at the operational level to enable theorganisation to specify in a systematic way what is meant by good performance.This has to be done at multiple levels ranging from the macro level of theorganisation as a whole, through sub-units such as work teams, all the waydown to the level of individual job roles Effective specification and measure-ment of performance is an essential HRM activity at all levels Its importance

at the macro level can be illustrated with reference to a scenario which will

be familiar to readers from the UK Within the last fifteen years or so, a largenumber of publicly owned organisations have been privatised by government.One frequent argument for doing this has been that ‘waste and inefficiency ’ will

be eliminated by privatisation But precisely how was ‘waste and inefficiency’(i.e poor performance) measured by the proponents of this view and how validwas this measure? Similarly, to show that privatisation produced an improve-ment, it would be necessary to demonstrate by systematic measurement that anincrease in efficiency had actually been achieved Taking another example at thesmall group level, to show that team working is more effective than other workarrangements it is first necessary to be able to measure team performance sys-tematically At the individual job role level, we have already seen that in HRMmuch is made of the added value people can provide if properly managed Butbefore we can manage them effectively, we need to know what end point weare trying to achieve In other words, before we can take steps to enhance theperformance of individual workers, we need to be able to define systematicallywhat constitutes good performance in an employee in the first place

As already mentioned, selection is a central operational level HRM activity

in all organisations Selection is in many ways the foundation upon which allother HRM techniques are built because it provides the raw material with whichthe HRM specialist has to work Once individuals have been recruited intothe organisation, their performance needs to be managed effectively Effectivemanagement has a number of elements, often beginning with a systematic assess-ment of their past performance known as performance appraisal As we willsee, performance appraisal has traditionally been used for a variety of purposes,such as assessing training and development needs, setting future performancetargets, salary determination, and so on More recent HRM approaches seek to

go beyond this by integrating appraisal into a broader scheme of performancemanagement in which appraisal is linked to organisational objectives as a whole.Training and development has long been a core area of activity in personnelmanagement and, if anything, it has assumed greater importance within HRM

If people are a vital resource then it obviously makes sense to invest heavily intheir training The planning and management of careers in the mutual interest

of employees and the organisation has also traditionally been seen as being animportant responsibility of the personnel department, at least in the majority oflarge organisations However, as Herriot (1992) has pointed out, the nature oforganisations has been changing in recent years This has come about partly as aresult of the adoption of HRM theories and practices, but also for other reasons.These changes have profound implications for careers and career management,

as we shall see when we come to take a detailed look at this topic

These core operational areas of specification of performance requirements in

a way that can be measured systematically, recruitment and selection,

perform-ance appraisal and performperform-ance management, training and development, andcareer management, will be dealt with in depth in the modules to follow It

is recognised that some areas often regarded as important HRM activities willnot be covered in detail in this text These include payment systems, industrialrelations, and the legal framework within which HRM activities are carried out.These have not been dealt with in detail either because they are already coveredcomprehensively in other Heriot-Watt Distance Learning texts, or because theHRM practices in question differ fundamentally across cultural and nationalboundaries These topics will, however, be referred to selectively where they arerelevant to other issues being discussed

The main impetus for the emergence of HRM was the perceived need, on thepart of a number of large organisations, to improve their competitive positionboth nationally and internationally Better utilisation of human resources throughthe adoption of HRM systems and practices was seen as the key to achievingthis objective Although HRM has much in common with traditional personnelmanagement, it attempts to overcome some of the apparent inadequacies ofpersonnel management as typically practised in the past This is particularlytrue of the strategic approach adopted by HRM Operational level HRM, which

is concerned with the everyday management of people in organisations, alsoshares much with more traditional personnel management approaches However,even here there are differences, due mainly to the impact of strategic HRMconsiderations on operational activities

Review Questions

True/False Statements

Each statement requires a single response – ‘True’ or ‘False’

1.1 An important underlying premise of HRM is the need to maximise the utilisation

of human resources if organisations are to compete successfully

1.2 It is unanimously agreed that HRM is fundamentally different from personnelmanagement

1.3 A major difference between HRM and personnel management is the morestrategic orientation of HRM

1.4 When a personnel department responds rapidly to threatened strike action bythe labour force and manages to defuse the situation it can be said to bemanaging people in a strategic way

1.5 Historically, traditional personnel management has had less impact at the tegic level than at the operational level

stra-1.6 ‘Soft’ HRM emphasises the importance of developing people so that they arecapable of contributing more to the organisation.

1.7 Most HRM theorists agree that the management of people is too important

a task to be in the hands of anyone other than specialists from the HRMdepartment

1.8 Task flexibility is the term used to describe the situation where an individual isexpected to carry out a variety of different work roles

1.9 Strategic HRM argues for an integrated approach to people management inorganisations

1.10 According to Guest (1994), HRM theories tend to emphasise individualism, ratherthan collectivism

1.11 According to Guest (1989), HRM and traditional personnel management arelikely to have a similar approach to industrial relations

1.12 Although the nature of organisations has been changing in recent years, thesechanges have not had any major implications for individuals’ careers

Short Essay Questions

1.1 What were the major factors which led to the emergence of human resourcemanagement?

1.2 How does human resource strategy relate to general business strategy?

Apply What You Have Learned: HRM in Action

You are a personnel manager in a large manufacturing organisation in the electronicsindustry The company has plants world-wide, including the USA and the Far East.You are currently seconded from your normal job on a one year assignment asspecial personnel adviser to the organisation’s newly created Scenario Review Unit.You have just received the following memorandum from the head of the unit Yourtask is to draft a suitable reply

you as a personnel expert, particularly since you have the benefit of all that up-to-date knowledge you obtained by studying for your Distance Learning MBA I have outlined

my ideas below Please let me have your considered comments in due course.

