Strategic human resource management (SHRM) is based on two fundamental ideas:
– human resource management has major strategic significance for the firm.
Knowledge, skills and employee interactions can form the firm’s strategy and its implementation;
– human resource practices are instruments to develop a firm’s strategic capacities through proper management of personnel.
Expressed in these terms, SHRM demonstrates many similarities with the vision of the firm based on RBV – resource-based view – resources (Wernerfelt 1984; Grant 1991).
Those trained in RBV think that the competitive advantages of firms stem from the resources at their disposal. As a result, it is the role of the managers to select, develop, combine and redistribute these resources. Not surprisingly, many authors have attempted to develop a connection between human resource management and the theory of the firm based on resources (Wright et al. 2001). However, a number of these authors recognize that beyond the analogy involving the notion of resources, SHRM lacks a theoretical framework comprising every aspect and strategic implication (Delery 1998). Backed by this logic, researchers and particularly Colbert (2004), whose ideas we will focus on later, attempt to incorporate human resource management, the strategic vision based on
resources and complex systems.
Next, we will use Colbert’s results (2004) to show the connections between complex
systems and the RBV approach within the scope of human resource management. We will then discuss the implications of complex systems on research and human resource
management practices.
5.4.1. RBV and complex systems
Several authors note that RBV establishes an interesting framework to justify the
importance of human resources in developing firm’s competitiveness. It provides rather little information on the implementation and the way an organization must develop their human resources to attain and maintain a competitive advantage (Delery 1998). This situation is not surprising insofar as the strategic value of RBV resources stem from the complexity of combinations and the inimitable character of the resources. Furthermore, this complexity is difficult to resolve. This difficulty arises from the causal ambiguity connected to resource combinations, the inability to observe certain interactions and path dependence in their accumulation. It is difficult in this case to find a level of direction that maintains the strategic aspect of RBV while making it sufficiently operational.
As Colbert points out (2004, p. 346), the difficulties connected to the use of RBV and potentially echoing in the sphere of complexity are: i) the importance of creativity and adaptability; ii) causal ambiguity; iii) the notions of imbalance and path dependence; and iv) the global representation as a system. This represents a set of characteristics that is particularly important when it comes to describing and analyzing complex systems, as shown in the previous chapters.
Works on SHRM are particularly attentive to the concept of slack, the free time left to individuals. In this – unsupervised – time, employee creativity can be freely expressed.
This point was underlined by Penrose (1959, p. 85) in particular: “The availability of unused productive services within it creates the productive opportunity of a given firm.
Unused productive services are, for the enterprising firm, at the same time a challenge to innovate, an incentive to expand, and a source of competitive advantage”.
The use of the creative resources employed has given rise to many debates, notably on the duality between control and creativity. For many SHRM authors, the late 1990s and the 2000s were marked primarily by the control of productive resources and little by creative
resource management. This is highlighted, for example, by Snell et al. (1996, p. 65): “In the context of achieving sustained competitive advantage, we need less research on the control attributes of SHRM and more research on how participative systems can increase the potential value of and impact of employees on firm performance. If human capital is valuable, we have to learn how to unleash that value”.
Causal ambiguity and path dependence make it difficult to precisely understand the interaction mechanisms through which human resources and the policies that support them create value. To imitate a complex system, we must know how the elements
interact. Researchers have shown that hiring human resource (HR) managers to imitate their previous organizational system and methods does not lead to high performative results (Becker and Gerhart 1996).
In the previous chapters, we have specifically insisted on the importance of interactions between the actors within complex systems. These interactions are many of the social links that make some employees valuable. Black and Boal (1994) put forth the notion of
“system-level resources” to refer to the strategic organizational abilities that only exist within certain interactions and that are limited to certain relationships. Many works have shown the importance of these strategic connections by using the notions of
complementarity or co-specialization (Brumagim 1994).
