Human Resource Management at Work

Mick Marchington, Adrian Wilkinson, Rory Donnelly, Anastasia Kynighou

• Publisher: CIPD - Kogan Page
• Year: 2016
• ISBN:
  9781843984368
• Edition: 6
• Topic: Business
• Subtopic: Human Resource Management
• Index: Business

A leading textbook in its field, Human Resource Management at Work provides a clear introduction to the multiple meanings of HRM (human resource management) and the relationship between strategy and HRM. Covering international and comparative HRM as well as HRM and performance, it is filled with case studies and activities to bring the subject to life while summarizing the major forces shaping HRM and looking at the principal theoretical frameworks.Ideal for business and HR students taking a critical look at HRM theory and practice, this fully updated 6th edition of Human Resource Management at Work combines the latest research with real-world examples. Linking theory with practice, it encourages a critical awareness of HRM through case studies, real-world examples and activities. Now with a closer analysis of the forces shaping HRM at work and the growth of insecure work, it also features new case studies, an updated literature review and a stronger emphasis on international and comparative HRM. Knowledge intensive firms, employee engagement and talent management are discussed in detail as well, as is the role of bodies such as 'Engage for Success' in promoting new methods of working. Online supporting resources include an instructor's manual and lecture slides.

PART 1

HRM, STRATEGY AND THE GLOBAL CONTEXT

CHAPTER 1

HRM, Strategy and Corporate Social Responsibility

LEARNING OUTCOMES

By the end of this chapter, readers should understand and be able to explain:

• the competing meanings of HRM and their implications for managing people
• how strategy is conceptualised and its role in shaping patterns of HRM
• the nature and importance of ethics, professionalism and diversity and their contribution to the business and moral case for HRM.

Drawing on this knowledge and insight, readers should be able to:

• advise senior managers about how to recognise and respond to stakeholder influences on business and HR strategies to enhance organisational and individual performance
• advise managers as to how HR strategies can link with broader corporate strategies
• demonstrate an ethical and professional approach to HRM taking into account its multiple meanings.

1.1 INTRODUCTION

HRM became a fashionable term from the mid-1980s in the UK and began to replace other terms such as ‘personnel management’. Much of the interest was around the idea of HRM as a new and distinctive approach, attempting to develop and utilise the potential of human resources to the full in pursuit of the organisation’s strategic objectives (Cascio and Boudreau 2013; Wilkinson et al 2016), and led to talk of an HRM revolution. But HRM can take many forms in practice and it often varies between organisations and the occupational group that is targeted. HRM cannot be analysed in isolation from the wider strategic objectives of employers and measured against these, specifically the need to satisfy shareholders, or (in the public sector) government and societal demands for efficiency and effectiveness.

However, strategy is also a multidimensional concept and, despite common usage of the term, it is more complex than the simple military analogy implies. Strategies emerge within organisations rather than being set merely by senior managers (generals) and cascaded down the hierarchy by more junior managers to the workers (the troops). Moreover, strategies are also influenced by wider societal objectives, legislative and political frameworks, social and economic institutions, and a range of different stakeholder interests. Strategy is not simply about financial returns to shareholders but also involves a rather wider base of stakeholders that includes customers, local communities, the environment and, of course, workers. HRM differs from other managerial functions because of its professional and moral base, so trust and integrity are important elements in how HRM is practised at work – hence, the interest in corporate social responsibility and the idea that HRM has to be viewed in relation to organisational strategies and wider institutional forces.

1.2 THE MEANINGS OF HUMAN RESOURCE MANAGEMENT

‘People are our most valued asset’ has become a very common but rather overused and trite-sounding phrase. Indeed, historically competitive strategies have not been based on the capabilities of employees but rather labour has been seen as a cost to be minimised, particularly in hard times when downsizing and retrenchment predominates (Cascio 2015; Mellahi and Wilkinson 2010a). But more recently it has been noted that traditional sources of advantage, such as access to capital, protected markets or proprietary technologies, are declining and organisations need to have the ability to innovate and learn, which puts greater emphasis on human resources (Wilkinson et al 2009b). HRM is now often seen as the major factor differentiating between successful and unsuccessful organisations, and is considered more important than technology or finance in achieving competitive advantage. This is particularly pertinent in the service sector, where workers are the primary source of contact with customers, either face-to-face in a service encounter or over the telephone or the Internet. Even in manufacturing firms, the way in which human resources are managed is seen as an increasingly critical component in the production process, primarily in terms of quality and reliability. Much of this revolves around the extent to which workers are prepared to use their discretion to improve products and services. In this argument, a particular style of HRM is envisaged, one that can be broadly termed the ‘high commitment’ model (see Chapter 3).