Clearly HRM is the key to improving our use of human resources and is a vast improvement on the old personnel management approach Consequently the first thing

we need to do is scrap our existing personnel departments throughout the business, make the individuals concerned redundant, and get in some new HRM experts We will only need one or two new people, however, since HRM theory tells us that line managers should now be expected to do the bulk of what used to be personnel work The seminar speakers suggested that personnel management is not strategic enough, but I think we may be an exception to this, since we have always been pretty good at reacting to crises Anyway, I am producing a business strategy for the UK side of our operation which I will pass on to the HRM experts so that they can implement whatever is necessary on the human resource side By the way, I do not think we should go for this so-called soft HRM approach – if the workers think we are soft they will walk all over us!

It seems we will need to change the culture of the organisation As I understand it, this is quite a straightforward thing to do Maybe you could take this on and organise a suitable course for people to go on Another thing, we will no longer need to employ those expensive organisational behaviour consultants, since their ideas are obviously out

of date now that HRM has taken over the field Whatever happens, if we do decide

to adopt a strategic approach to HRM, it is likely to involve a whole new approach to what we do, rather than introducing a few new ideas on a piecemeal basis Once we get the new systems up and running successfully, it might be a good idea to suggest to our colleagues in the US and the Far East that they should follow our lead and adopt

an HRM approach too.

Does this all seem fine to you?

References

Evans, A and Cowling, A (1985) ‘Personnel’s part in organisation restructuring’,

Personnel Management, January, 14–17

Guest, D.E (1989) ‘HRM: Implications for industrial relations’, New Perspectives in

Human Resource Management, ed Storey, J., London and New York: Routledge

Guest, D.E (1994) ‘Organizational Psychology and Human Resource Management:

towards a European approach’,European Work and Organizational Psychologist, 4, 251–270 Hendry, C (1995) Human Resource Management: A Strategic Approach to Employment,

Oxford: Butterworth-Heinemann

Herriot, P (1992) The Career Management Challenge, Oxford: Butterworth-Heinemann Peters, T.J and Waterman, R.H Jr (1982) In Search of Excellence: Lessons from America’s

Best Run Companies, New York: Harper & Row

Torrington, D and Hall, L (1995) Personnel Management: HRM in Action, Hemel

Hempstead: Prentice Hall

Models of Human Resource

Management

Contents

Learning Objectives

By the end of this module, you should be able to:

• describe the defining characteristics of HRM models

• understand the Fombrun Matching model

• understand the Schuler model

• describe the main features of the original Harvard approach

• explain Guest’s model and its relationship to the original Harvard approach

• describe the Pettigrew model

• evaluate the strengths and weaknesses of the Matching and Harvard models

Although a number of different models of HRM exist, they can be broadlyclassified into two types First, there are those which are commonly known

as Matching models One of the earliest and most well known of these is

the model put forward by Fombrun et al (1984) The second type, which was

developed by Beer et al (1984) has subsequently become known as the Harvard

model Both of these models originated in the USA, although as we shall see

below, variants on them have been proposed by writers from other countries,notably Britain The Matching and Harvard models have somewhat differentunderlying philosophies and associated implications for how best to managepeople in organisations Although this does not mean that their prescriptionsare necessarily fundamentally incompatible, they are not easy bedfellows, and

in practice most organisations are likely to be attracted to one approach at theexpense of the other

Before proceeding to a detailed comparison of some of the more well knownmodels, it is useful to consider some of parameters along which they can vary.This will help the reader to identify the similarities and differences among them

• All models are directly concerned with strategic aspects of HRM However,some are concerned almost exclusively with strategic considerations, whileothers also give weight to operational and implementation issues Also, thetreatment of the relationship between HRM strategy and business strategygenerally differs significantly from one model to another

• Some models are more prescriptive than others The more prescriptivemodels endeavour to tell managers the ‘best way to do things’ With lessprescriptive approaches, the emphasis is much more on understandingstructures and processes than on telling HRM managers how to do it

• An important differentiating factor among theories is the extent to which a

‘hard’ versus ‘soft’ approach is taken, as described in Module 1

• Another important differentiating factor is the extent to which line managersare assigned responsibility for HRM in the various models

• Models vary in how far they advocate a departure from traditional personnelmanagement practice Thus, while some have taken a radically differentapproach, others have been described as being no more than personnelmanagement in a new guise