For Peteraf (1993), the resources particular to the system (and thus to the firm) are quite immobile. This fixedness of certain resources is the source of some firms’ lasting
competitive advantage. It is a source of value and profits for the firm (Burger-Helmchen and Frank 2011).
Table 5.2 summarizes and compares the characteristics of the firm’s vision based on resources and complex systems. This table, inspired by Colbert (2004), has been updated with remarks by Stacey and Mowles (2015). The different dimensions highlighted show that the two approaches, RBV and complex systems, have the potential to enrich one another. Since SHRM is supported by firm’s theory based on resources, the potential connections between human resource management and complex systems are possible.
They are the subject of discussion in the next section.
Table 5.2. Connects and complementarity between RBV and complex systems (source:
Colbert 2004, p. 350)
Characteristics RBV Complexity
Creativity/adaptability The source of competitive advantage lies in latent creative potential,
encapsulated in the firm’s resources
CAS create new responses to environmental modifications
Complexity and ambiguity
Inimitability stems from social complexity and causal
ambiguity
CAS are made up of complex, nonlinear, non-deterministic interactions
Imbalance,
dynamism, and path dependence
Complex relationships are inherited from firms’ history;
imbalance is habitual
The system evolves regularly;
imbalance is synonymous with stagnation; history and the timeline are pronounced Resources at the
system level
Some resources only exist at the system level through construction
Some characteristics only exist at the system level thanks to agent intervention
5.4.2. Strategic human resource management
Figure 5.3 illustrates the integration of SHRM into firm’s theory as a complex system.
Conceptual approaches and levels of analyses have been represented in this figure. The oval shapes indicate the range of each conceptual approach. As readers turn their
attention to the right, the degree of interaction between the system elements becomes greater.
This human resources approach specifically emphasizes that HR systems are very difficult to transfer from one firm to another. Path dependence makes it so rigid that a firm’s HR practices only apply in a very specific framework. By definition, though, the employees in each firm, the organizational culture and the routines in place are specific to each firm. In addition, an optimal SHRM practice for one firm may be ill adapted to
another’s needs. This approach also is a large part of self-organization. The implications for HR managers lie at the level of specifying the rules to be put in place. In this
approach, their role is to set some basic principles that will be available locally within each unit of the firm. Each unit will self-organize, where the HR managers’ role is to
avoid unacceptable drifting and fixing better practices once local actors are self-organized, if necessary.
Figure 5.3. Theoretical conceptualization of the firm and complexity (source: Colbert 2004). For a color version of this figure, see www.iste.co.uk/heraud/creative.zip
The system approach implies that HR managers make it a priority to develop resources at the system level, for these are useful in large quantities, which gives them greater value.
Likewise, greater attention must be paid to interfunctional activities. To encourage these, HR managers can encourage personnel to move between different departments and
functions in the firm or offer a training period when a new employee arrives. This could involve spending several months in different firm functions to improve knowledge of the system as a whole.
The information system must enable each employee to be quickly and correctly informed of important changes that affect the system as a whole. The formal methods of informing employees must be completed with informal practices (particularly at the unit level), recourse to forums and also a solution to ensure this information exchange, even if numerous works show that these forums are used very little by employees in the end.
One of the missions of HR managers is all the more difficult within the scope of complex systems: establishing performance measures and incitation mechanisms. Usual practices actually focus on local effects and immediate employee performance, yet a complex
systems approach must look at long-term impacts and the value created by an employee at different levels. Designing performance measures and remuneration patterns in this case requires considering a large number of factors, often beyond the classical mapping criteria such as a balanced scorecard (Kaplan and Norton 2004). These kinds of works in SHRM are still few and far between, and those that exist could be largely amended.
However, the school of thought concerning the micro-foundations of strategy offers new possibilities to echo complex systems within the scope of human resource management
and strategic management by focusing on the smaller elements in a complex system (Foss and Pedersen 2014; Felin et al. 2015).