STRATEGIC HUMAN RESOURCE MANAGEMENT

DISCUSSION What is meant by the term “Strategic Human Resource Management” and how has it been used to study the employment relationship?

HUMAN RESOURCE MANAGEMENT “… human resource management (alternatively, ‘employee relations’ or ‘labor management’) includes the firm’s work systems and its models of employment. It embraces both individual and collective aspects of people management. It is not restricted to any one style or ideology. It engages the energies of both line and specialist managers… and typically entails a blend of messages for a variety of workforce groups.” Purcell & Boxall (2003) P. 24

HUMAN RESOURCE MANAGEMENT  “HRM as a subject of study assumes that the interests of employees and employers will coincide and is preoccupied with the shared goal of organizational effectiveness that marginalizes the interests of other stakeholders such as employees. HRM is also predominantly focused on the individual and seeks solutions to HR problems within the firm, with an analytical focus on the motivations and aspirations of individual employees.”  Bach (2005) P. 4

STRATEGY “The determination of the basic long-term goals and objectives of an enterprise and the adoption of courses of action and the allocation of resources necessary for carrying out these goals.” Alfred Chandler, Strategy and Structure, (MIT Press, 1962), P. 13

STRATEGY  At the core, its is the debate between best fit and best practice  Used for gaining a competitive advantage Innovation Offer something new; different from competitors Quality Enhancement Products and services Cost Reduction Attempt to be the lowest cost provider  Optimal strategy depends on the wants and nature of competitors

TYPES OF STRATEGY  Business Examines correspondence between each firm’s competitive strategy and its system of high performance work practices  Operations An internal approach; connected to the work organization inside a firm  Resource View Views human resources as sources of sustained competitive advantage

STRATEGIC HRM  “(S)trategic HRM is about how the employment relationships for all employees can be managed in such a way as to contribute optimally to the organization’s goal achievement.” Legge (2005) P. 223

HR PRACTICES LINKED WITH COMPETITIVE STRATEGY  Recruitment  Training  Career Path  Promotions  Socialization  Openness

HIGH PERFORMANCE PRACTICES  Features Comprehensive selection/recruitment procedures Incentive compensation Extensive employee involvement/training  Expected Results Improve knowledge, skills, and abilities of employees Increase motivation Reduce shirking Enhance retention of quality employees (reduce tenure of non-performers) Huselid (1995) P. 635

HIGH COMMITMENT PRACTICES  Unique to the High-Performance Paradigm Sophisticated selection and training Emphasis on values, human relations skills, and knowledge skills Behavior-based appraisal Single status policies Contingent pay systems  Traditional Personnel Practices Job security Above market pay and benefits Grievance systems Godard (2004) P. 351

CONCLUSION Model of the Basic Strategic HRM Components HUMAN CAPITAL POOL: Knowledge, Skill, Ability EMPLOYEE RELATIONSHIP BEHAVIORS: Psychological Contracts, Citizenship, Discretion Wright, P. Dunford, B. and Snell, S. (2001) Human Resources and the Resource Based View of the Firm, Journal of Management, 27:6 PEOPLE MANAGING PRACTICES: Staffing, Training, Rewards, Appraisal, Work Design, Participation, Recognition, Communication

CONCLUSION  Effectiveness can be increased by systematically melding human resource practices with the selected competitive strategy  The success or failure of a firm is not likely to turn entirely on its strategic human resource management practices, but these practices are likely to be critical