• Models vary in the degree to which they adopt a unitarist approach toHRM The unitarist approach takes the position that there are only a smallnumber of individuals or groups who have a legitimate interest in the fate

of the organisation Furthermore, these major stakeholders should be theones whose point of view should be taken into account in the determination

of business and HRM strategy At its most extreme, the unitarist view cates that only top management has a responsibility for devising strategyand its major priority in making organisations successful is to satisfy share-holders’ needs (shareholders being the other main stakeholders) Pluralistapproaches, on the other hand, assume a much wider range of stakeholderswhose legitimate interests should be taken into account in the process ofstrategy formulation Examples of this wider community of stakeholdersmight include individual employees, trade unions, and society generally.With these points in mind, let us now proceed to examine some of the majormodels of the HRM process

advo-2.2 Matching Models

2.2.1 Fombrun, Tichy and Devanna’s Model

This model starts with the basic proposition that HRM strategy should bedriven solely by the needs of the business The general business strategy of thefirm is formulated in an attempt to meet these needs Thus, general strategydictates HRM strategy with little consideration given to reciprocal influence

in the other direction According to the model, a number of external factorsinfluence strategy formulation, the three most important of which are economicpolitical and cultural forces The organisation’s overall mission and strategy inturn dictates both its general structure and its human resource policies

In this way business strategy determines HRM strategy and the latter must bematched to the former But how is the latter implemented in practice? The modelemphasises the importance of setting up systems which match the two aspects ofstrategy According to the model, there are four key operational systems whichare essential for implementing HRM strategy These are: selection, appraisal,development, and rewards

The first stage in the process is to take decisions about the optimal competitivestrategy to be pursued Typically, this is based very much on market-orientedconsiderations The next step is to decide, in the light of the overall strategy,what performance goals should be set for employees When the abilities required

to achieve these goals have been determined, new employees can be selectedagainst them Once employees are in place, they are subsequently appraisedagainst these goals The results of the appraisal are used for reward allocation

in order to motivate individuals to further enhance their performance Theappraisal process also identifies training and development requirements forimproved performance These four core activities are meant to operate in anintegrated way, so that there is a coherent HRM strategy, rather than a piecemealarrangement

What are the main characteristics of this model in terms of the parameterslisted above? The model is quite clear on the relationship between generalbusiness strategy and HRM strategy General strategy dictates HRM strategyand there is no expectation of any influence the other way While there is acertain logic to this, it does imply a rather mechanistic view of people as aresource who can be readily manipulated to meet the needs of the organisation.Take, for example, the question of the capabilities or even desires and interests ofthe workforce According to the model, if these do not match the performancerequirements as dictated by the general strategy, then it is the role of HRM

to remedy this state of affairs But this may be more easily said than done.Suppose an organisation with a highly skilled and highly qualified workforcedecides to move from a low volume, high quality product to a high volume lowquality product where high levels of skill are no longer needed If people arethen told that they can no longer exercise their skills but will be carrying outmore mundane tasks than before because this is what the business requires, howwill this affect their motivation and performance? The alternative of replacingthe existing workforce with less skilled people is hardly an easy option either

If, on the other hand, the model had allowed for the possibility that HRMconsiderations might influence general strategy, a broader view of people ashuman resources emerges, with possible beneficial results In the above example,information about the capabilities of the workforce would be an input into thegeneral strategic process and would thus become a factor, in addition to marketconsiderations, in deciding which direction to take in the future.

The model is highly prescriptive, providing managers with a set of guidelines

as to how things should be done It is also readily identified as ‘hard’, ratherthan ‘soft’ HRM People are seen as resources whose contribution has to bemaximised at the same time as their costs have to be minimised There is littlemention of the needs or interests of employees in the model

The approach is essentially unitarist, rather than pluralist Although the modeldoes mention the role of political and cultural forces these are given little empha-sis There is scant consideration, for example, of possible inputs to the wholeprocess from the trade unions or any other organisation representing the needs

of the employees The emphasis is predominantly on market forces determiningstrategic need which then dictates HRM practices In this respect, the approachrepresents quite a departure from traditional personnel management, which hasoften seen its role as more than just the implementation of policies designed

to meet narrowly defined performance requirements It has also been seen ashaving a legitimate role in meeting employees’ needs and interests, providedthese are compatible with organisational objectives

2.2.2 The Schuler Group

The Schuler group (Schuler and Jackson, 1987) has attempted to provide detailedexpositions of the performance requirements (called employee role behaviour intheir terminology) arising out of different competitive strategies The group hasalso endeavoured to show how these relate to specific HRM policies Applyingthis approach to Porter’s (1990) generic strategies framework, it suggests a list ofperformance requirements and associated HRM policies for the strategic objec-tives of innovation, quality enhancement, and cost reduction Thus, for example,

a strategy that emphasises innovation requires employees to be creative, to have

a longer term focus, and so on The HRM strategies are designed to deliver theseperformance requirements In the example just mentioned, for instance, appraisalshould focus on longer-term and group-based skills because this will help pro-duce the appropriate role behaviours A selection of performance requirementsand associated HRM strategies, drawn from the more extensive list to be found

in Schuler and Jackson (1987), is shown below:

Innovation

Where the strategic objective is to encourage a high level of innovation, it is

proposed that the desired performance requirements would include:

• a high degree of creative behaviour

• longer-term focus

• a relatively high level of co-operative, interdependent behaviour

HRM strategiesjudged to be appropriate for ensuring that these requirementsare met include:

• jobs that require close interaction and co-ordination among groups of viduals

indi-• performance appraisals that are more likely to reflect longer-term and based achievements

group-• jobs that allow employees to develop skills that can be used in otherpositions

Quality enhancement

A somewhat different pattern of performance requirements emerge when the

strategic objective is quality enhancement Examples of these are:

