Introducing Human Resource
Management
Chapter One
• Define the term Human Resource Management
• Describe the main activities of the Human Resource
Management function
• Outline the historical development of Human Resource
Management
• Be able to engage with the ‘Personnel’ or ‘Human
Resource Management’ debate
• Recognize what the term Strategic Human Resource
Management means
• Describe the key models and theoretical underpinning
in the study of Human Resource Management
• Contextualise Human Resource Management within
the macro and micro environment
An Overview
• Human Resource Management is essentially about
managing people in a way that both maximises and
rewards the contribution each person makes to the
organisation
• Organisations choose between a range of policies
and practices that can assist in achieving this
objective
– policies and practices such as how to recruit and
select employees and how to pay and reward
them
The nature of the employment relationship
• Important to understand the nature of the employment
relationship that exists between employers and employees
• All employment relationships have to be regulated in some
form or another so that each side understands its obligations
– traditionally negotiated with trade unions
• Most analyses of the employment relationship focus on the
concept of industrial relations
• Traditionally, most HR managers were essentially industrial
relations managers where their main responsibility was to
negotiate and interact with trade unions
The nature of the employment relationship cont’d
• Decline in both trade union membership & perceived
significance of trade unions in managing the employment
relationship has meant that managers, acting on behalf of
employers, now have a significant amount of control over this
relationship
– the open door policy
• For this approach to be effective, it is important that
employees are seen as assets that can be developed and
nurtured, rather than resources to be exploited, and that a
partnership exists between management and employees
What is Human Resource Management?
• Since the beginning of modern management theory the terms
used to describe HRM have included:
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personnel
industrial relations
employee relations
human resource management
• The term Human Resource Management highlights the
importance placed on empowering employees to assist the
organisation in the achievement of its strategic objectives
• People are viewed as an asset rather than a cost and are seen
as providing a source of competitive advantage
– the ‘human’ resources of the organisation should be
managed as carefully as other valuable resources
The impact of HRM on organisational performance
• The global financial crisis highlighted the need for
organisations to focus on ways of improving competitiveness
whilst at the same time keeping costs as low as possible:
– employee salaries and related costs are often the single
most significant element of the expenditure involved in
operating any business
The impact of HRM on organisational performance
CONT’D
• Effectiveness is measured in different ways
- The achievement and maintenance of sustainable
competitive advantage
- Organisational survival
- The development and maintenance of corporate
reputation
• The HR function has a key role to play in the achievement
of all these goals
The impact of HRM on organisational performance
CONT’D
• Many leading academics hold the view that HRM positively
improves organisational performance (see for example
Huselid, 1995; Huselid and Becker, 1996; Guest, 1997; Purcell,
Kinne, Hutchinson, Rayton and Swart, 2003)
• The difficulty occurs when trying to identify which specific
policies or practices are responsible given the integrated
nature of work and the different industries and organisational
contexts
• Despite the difficulties involved measurement has become
one of the most critical aspects of HRM
Evolution of Human Resource Management as an
organisational function
• During the Industrial Revolution in England in the late 19th
century the working conditions of men, women and children
were dreadful
• Some enlightened employers, often Quakers, who wanted to
improve the working conditions of their employees, providing
workplace and family amenities for workers such as lunch
rooms, medical care, company magazines, and housing
• The changes during this period to working conditions were
driven by not just a welfare agenda, but also a drive to
improve productivity
Evolution of HRM as an organisational function cont’d
• F.W. Taylor’s Scientific Management movement focused on
developing a systematic approach to the design of jobs and to
employment and pay systems
– Allied to these were tight control of workers
– Practices were often met with resistance from workers and
their union representatives
Evolution of HRM as an organisational function cont’d
• Elton Mayo and his colleagues in the Hawthorne
- Experiments in Illinois in the USA highlighted an emphasis
on personal development, a better understanding of group
work and the importance of working conditions as a means
of motivating employees, all areas that are covered by the
work undertaken by today’s HR function
Evolution of HRM as an organisational function cont’d
• 1960s and 1970s - introduction of a large body of legislation
which provided rights for employees
• 1980s recession led to high unemployment levels and
significant competition in the marketplace led to a focus on
productivity and ‘excellence’ associated with leading-edge
companies
• This led to a shift from traditional manufacturing industries to
growth in the service sector and a move towards a 24/7
society and an introduction of non-standard working hours
Development of the use of the term HRM
• The 1980s saw two separate lines of thought
developed where there was a move to differentiate
traditional Personnel Management (PM) from
Human Resource Management
• Storey (1989) identified four features of HRM, which
he believed differentiate HRM from traditional PM:
Development of the use of the term HRM cont’d
– HRM is explicitly linked with corporate strategy
– HR focuses on commitment rather than compliance of
employees
– Employee commitment is obtained through an
integrated approach to HR policies in the areas of
rewards, selection, training and appraisal
– HR is not just the domain of specialists in the HR
function, rather that HRM is owned by line managers
as a means of fostering integration.
Characteristics of HRM
A number of major characteristics are normally associated with
HRM :
• A strategic approach to the management of people
• Line managers work in partnership with HR
• HR policies and practices which are integrated and consistent
with the organisational culture:
• Unitarist frame of reference:
• A ‘soft’ HRM approach
• HRM is therefore not simply a set of individual practices, but
rather must be viewed as a system, where the elements are
integrated and mutually reinforcing in order to produce an
effective outcome at an organisational level (Kepes and
Delery, 2007).
Who is responsible for HRM in the organisation?
