A Strategic View on Winning
Employees’ Hearts and Minds
Clint Chadwick
Associate Professor of Strategy and
Human Resource Management
4/2/15
Topics of Discussion
• Topic 1: What people are saying about
strategic HRM
• Topic 2: Principles of strategic HRM
• Topic 3: How do organizations put this into
practice?
Topic 1: What People Are Saying about
Strategic HRM
• The focus of strategy has shifted to internal
factors
• Today, labor comprises approximately 65% of
companies’ cost structures
– People management has traditionally been either
oversimplified or seen as an art
– Thus, people management is a key untapped
strategic leverage point
Traditional HRM vs. SHRM
• Individual HR policies and
practices
• Individual or group level
performance
• Transactional decision
making
• HR systems
• Organizational
performance
• Strategic choice
Lots of evidence linking commitment-based
HR systems and organization performance
• This has led to universalistic prescriptions
• But there are lots of reasons to be skeptical…
• Is this accurate?
– Lots of differences between systems
– “File drawer” problem that non-significant results go
unpublished
• Is this interesting?
– Strategy is about choice, and universal prescriptions
run counter to choice
SHRM Research Emphasizes “More HRM is Better”
Always upward sloping?
1
0.5
-0.5
-1
-1.5
Standard Deviations of the Standardized HR Practice Variables
Meetings
Rotation
Selection
Source: Chadwick, C. 2007
Training expense
5.25
4.75
4.25
3.75
3.25
2.75
2.25
1.75
1.25
0.75
0.25
-0.25
-0.75
-1.25
-1.75
-2.25
-2.75
-3.25
0
-3.75
Estimated Effects on Log of Value Added
1.5
It’s easy to overdo it with part-time workers
0.6
0.4
Effects on Log of Value Added
0.2
0
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
-0.2
PT Workers (Model 2)
-0.4
PT Workers2 (Model 3)
-0.6
-0.8
-1
-1.2
-1.4
Values of Log Part-time Workers
Source: Chadwick & Flinchbaugh, 2012
Can Strategy Theory Get Us Past
Sloganeering?
Topic 2: How People Issues Influence
Organization Performance--Principles
•
•
•
•
The Resource-based View
Strategic Factor Markets
Human Capital
“Mind the gap”
The Resource-based View
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•
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•
•
Value
Rareness
Inimitability
Non-Substitutability
Immobility
Some Attributes of Perfect Market
Competition
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•
•
•
•
Perfect price and product quality information
Costless transactions
Free exchange between parties in the market
Free movement into and out of the market
Participants that behave in their rational selfinterest
Implications of the RBV
• Operational effectiveness vs. competitive
advantage
• Business units: What do you do that isn’t a
commodity service or activity? Does a
stakeholder care enough to pay for it?
• Organizations: Not all employees matter to
the same degree
Strategically Valuable Characteristics of
Human Beings
•
•
•
•
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•
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Adaptability
Inherent uniqueness
Coordination
Knowledge, creativity, innovation
Non-depletion with use
Relationships
Free will
What Does This Mean For Me?
• The RBV: What do I do for the organization
that they can’t get from anyone else?
– Labor can be a commodity, like anything else
– How can I signal to my organization that I’m
providing this value?
– Differentiation isn’t just uniqueness
Topic 3: How do organizations put this into practice?
• HRM systems
• Portable vs. Organization-specific Human
Capital
• The Dual Nature of Employment
• Discretionary effort/Types of commitment
HR Systems on the Organization
Level
HRM Systems
Performance
Strategy
Example HR system:
Pfeffer’s HR Best Practices
•
•
•
•
•
•
•
employment security
selective recruiting
high wages
incentive pay
employee ownership
information sharing
participation and
empowerment
• self-managed teams
• training and skill
development
• cross-utilization and
cross-training
• symbolic egalitarianism
• wage compression
• promotion from within
Portable vs. Organization-specific
Human Capital
• Portable HC: Valuable for many organizations
– Employees typically make these investments
– Organizations need assurances that they will not forfeit
their investment
• Organization-specific HC: Valuable only for one
organization
– Organizations typically make these investments
– Employees need assurances that organizations will
not take advantage of them if they invest in
organization-specific skill
The portable skill/organization specific
skill paradox
• What can your organization credibly offer you
to induce you to make bigger investments in
organization specific skill?
Organization Specific
Portable
Common
n/a
OK for organizations, bad
for workers
Scarce
Great for organizations
Great for workers
The Dual Nature of Employment
• Employment as an
economic exchange
– Labor for wages
– Uncertain contracts
– Indefinite contracts
• Employment as an
affective relationship
– Reciprocal exchanges
– Psychological contracts
– Importance of noneconomic factors
Example: Profit-sharing
• Behavioral modification view: Employees work
harder to increase profitsharing payouts
– 1/n problem
– Line of sight problems
– Is the amount large enough?
• Affective view: Employees reciprocate the gift
of profitsharing with greater effort
Discretionary Effort/
Types of Commitment
• Behavioral/Compliance
• Normative
• Affective
Control Systems and
Types of Commitment
• Behavioral/Compliance: bureaucracy,
hierarchy, budgetary
• Normative/Affective: culture, leadership,
relationships with co-workers, mission
Conclusion
• Thank you – Let’s continue the conversation
Clint Chadwick
Associate Professor of Strategy and Human Resource Management
University of Kansas School of Business
326 Summerfield Hall
office: (785) 864-7559
1300 Sunnyside Avenue
fax: (785) 864-5328
Lawrence, KS 66045-7601 web: www.business.ku.edu/faculty/chadwick-clint/