• relatively repetitive and predictable behaviours

• a moderate amount of co-operative, interdependent behaviour

• a high concern for quality

The relevant HRM policies in this case are:

• relatively fixed and explicit job descriptions

• high levels of employee participation in decisions relevant to immediatework conditions and the job itself

• extensive and continuous training and development of employees

Cost reduction

Illustrative performance requirements here are:

• relatively repetitive and predictable behaviour

• a rather short-term focus

• high concern for quantity of output

The ideal HRM strategies in this situation are said to include:

• relatively fixed and explicit job descriptions that allow little room for guity

ambi-• short-term results-orientated performance appraisals

• minimal levels of employee training and development

The approach of Schuler and his group clearly provides a more detailedanalysis of how HRM policies can be used to implement strategies than that

of Fombrun This apart, it has much in common with their approach and itscharacteristics are similar in terms of the parameters outlined at the beginning

of the module

To what extent are Schuler’s prescriptions for matching particular HRM cies to specific business strategies valid and useful? Hendry (1995), addressingthis question, concluded that, while a number of the proposed links seem intu-itively plausible up to a point, the optimal HRM strategy is unlikely to be

poli-determined mechanistically by the chosen business strategy in the manner gested by Schuler According to Hendry, the best HRM strategy will also depend

sug-on an organisatisug-on’s particular circumstances These would include factors such

as the nature of the technology, local and national customs, and so on As anexample of the latter, he cites the proposed use of appraisal schemes at shopfloor level and points out that this would be ‘foreign to the British environment’(p 83) This is likely to make any appraisal linked policy difficult to implementfor this group of workers in the UK

2.2.3 Evaluation of Matching Models

Boxall (1992) has advanced a number of criticisms of matching models Thesecan be summarised as follows

• The theories have seldom been backed up by systematic research to validatethem Rather, they have relied on ‘anecdotal illustrations largely unsup-ported by formal fieldwork programmes’ (p 67) The Schuler group is anexception to this since it has carried out systematic surveys to back uptheir claims These studies have provided mixed support for the model,although they have also highlighted the importance of organisational con-text in determining practices Boxall has also questioned the appropriateness

of the research method used by the Schuler group The interested readershould consult Boxall (1992) for a fuller discussion of this issue

• The assumptions of the models are too unitaristic As Boxall puts it ‘HRM

is seen as something that is “done to” passive human resources rather thansomething that is “done with” active human beings.’ (p 68)

• The process of strategy formulation is not as rationalistic as the modelsassume The idea that strategy is simply a formal planning process whichleads to decisions being made and implemented more or less automaticallymay be quite divorced from reality It is probably more realistic to suggestthat strategy is only partly planned, but it also evolves in an unintendedway as events unfold

• Also, with particular reference to the work of the Schuler group, tions about the validity of the generic models on which they are based may

assump-be misplaced since these models have themselves assump-been criticised

• The models are overly restricted in their definition of the major areas ofconcern to HRM The Fombrun model, for example, ignores many of thefactors which have been shown from many years of research in organisa-tional behaviour to be important for employee attitudes and performance

An example here would be leadership and supervisory style As has alreadybeen alluded to, there is also little attention paid to the whole field of tradeunions and labour relations and their impact on HRM policies and practices

• Finally, in these models, much is made of the need to fit HRM strategy tooverall strategy But Boxall argues that if the fit is too close this can lead tolack of flexibility and an impaired ability to adapt to change

Despite the telling nature of some of these criticisms, it would not do tothrow out the baby with the bath water These models have highlighted the

need for an integrated and strategic approach to HRM They have also shownhow strategic HRM can be informed by general strategy and have demonstratedhow strategy can be used to guide operational level activities While the modelsmay be somewhat over-simplified and rudimentary, they have at least shownthe need for, and potential value of, theory in this area.

2.3.1 The Original Beer Model

While, as we have seen, the matching models were mainly influenced by the

strategy literature, the Harvard approach (Beer et al 1984) has its roots in the

literature on organisational behaviour The human relations school in particular,was an important influence

The Harvard model typifies the ‘soft’ approach to HRM, with the focus being

on people as individuals whose talents can be nurtured and developed to themutual benefit of themselves and the organisation From this perspective HRMbecomes an important responsibility of all managers, not just HRM specialists.The main components of the model are shown in Figure 2.1

Stakeholder interests

Situational factors

choices outcomes consequences

Figure 2.1 A simplified illustration of the Harvard framework.

According to the model, HRM policy choices (i.e strategy) are influenced

by stakeholder interests and situational factors There are presumed to be

several other stakeholders, over and above shareholders and top managers, whohave a legitimate interest in HRM strategy These include employee groups,government, the unions, and the wider community Thus, unlike the matchingmodels, not only are the employees’ interests explicitly recognised, but so too are

those of other groups outside of the organisation As far as situational factors

are concerned, general business strategy is only one of seven relevant factorslisted as important inputs to HRM policy choices Other influences includethe nature of the workplace, the labour market situation, and even laws andsocietal values Here again this contrasts sharply with the approach taken inthe matching models where everything is driven by business strategy There areseveral areas of HRM activity in which policy choices arising out of stakeholders’interests and situational factors can be made These include choices about: thedegree of opportunity for employee influence on decisions, the nature of rewardsystems and the type of work systems