• The types of activities normally devolved to line managers
include employee selection, discipline, and performance
management with HR providing support and guidance
• This approach requires that line managers are equipped with
the appropriate skills, knowledge and attitudes to effectively
manage and develop their staff
• It is the overall vision, values and managerial ideology of the
owner, however, which has the critical influence on the way in
which HRM operates in an organisation
Key Human Resource Management activities
• The key role of the HRM function is to enable the organisation to
achieve its strategic objectives and to positively impact
organisational effectiveness by dealing effectively with all aspects
of the employment relationship
• HRM strategies are plans that address and solve fundamental
strategic issues related to the management of human resources in
an organisation
Key Human Resource Management activities
CONT’D
• HRM strategy is used to create a set of HRM policies
designed to achieve the organisation’s strategic goals
• These policies are then translated into specific HRM
practices, again aimed at meeting the strategic goals
Evolution of Human Resource Management roles
Roles for twenty-first century HR reflecting changing roles in
organisations (Ulrich and Brockbank , 2005)
– Strategic partner: strategy formulators, strategy
implementers, and strategy facilitators
– Employee advocate: focus on meeting the current needs
of employees
Evolution of Human Resource Management roles
cont’d
• Human capital developer: focus on meeting the
future needs of employees in terms of their learning
and development
• Functional expert: increase the administrative
efficiency of the HR function by designing effective
HR policies and practices
• Leader: requires mastering the previous four roles
and working in collaboration with other business
functions to set standards for strategic thinking and
corporate governance
Theoretical basis of HRM
• The matching model of HRM (Fombrun, Tichy and Devanna,
1984) or Michigan model of HRM proposed that an important
source of competitive advantage lay in the alignment of HR
strategy, employee management activities and corporate
strategy
• The Harvard model recognised the influence that various
stakeholders have on the development of HR policies (Beer et
al. 1984)
– The model suggested that effective implementation of HR
policies had a number of long-term consequences, one of
which was organisational effectiveness
Theoretical basis of HRM cont’d
David Guest (Guest, 1989) in the UK built upon this model to
develop a theory of HRM founded on four key policy
propositions that he proposed, if followed, will combine to
increase organisational effectiveness
- Strategic integration
- High Commitment
- Flexibility
- High Quality
Strategic Human Resource Management (SHRM)
• The integration between HRM and business strategy is
believed to contribute to the effective management of human
resources, to an improvement in organisational performance
and finally to the success of a particular business
• When referring to SHRM we are referring to the linkage
between human resource management policies and practices
and the strategic objectives of the organisation
• In differentiating between SHRM and HRM we see that SHRM
takes a macro level approach within the context of
organisational performance, whereas HRM operates at the
micro level
SHRM Perspectives: Contingency
• Proponents of this view believe there is no universal answer
to the choice of HRM polices and practices
– the choice is contingent on the context of the organisation
and its business strategy (external fit)
• Each organisation can choose a different set of polices and
practices, depending on their organisational specific context
and strategy
SHRM Perspectives: Contingency cont’d
• The adoption of a contingency HRM strategy is then
associated with optimised organisational
performance, where the effectiveness of individual
HR practices is contingent on firm specific strategy
• The most effective way to manage people will
depend on issues specific to the organisation, such
as industry sector, organisational size and economic
conditions
- Best-fit approach
SHRM Perspectives: Universalism
• Focuses on the existence of one set of HRM ‘best practices’
aimed at creating and enhancing high levels of employee
commitment and performance
– These will result in superior levels of organisational
performance, regardless of the context in which the
organisation operates and the competitive strategy of the
firm
SHRM Perspectives: Universalism cont’d
Pfeffer’s (1998) work identified seven practices which
result in higher performance
- Recruiting the right people
- High wages clearly linked to organisational
performance
- Employment security
- Information sharing
- Investment in training and skill development
- Self managed teams and decentralised decision
making
- Reduced status differentials
SHRM Perspectives: Configurations
• In the configurational or ‘bundling’ approach “the distinction
between best practice and contingency models begins to
blur” (Becker & Gerhart 1996:788)
• The view is that effective combinations, or arrangements of
HR practices will work by supporting and complementing each
other (Huselid & Becker, 1995; Delery & Doty, 1996)
• MacDuffie (1995) highlights that implicit in the idea of a
bundle is that HR practices within a bundle are internally
consistent and interrelated
Impact of environmental context on HRM choices
• At its simplest, the environment is anything outside an
organisation which can affect an organization’s present or its
future activities
• The environment is context dependent and is unique to each
organisation
• Organisations have one of two choices about how they
manage their relationships with their environment
– Reactive
– Proactive
• This context is normally identified as comprising (i) the
internal organisational environment and (ii) the external
organisational environment
Internal organisational environment
Organisations are effectively all distinctive
This distinctiveness is created by many different factors
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The size and structure of the organisation
The sector the organisation operates in
The length of time the organisation has been operating
Workforce characteristics
The financial health of the organisation
Established ‘custom and practice’
The organisational culture
The values and managerial ideology of the senior management team
External organisational environment
The factors are often classified as PESTLE or more recently as
STEEPLE:
– Social
– Technological
– Economic
– Environmental
– Political
– Legal
– Ethical
• Can you define the term Human Resource Management?
• Describe the main activities of the Human Resource
Management function
• Can you outline the historical development of Human
Resource Management?
• Do you now know how to engage with the ‘Personnel’ or
‘Human Resource Management’ debate?
• Can you recognize what the term Strategic Human Resource
Management means?
• Describe the key models and theoretical underpinning in the
study of Human Resource Management
• Can you contextualise Human Resource Management within
the macro and micro environment ?