1. Managing People in Organisations
Lecture 2 - HRM Strategy and its Fit to Organisational Goals

2. Learning Objectives for this Lecture
Explore the theoretical building blocks (assumptions) of HRM
Examine the development and spread of HRM ~ rhetoric or reality
Consider the design of HRM Policies and Interventions

3. What is HRM?
HRM emphasises that employees are critical to achieving sustainable competitive advantage, that HR practices need to be integrated with the corporate strategy, and that HR specialists help organisational controllers to meet both efficiency and equity objectives.
(Muller-Camen, Croucher, Leigh, 2008; Bratton & Gold, 1999)

4. HRM Perspectives Hard HRM: Utilitarian Instrumentalism
Soft HRM: Developmental
Each perspective insinuates a distinct management style leading to a set of ‘universal best practices’ or ‘best fit’ between the strategic intent of an organisation and the utilisation of its human resources.
(Marchington & Wilkinson 2005)

5. Strategic - Hard HRM Utilitarian Instrumentalism
An integrated approach
HR is a strategically driven process
Employees are a factor of production
The HR department’s preferred option
Direction followed by an organisation in how it secures, develops, and from time to time, dispenses with human resources to help it continue in the long run
(Legge 2005)

6. Strategic - Soft HRM
Resource-based model draws attention to the strategic value of the workforce
Employee = Resource
Training = Investment
Employee development is the way to secure competitive advantage
engenders: commitment; adaptability; high quality of skills and performance
employees are proactive rather than passive inputs

7. HRM Strategy and Best Practice Framework
Improved organisational performance can be achieved by implementing best practice
Mechanistically matching strategy with HRM policies and practices
Do successful practices in one organisation work well in another? Are there normative recipes for success?

8. Limitations to Best Fit and Practice Models
Deterministic
Ignores multiple influences within the pluralistic system
Assumes managers have complete control over workers
Models are static and do not focus on the process of change
Neglects the significance of institutional forces e.g., EU
Plausibility and utility of applying ‘best fit’ models in practice
Strategic choice influenced by both the internal and external environment

9. Storey’s (1992) Model Of HRM
Beliefs and assumptions
HR gives organisations a competitive edge
Commitment rather than compliance
Selection and development are central to HRM
Strategic qualities
HR decisions are of strategic importance
Senior managers must be involved in HRM
HR policies need to be integrated into business strategy
Critical role for line managers
HR too important to be left to personnel specialists alone
Line managers are deliverers and key drivers of HR
The management of managers is critically important
Key levers
Culture more important than procedures and systems
Integration of HR practices
Emphasis on devolved responsibilities and empowerment

10. The Harvard Model After Beer et al. (1984)
STAKEHOLDER INTERESTS
Shareholders
Management
Government
Community
Trade Unions
HRM POLICY
CHOICES
Employee influence
HR flows
Reward system
Work systems
HR OUTCOMES
Commitment
Competence
Congruence
Cost effectiveness
LONG TERM CONSEQUENCES
Individual
Well-being
Organisational
Effectiveness
Societal
well-being
SITUATIONAL FACTORS
Workforce characteristics
Business strategy
Conditions
Management philosophy
Labour market
Trade Unions
Task Technology
Laws and societal values

11. Strategic integration
Guest’s (1989) Model
HIGH
Job performance
Organisational/
Job design
Strategic integration
HIGH
Problem solving
Change
Management of
change
Commitment
Recruitment
Selection
Socialisation
Innovation
Flexibility
Appraisal
Training and
development
HIGH
Cost effectiveness
Reward systems
Quality
LOW
Labour turnover
Absence, Grievances
Communication

12. Problems and Contradictions Within HRM
How extensive is HRM? (WIRS )
Increasing take up of HRM practices
Pick-and-mix approach
Hard aspects of ‘HRM’ ~
labour productivity and reduced costs
A strategic role for HR managers?
Devolvement v Development
Empowerment or Intensification
Flexibility v Commitment
Strong Culture v Flexibility

13. Corporate, Competitive, and Operational Strategies
Johnson & Scholes (2002:10) define strategy as:
‘the direction and scope of an organisation over the long term, which achieves competitive advantage for the organisation through its configuration of resources within a changing environment and to fulfil stakeholders expectations’
Can HRM be viewed as a universalist, high commitment, best practice model of people management?

14. Internal and External Dimensions of the Strategic Problem

15. HR Professionals in a Strategic Role
Role changed from controllers to consultants
Architects of large, one-sized programmes to smaller tailor-made solutions for specific purposes
Implementation of HRM practices devolved to line managers
A strategic role for HR managers? .

16. Role of Line Managers in HRM: Sheffield Study
Good news and bad news
Line managers saw the necessity and value of doing HR work but for various reasons were often unable to deliver consistent results
Line managers were willing to take on HR work but would excuse any failings on their part by saying it was actually the preserve of HR professionals
Line managers valued HR professionals' input but wanted to have the final say in any personnel decisions
Line managers feel that much HR work is a matter of common sense but it is clear that failures in devolved HR come from lack of specific skills, e.g. negotiation
Devolved HRM - the upside
managers reported being able to act independently within guidelines and using advice from the HRM function.
There was a general feeling that "it came with the territory", i.e. being a professional and responsible line manager means being involved in everything that affects the performance of your staff.
Devolved HRM - the downside
Little recognition from top management. At the same time, HR professionals were seen as policing line managers, being too rule-bound and too quick to exercise ultimate authority over issues such as pay and this inevitably led to conflict.
The success of HR work was also dependent on personalities.
In the words of one interviewee, some managers are good at strategy and others are good at people.
Performance-related pay schemes could be made inconsistent by managers allowing personal perceptions of staff to over-ride guidelines.