Turning to the postulated HR outcomes of policy choices, there is an

acknowl-edgement of the importance of cost effectiveness which is in line with the tulates of the matching models Another outcome is an increased capacity ofemployees to meet performance requirements as a result of the augmentation

pos-of their skills and abilities However, in the Harvard model, neither pos-of theseare regarded as the most critical HR outcome Rather, the key outcome to beachieved is increased commitment According to the model, if HR policies cansucceed in ensuring that employees have a strong commitment to the organi-sation and what it is trying to achieve, they will perform better in a variety

of ways For example, they will be more willing to adapt to change and willrespond positively to it This gives the organisation the crucially important abil-ity to adapt quickly and effectively to new threats, pressures, and opportunities

In addition, because committed employees are more self-motivated they requireless ‘top-down’ management

A cornerstone of the Harvard philosophy is the belief that these HR outcomes

do not just benefit the organisation but their long-term consequences are also

beneficial to the employee Commitment results in mutuality between employeeand the organisation resulting in the creation of mutual goals, mutual respectand mutual responsibility This, along with the opportunity for employees toinfluence decisions, and the enhancement of their skills are all meant to lead

to the long-term consequence of increased satisfaction and well-being at work.The first two long-term consequences then are benefits to the employee and tothe organisation If the third proposed long-term consequence, that of societalbenefit, can also be achieved, then we truly will have found the holy grail in thetheory and practice of HRM!

How can the Harvard model be classified in terms of the parameters listedearlier? Unlike the matching models, the role of general strategy is much lessdominant in the Harvard model In particular policy choices, HR outcomes, andlong-term consequences all input into the strategy formulation process via thefeedback loop shown in the figure Thus, strategic HRM is not viewed in thismodel as purely the servant of business strategy Instead, HRM considerationsare part of the process itself

The model is more analytical then prescriptive It presents HRM policy choices,rather than recommending the one best way Indeed from the perspective of theHarvard model, the specifics of any particular procedure or policy are less crucialthan the general approach which is adopted to HRM The overall philosophy

of how people can best be managed is the key from their viewpoint However,the model does contain prescriptive elements, especially in its advocacy ofcommitment as being more or less universally desirable

As already indicated, this model typifies the ‘soft’ approach to HRM Also,

in line with its general philosophical position that the key to success is peoplemanagement, the model places strong emphasis on the allocation of HRMresponsibilities to individual managers

The model is much closer to traditional personnel management than thematching models This can be seen, for example, in its attempt to take account

of the needs of both the employee and the organisation, in its explicit recognition

of a number of stakeholders in the process, and in its attempt to embrace external

factors such as the labour market, laws, and society in the model.

Following from the previous point, the Harvard model is much more pluralistthan the matching models It recognises the legitimacy of employees’ interests

as well as those of shareholders, and it accepts the need to take into account theviews of other stakeholders external to the organisation

2.3.2 The Guest Model

This model is considerably more prescriptive than that of Beer It is less cerned with the analysis of strategic options than with putting forward a set of

con-recommendations for good HRM practice The model has four elements.

First, there are a series of HRM Policies and Practices, many of which one

would expect to find in a traditional personnel department These are:

• Organization and job design;

• Management of change;

• Recruitment, selection and socialisation;

• Appraisal, training and development;

• Reward systems;

• Communication

In the model, the human resource policies and practices are designed and

operated in such a way as to achieve the four key Human Resource Outcomes

which constitute the second element of the model The HRM outcomes are:

of bridges between HRM strategy and business strategy As Guest sees it, properintegration also requires an organisational culture where managers share, or atleast accept, the underlying value system driving the HRM strategy

The third element of the model is the achievement of a desired list of sational Outcomes These are:

Organi-• High job performance;

• High problem solving;

• High innovation;

• High cost-effectiveness;

• Low turnover, absence and grievances

Finally, the fourth element needed to make all of this come to fruition is

Leadership This is crucial to ensure the development of the right organisationalculture to and to drive forward strategic HRM as a key goal

In terms of the parameters listed at the beginning of this module, the Guestmodel is broadly similar to that of Beer, apart from the fact that it is somewhatmore prescriptive

2.3.3 The Pettigrew Approach

Pettigrew and his colleagues (Hendry and Pettigrew, 1990) have taken theopposite approach to Guest in the sense that they have taken a more analyticaland less prescriptive view than Beer Consequently, they are more interested ingaining a better understanding of the structures and processes that influencestrategy making than in what they call the ‘armchair exercise of matchingstrategy to HR processes’ (Hendry and Pettigrew 1990, p 32)

These authors use the term Outer context to describe the wider societalinfluences on the organisation These include:

Finally, the HRM context has effects on human resource systems, defined in

their terminology as HRM content factors These include:

• HR flows

• Work systems

• Reward systems

• Employee relationsThe authors propose that there is a two-way relationship between HRMcontent and the other elements of the model Thus HRM content is capable

of influencing not just the HRM context but also the overall Inner contextand Business strategy content The model is also pluralistic in its orientation,recognising the many influences that can shape strategy Finally, as alreadysuggested, the most notable difference between this model and those of bothBeer and Guest is the absence of any real prescriptive element

2.3.4 Evaluation of Harvard-type Models

A number of well reasoned arguments have been put forward in favour of theHarvard approach, particularly when compared with the matching alternative