Wilkinson et al (2009a, pp4–6) argue that HRM can be seen as having:

1. A human focus. The focus on employee rights and well-being is evident in the history of HRM. That focus can be seen in the current emphasis on work design, work–life balance and equality and diversity, all of which are covered. At its core, HRM focuses on managing the employment relationship and agreements (implicit and explicit) between individuals and organisations. In some cases – as we see in Chapter 6 – HR plays the role of employee advocate in ensuring the equitable treatment of employees in order to ensure that the interests of employees as well as the organisation are protected.
2. A resource focus. HRM focuses on employees as a resource in enhancing the performance of the organisation. We examine HR practices that are linked to productivity and enhancing the competitiveness of the firm by ensuring the organisation acquires employees with the ability and motivation to perform via recruitment and selection approaches, and builds capabilities by training and development and performance management. From a more macro perspective, a resource focus of HRM addresses the set of practices for managing the aggregate of human capital in organisations. Much of this literature is informed by the resource-based view of organisations (see Chapter 4, and Boselie and Paauwe 2009).
3. A management focus. In recent years there has been much focus on how the HR function has evolved. While the earliest roles of HR managers emerged from the administrative and transactional requirements of employment issues, the contemporary setting requires HR managers to adopt a more strategic approach that focuses on managing change, building organisational culture and becoming a partner in the business. This requires a different set of skills, knowledge and behaviours of HR managers.

As Morris and Snell note (2009, p85), it is not just HR scholars that are calling for a stronger focus on the human resources inside the firm and how they are managed, but mainstream strategy scholars are also beginning to acknowledge that they need to focus on ‘micro-level’ factors; the value proposition of a firm is seen as relying more on knowledge and service activities, and so strategic management depends very much on what people know and how they behave. As Morris and Snell note, because no other resource possessed by a firm has free will or heterogeneity of ideas, products and services often originate in individuals, making human resources – and how they are managed – a potentially unique source of strategic leverage. The increase in differentiated workforces poses added cultural, geographical and competency gaps (Becker and Huselid 2009).

HRM is still a relatively new area of study that is seeking to gain credibility in comparison with more established academic disciplines – such as economics, psychology, sociology and law – which have a much longer history. HRM is often contrasted with industrial relations and personnel management, with the former laying claim to represent the theoretical basis of the subject while the latter is viewed as the practical and prescriptive homeland for issues concerning the management of people. In addition, there are so many variants of HRM it is easy to find slippage in its use, especially when critics are comparing the apparent rhetoric of ‘high commitment’ HRM with the so-called reality of life in organisations that manage by fear and cost-cutting. Similarly, HRM often attracts criticism because it can never fully satisfy business imperatives nor the drive for employee well-being. As the remainder of the book explores issues such as these in depth, we focus here on a brief résumé of the main strands of the subject. In the concluding section of the chapter we outline what we see as the main components of HRM.

1.2.1 THE ORIGINS OF HRM IN THE USA

The terminology of HRM originated in the USA subsequent to the human relations movement (Kaufman 2014). The term first appeared in the textbook literature from the mid-1960s, specifically in relation to the specialist function which was interchangeably termed ‘personnel’ or ‘human resources’. What really helped HRM to take root a couple of decades later, however, was the Harvard framework developed by Beer et al (1985). Here, HRM was contrasted with ‘personnel’ and ‘industrial relations’; the latter were conceptualised as reactive, piecemeal, part of a command-and-control agenda and short term in nature, while HRM was seen as proactive, integrative, part of an employee commitment perspective and long term in focus. In line with this perspective, human resources were seen as an asset and not a cost. The Harvard framework consists of six basic components. These are:

1. Situational factors, such as workforce characteristics, management philosophy and labour market conditions, which combine to shape the environment within which organisations operate.
2. Stakeholder interests, such as the compromises and trade-offs that occur between the owners of the enterprise and its employees and the unions. This makes the Beer et al framework much less unitarist than some of the other models (Bratton and Gold 2007, p23).
3. HRM policy choices, in the areas of employee influence, HR flow, reward systems and work systems. Employee influence is seen as the most important of these four areas, again making this model somewhat different from some other versions of HRM.
4. HR outcomes, in terms of what are termed the ‘4Cs’ – commitment, competence, cost-effectiveness and congruence. This incorporates issues connected with trust, motivation and skills, and it is argued that greater employee influence in the affairs of the company is likely to foster greater congruence (Beer et al 1985, p37).
5. Long-term consequences, such as individual well-being, organisational effectiveness and societal goals. Unlike many other models of HRM, this framework is explicit in recognising the role that employers play in helping to achieve wider societal goals such as employment and growth.
6. A feedback loop, which is the final component in the framework, demonstrating that it is not conceived as a simple, unilinear set of relationships between the different components.

A key feature of the Harvard approach is that it treats HRM as an entire system, and it is the combination of HR practices that is important. As Allen and Wright (2007, p91) note, ‘this led to a focus on how the different HRM sub-functions could be aligned and work together to accomplish the goals of HRM’. This is often referred to as horizontal alignment or integration (see Chapter 3). While acknowledging the role of government and the community, this framework is essentially positivist because it assumes a dominant direction of influence from broader situational and stakeholder interests through to HR outcomes and long-term consequences. In reality, the relationship is much more complex and fragmented as employers are unable to make policy choices in such a structured way, especially if they operate in networks of firms up and down supply chains or across national boundaries.

The other main school of thought which developed in the USA was the matching model (Fombrun et al 1984). This emphasises the links between organisational strategy and specific HR practices, concentrating on vertical rather than horizontal alignment. The HR practices are categorised into selection, development, appraisal and reward. The human resource cycle – as the four components are known – are tied together in terms of how effectively they deliver improved performance. In Devanna et al...