By way of illustration, Boxall (1992) has made the following positive pointsabout Harvard-type models:

• They acknowledge that many groups have a legitimate stakeholder interest

a pawn in the face of market pressures and can exert real choices

• By recognising the importance of societal level influences the door is opened

to consideration of international comparisons of HRM practices In thiscontext it is worth noting that both Guest and the Pettigrew group arewriting from a UK perspective while the Beer model emanates from theUSA

Of course these models also have their critics In particular, there has to be aquestion mark as to how realistic these models are in terms of their assumptionsand their practical application in the real world Is it really the case that increasedcommitment inevitably leads to enhanced performance? Do we know how toincrease commitment anyway? Similarly, culture may indeed be very important,but do we actually know how to change it? Can the philosophy of sharedcommon interests really be sustained in real world situations? Some wouldargue that conflict of interests is an inevitable part of the employer-employeerelationship whatever HRM practices are adopted We shall examine a number

of these issues further in the next module

on the ‘human’, than the ‘resource’, side of HRM Soft HRM takes the view that

it is possible to develop HRM policies which will be mutually beneficial to bothorganisations and their employees

Review Questions

True/False Statements

Each statement requires a single response – ‘True’ or ‘False’

2.1 While there are some minor differences of detail, the underlying philosophiesand assumptions of the matching and Harvard models are the same

2.2 Prescriptive HRM models are more concerned with understanding organisationalstructures than with advising managers on how things should be done

2.3 Unitarist approaches to HRM tend to assume that the main stakeholders in theorganisation are top management and shareholders

2.4 According to the Fombrun matching model, there are three key operationalsystems which are critical for implementing strategy

2.5 The Schuler and Jackson (1987) model attempts to provide lists of performancerequirements which fit different business strategies

2.6 According to Boxall, a strength of matching models is the fact that they havefrequently been supported by systematic research validating them

2.7 A strength of the matching models is the way in which they have highlightedthe need for an integrated approach to HRM

2.8 Empirical studies by the Schuler group have produced equivocal support fortheir model

2.9 The Harvard approach regards HRM as an important responsibility of all agers

man-2.10 In the original Harvard model, business strategy is only one of a number offactors seen as relevant inputs to HRM strategy

2.11 According to the Harvard view, high levels of commitment need to be panied by a strong emphasis on top-down management

accom-2.12 The Harvard framework as proposed by Beer et al (1984) considers cost

effec-tiveness to be a desired outcome of HRM policy choices

2.13 The Guest model of HRM is much less prescriptive than that of Beer et al.

2.14 The strategic model put forward by Hendry and Pettigrew is analytical, ratherthan prescriptive

2.15 Soft HRM models place more emphasis on market forces than hard models

Short Essay Questions

2.1 Critically evaluate the Fombrun, Tichy and Devanna matching model of HRM

2.2 What are the defining characteristics of the original Beer et al model of HRM?

Apply What You Have Learned: HRM in Action

You are the HR Director of a large chain of retail stores Twelve months ago youwere instructed by the chief executive to carry out a fundamental review of HRpolicies and systems As part of this exercise, you hired a group of managementconsultants to examine the current situation and come up with recommendations forthe future The main recommendation of the consultants was that the organisationshould adopt a Harvard style, soft, HRM system

You have decided to accept this advice You have just made a presentation tothe main board of the company having previously circulated the consultants’ report

to all members At the end of your presentation, you were asked a number ofquestions about the proposal These are listed below Your task is to answer each

of them in the light of your knowledge of the Harvard approach

1 Is this soft approach any better than what they call the hard approach?

2 If we use this approach to work out an HR strategy, do we need to take onboard the views of the unions?

3 The report suggests that HR strategy can influence business strategy, but surely

it should be the other way around?

4 The report says that we should give our line managers more responsibilityfor people management But what if they screw up? In any case why is thisnecessary?

5 Is it really the case that the right HRM policies are to the mutual benefit of allemployees?

6 Does it really matter whether or not employees are committed, so long as they

do what they are told by their managers?

7 How easy is it going to be to get people to be more committed?

8 What do we risk if we go down this route?

Beer, M., Spector, B., Lawrence, P.R., Mills, Q.N and Walton, R.E (1984) Managing

Human Assets, New York: Free Press

Boxall, P.F (1992) ‘Strategic human resource management: Beginnings of a new

theo-retical sophistication?’, Human Resource Management Journal, 2, 60–79.

Fombrun, C.J., Tichy, N.M and Devanna, M.A (1984) Strategic Human Resource

Manage-ment, New York: Wiley

Guest, D.E (1994) ‘Organizational Psychology and Human Resource Management:

Towards a European approach’, European Work and Organizational Psychologist, 4, 251–70 Hendry, C (1995) Human Resource Management: A Strategic Approach to Employment,

Oxford: Butterworth-Heinemann

Hendry, C and Pettigrew, A (1990) ‘Human resource management: An agenda for the

1990s’, International Journal of Human Resource Management, 1, 17–43.

Porter, M.J (1990) The Competitive Advantage of Nations, New York: Free Press.

Schuler, R.S and Jackson, S.E (1987) ‘Linking competitive strategies with human

resource management practices’, Academy of Management Executive, 1, 207–19.

Key Themes in HRM

Contents

3.4.4 Advantages and Disadvantages of Flexible Working Arrangements 3/13

3.6.2 Characteristics of the Learning Organisation 3/19

3.8.2 The Relationship between Culture and Performance 3/25

Learning Objectives

By the end of this module, you should be able to:

• describe the various ways in which quality has been conceptualised inHRM

• understand what is meant by TQM

• compare bureaucratic and de-centralised organisational structures

• explain what is meant by the flexible firm

• describe different types of work teams and explain their potential benefits

• understand what is meant by the learning organisation

• explain the term organisational commitment and its relevance for soft HRM

• explain what is meant by organisational culture and discuss its relationshipwith organisational performance

We have seen how the forces for change in the eighties in the form of fierceinternational competition, the enterprise culture, the globalisation of market-places, and so on produced a fundamental re-appraisal of how organisationsshould best be managed to regain competitive advantage in the national andinternational arena This module will examine in some detail the key HRMthemes and ideas which emerged from this process, some of which have alreadybeen mentioned in passing in the previous two modules, and will consider howthey have been implemented in practice

One of the most fundamental themes underlying most models of HRM is that

of quality However, as we shall see, quality is not a simple unitary concept Ithas been conceptualised in a number of different, but overlapping, ways

3.2.1 Quality as Product Superiority

One of the most influential factors in the adoption of quality as a key themearose out of the perceived superiority of Japanese manufactured products, whichwere seen to be of higher quality for a given price than those produced in theWest Other factors were, of course, important in creating a focus on productquality, such as the writings of a number of American management gurus, such

as Deming (1982) and Juran (1988) who preached the quality message Productquality can be defined in a number of ways such as low levels of defects dur-ing the manufacturing process, reliability in use, and overall value for money.Product quality has also been defined as conforming to a high design specifi-cation When quality is defined in product terms, an important consideration isthe trade off between cost and quality, since high design specifications and theinstallation of systems to minimise defects are likely to have a measurable costfor the organisation

3.2.2 Quality as Customer Satisfaction

A major rationale for seeking to enhance product quality is the belief that this

is what the customer wants If quality is overtly defined in terms of meeting

or exceeding the customer’s expectations or requirements and this becomesthe goal, this opens the door for a much broader application of the concept.Defined in this way, quality can become a key theme not only in manufacturingindustry, but also in the service sector, be it private or public At first glance,this is hardly a very original notion After all, the belief that ‘the customer isking’ has been around for a long time and certainly pre-dates the arrival ofHRM However, while the need to please the customer may be self-evident tothe small entrepreneur whose livelihood might well depend on customer loyalty,the concept may not be quite so salient to many employees in large bureaucraticorganisations who (with the exception of the sales force) are often far removedfrom the customer or who do not see their income as tied to customer satisfaction

in quite such a direct way Seen in this light, one of the outcomes of qualityinitiatives in this sphere, such as customer care programmes, is the creation ofheightened awareness of the crucial importance, for all employees, of maximisingcustomer satisfaction

Customer focused approaches have also resulted in more all-encompassingdefinitions of who constitutes the customer As well as external customers, forwhom the organisation provides goods and services, there are perceived to

be internal customers within the organisation itself Thus, for example, whenmanagers take part in an internal training course, they are the customers whoseneeds and expectations need to be met satisfactorily by the training department

In similar fashion, whenever any department or sub-unit produces work or anykind of service for another, the latter is a customer whose expectations need to

be met in the same way as external customers

In the UK, at the instigation of the enterprise-oriented governments of theeighties, the notion of the service provided to the customer has been widelyadopted within the public sector as a yardstick of quality From this perspective,anyone at the receiving end of any public sector activity is defined as a customer.Thus, in the UK, students have become clients of the universities Patients inthe National Health Service are now customers and family doctors are giventheir own funds and thus become customers who literally buy services (such asoperations) for their patients from the hospital of their choice While there areclear potential advantages in this approach if it leads to an increased concernfor the needs of the consumer of public sector services, the public sector (and

to some extent other providers of services), is different in important waysfrom the private sector manufacturing industries which spawned these ideas

on quality For example, let us assume that quality as far as the customer isconcerned is defined in terms of meeting customer expectations and creatingcustomer satisfaction Taking expectations first, Legge (1995, p 213) describesthe difficulties here with respect to healthcare provision As she points out,

it is not difficult to establish through market research what customers expectfrom a new car, but how can a customer (formerly patient) know what he orshe can reasonably expect from a public health service at any detailed level?

As far as customer satisfaction is concerned, a rather different example from

the Heriot-Watt Distance Learning MBA can be used to illustrate some of thecontradictions which result from trying to specify quality purely in these terms.One potential way to increase customer (i.e student) satisfaction in this casemight be to set extremely easy examinations which all students pass Wouldthis constitute a high quality product? Would difficult examinations, which asignificant number of students fail with resulting low customer satisfaction,necessarily result in a low quality MBA product? What both of these examplesillustrate is the fact that, while no one would deny the importance of meetingthe customer’s needs, defining quality purely in terms of customer satisfactioncan often be far less straightforward than it seems, especially when applied topublic service organisations and perhaps other providers of services.

3.2.3 Quality in the Guest Model of HRM

While Guest’s model implies both the delivery of quality products and customersatisfaction, he takes a somewhat different focus in defining quality He pro-poses three aspects of quality These are the quality of staff (to perform wellyou need good people), the quality of performance (the product quality andcustomer satisfaction elements), and a favourable reputation with the public forbeing a good employer in terms of HRM policies This last aspect can actuallyinfluence the other two quality dimensions in a number of ways For example,

an organisation which has a good public reputation is likely to attract high ity applicants when it advertises job vacancies This enables the organisation toselect good people (quality of staff) who will, by definition, tend to contribute

qual-to the achievement of quality of performance

3.2.4 Quality as Organisational Culture

So far we have defined quality in terms of its focus on people (i.e customers),

on products, or on some combination of both Yet another approach sees quality

as being even more fundamental to an organisation’s functioning than has beenimplied so far According to this perspective, the idea of quality is somethingwhich should be embedded in the organisation’s culture It is really a philosophyabout how things should be done and is an attitude which permeates all aspects

of the organisation’s functioning Quality comes first in all things and there is acontinual and unremitting striving for improvement in quality terms at all levels

in the organisation From this perspective, it is one of the core values of theorganisation Indeed, some would argue that it should be the defining value ofthe organisation

3.2.5 Total Quality Management

The notion that making quality central to an organisation’s philosophy is likely

to be conducive to high performance is intuitively very appealing However,

it does beg a most important question How far can HRM deliver this important quality emphasis, and what techniques do we have at our disposal toachieve this desired outcome? One well known system which has endeavoured

all-to achieve this objective is all-total quality management (TQM)

What is TQM?

As a system, TQM embraces the various perspectives on quality described above.However, it is most clearly identified with the idea of quality as something which

is fundamental to an organisation’s culture and philosophy In this sense TQM

is not just about products or services to external customers Rather, according

to its proponents, it is about a set of values and ways of operating which driveeverything the organisation does While TQM has a number of variants, mostTQM systems would, at least in theory, include the following:

1 The discipline of TQM applies to everything the organisation does – notjust the provision of goods and services to the external customer

2 The satisfaction of the needs of both external and internal customers isgiven the highest priority

3 Everyone in the organisation has to buy into the process – from top agement down to the shop floor Employee involvement and commitmentare seen as central to the success of TQM

man-4 The emphasis is on continuous improvement in quality rather than meeting

a required standard TQM is a long-term strategic activity, rather than aquick fix

5 TQM is about a change in culture It is about changing ‘the way we dothings around here’

6 The achievement of TQM objectives may require the modification of tional organisational structures including devolving power and responsibil-ity down the organisational hierarchy

tradi-7 New methods of work organisation are often introduced as part of TQM.These may include more flexible working arrangements and a greateremphasis on team working

It is clear from the above that the introduction of TQM can potentially involvefar reaching changes in organisational structures and functioning It may alsorequire new employee attitudes, responsibilities, and working arrangements.According to the theory, TQM is an integrated system requiring wide rangingchanges which mutually reinforce each other It is not about bolting a few newprocedures onto existing systems

Does TQM Work?

There is no doubt that TQM has been an extremely influential managementinnovation world-wide Its early applications were mainly seen in Japanesemanufacturing industry, and much of the credit for the superior quality ofJapanese products discussed at the beginning of this module was attributed

to the use of TQM methods It is therefore not surprising that TQM wassubsequently adopted enthusiastically in the West as part of the drive to competesuccessfully, both at home and in the international arena However, becausesomething is popular does not necessarily mean that it works To evaluatewhether or not TQM works we have to look at the evidence from studies ofTQM in action

There is no shortage of individual accounts of the success of TQM in thepopular management press However, often these are written by proponents

of the method, and as such, they often have more of a flavour of missionaryzeal than dispassionate analysis about them It is perhaps more illuminating

to consider the findings from more objective, academically-oriented research onTQM effectiveness The results from these studies are more mixed and, whilethere have been some reported successes (Hill, 1991), there have also been

reports of TQM failing to live up to its expectations (Wilkinson et al., 1992).

The failure of some TQM initiatives to produce the anticipated benefits hasbeen put down to a number of factors, including the following:

• failure to adopt a proper integrated approach, with a few TQM conceptsbeing selected and implemented on a piecemeal basis

• lack of support from middle managers who see it as more work for themwithout any additional benefit

• insufficient commitment from top management

• reluctance of management to devolve control and responsibility down theline

• employee perceptions of TQM as something imposed on them by top agement

man-Whatever the theoretical merits of TQM, and despite its widespread popularity,

it seems clear that there are many implementation problems in ensuring that thepromised quality enhancement is realised in practice

Total Quality Management and Key HRM Themes

Apart from the overall emphasis on quality, a number of more general HRMthemes have been incorporated in TQM systems This can be illustrated withreference to the seven defining characteristics of TQM listed above, as follows

• new organisational structures – point 6 above

• flexible working arrangements – point 7 above

• team working – point 7 above

• employee commitment – point 3 above

• culture change – point 5 above

These are all important themes in HRM thinking and practice However, each

in its own way has been the subject of controversy, particularly in terms ofits implications for individual and organisational performance Each will beexamined in detail in the course of the remainder of this module For now,the reader is simply cautioned that, whenever any of these concepts is foundwanting, this has implications for our evaluation of the effectiveness of TQM as

a system