The Routledge Companion to Strategic Human Resource Management

John Storey, Patrick Wright, David Ulrich, John Storey, Patrick M. Wright, David O. Ulrich, Patrick Wright, David Ulrich, John Storey, Patrick M. Wright, David O. Ulrich

• Publisher: Routledge
• Year: 2008
• Print ISBN: 9781138386006
• eBook ISBN: 9781135981976
• Topic: Business
• Subtopic: Business General
• Index: Business

Combining up-to-date research, innovative content and practical perspectives, this book is the benchmark by which all other strategic HRM reference works should be measured. Leading figures from around the globe survey the current state of the discipline, while also introducing and exploring new, cutting edge themes in order to offer a comprehensive and authoritative overview of the field.

Section introductions and integrative critiques pull together the separate themes to provide cross-comparisons between chapters to create a cohesive and well-structured volume. Unlike other texts in this area, The Routledge Companion to Strategic Human Resource Management incorporates contributions from leading management and business writers in areas adjacent to human resource management, including strategy, innovation and organizational learning. These add fresh and challenging insights into HRM themes from key mainstream business and management thinking. The field of strategic HRM is thus enriched and extended by this volume.

Focusing on the interplay between theory and practice, this book is an essential resource for researchers and students studying human resource management and strategy.

Introduction

DOI: 10.4324/9780203889015-1

This first Part contains just one chapter. Written by the editors of the volume, it seeks to set the scene for the book as a whole. To do this it describes the background and identifies some of the central themes of the book.

Four themes in particular deserve special mention. First, that there is a growing demand for a bridge between theory, research and practice. The chapters in this volume seek to attend to this. Second, that there is an increasing realization that what goes on inside a firm affects what happens outside, and vice versa. The chapters in this book make the case for connecting HR issues inside the firm (e.g., employee commitment, policies, etc.) in ways which connect to the external world – suppliers, investors and customers. How things are done inside the organization shape the things that go on outside – and vice versa. A good example of this is the notion of ‘employer brands’. A third theme is the need for HR to manage both at the micro-and macro-levels – for example, to actively manage individual talent and organization culture and form. The fourth theme is that HR must learn to manage both transactions (administrative, operational work of HR) as well as transformation (change, strategic and long-term work). These are often seen as two different types of operations. The operations require efficiency through technology; the strategic requires transformation through alignment and integration. One possible implication is that just as other functions have gone through separation (finance versus accounting, sales versus marketing, information for data centers versus decision making), so too HR may need to split.

Hence, there are a number of paradoxes to be confronted and they present considerable challenges to practitioners and researchers. There is a clear need here to bring theory and practice closer together. Theory offers conceptual roadmaps that explain why things happen. Research tests those relationships and offers evidence and data that confirm what happens. Practice built on theory is more likely to endure and to be effective. Theory built on practice passes a relevancy test. When HR theorists and HR professionals work together, both gain. This volume is an indicator of how this collaboration might be taken further.

Introduction

John Storey, Dave Ulrich and Patrick M. Wright

DOI: 10.4324/9780203889015-2

Strategic Human Resource Management is concerned with the constellation of policies and practices relating to the interaction between people and organizations designed to enable an organization to achieve its purposes. As such, it is both a field of practice and a field of study. Although one might desire and assume this strong connection between the study and practice of strategic HR, in reality, there is often a considerable disconnect.

The gap between research into and application of HR has been described as a ‘great divide’ and even a ‘chasm’ (Rynes, 2007: 985). Indeed, such is the level of concern about this that in October 2007 the Academy of Management Journal devoted an Editor’s Forum to a concerted exploration of the causes of this ‘two-worlds’ academic–practice divide. This Routledge Companion to Strategic Human Resource Management is designed to bridge research and practice. It does not speculate about why there may be a divide or propose what might be done about it; rather, it seeks to show how there is much of mutual relevance between current theory and practice. Practice anchors theory and theory informs practice. One without the other is incomplete. Theory without practice falls prey to abstract thinking that informs no one. Practice without theory leads to fads rather than sustained learning and improvement (Ulrich, 1998a).

The authors commissioned for this volume have much to say about both theory and practice. Most play in the field of practice as active consultants or managers but they are also academically grounded in the work they do. They observe, describe, explain, advocate, and reflect on how HR work is done. But at the same time, they rely on data and evidence-based research to shape practical recommendations; and they work to build theory that will explain and predict future practice. Even the more academically oriented authors sense the need for more authentic and effective links between theory and practice. They try to ground their ideas in reality, to test the impact of their observations, and to turn research into results. Thus, one of the key purposes of this book is to bridge the theory/practice divide.

We see four ways to begin to bridge research and practices, which we will cover in this introduction:

• the nature of SHRM and its link with performance;
• an examination of analytical frameworks;
• a review and analysis of current issues and key trends;
• implications for practical action.

Strategic HRM and Performance Outcomes

The fundamental underlying premise underpinning any serious discussion or action within HRM and SHRM is that a causal connection exists between HR practices and organizational performance (measured in various ways and against various outcome criteria). Without such an assumption, the only rationale for allocating time and effort in HR from a management point of view would be to comply with prevailing employment laws or to meet minimum operational requirements in hiring, firing and labour deployment and the like.

At the most basic level, scholars have sought to measure the statistical correlations between the existence of certain HR practices and a range of performance outcomes (Arthur, 1994; Delery & Doty, 1996; Guthrie, 2001; Huselid, 1995; Ichniowski et al., 1997). While such statistical relationships may be fairly crude measures and subject to all manner of caveats they provide a starting point to show the relevance of HR research.

Some observers declare themselves convinced that there is now an accumulated body of evidence that HR practices can be demonstrated to be connected with favourable measures of effectiveness (Becker & Huselid, 1998; Gerhart et al., 2000; Wright et al., 2005). While this body of work is widely cited as reliable at the generic level (though many caveats about reliability remain, such as single-respondent bias in the instruments used), even when associations are found and thus the case for HR is to this extent made, this leaves open questions about the intervening processes (Becker et al., 1997; Delery & Shaw, 2001; Lepak et al., 2003; Wright & Gardner, 2003). This is sometimes referred to as peering into the black box. The premise is that, in some shape or form, HR policies have an effect on HR practices and these in turn influence staff attitudes and behaviours which will, in turn again, impact on service offerings and customer perceptions of value.

Investments in HR may impact both individuals and organizations. At the individual, or human capital level, investing in HR practices may increase the competence or the commitment of the individual employee (Ulrich, 1998b; Wright et al., 1994; Wright & Snell, 1998). Competence is comprised of knowledge and skills including tacit knowledge as well as formal knowledge. This ‘human capital’ embedded in individuals can be enhanced through education, training and development, or an aligned compensation system. Individuals may become more competent in delivering an organization’s financial or strategic goals (e.g., learning to do business in China). Commitment deals with engagement or application of knowledge to a particular condition or setting. Regardless of competence, individuals may be more or less committed to the extent that they dedicate their energy and attention to a particular set of goals. HR practices may focus and enhance how much individuals attend to a particular set of issues through staffing, compensation, or training.

Commitment deals with ‘effort’. This has always been a point of focus for HR, labour relations and staff management of all kinds. Human capital is unique in the inherent variability with which it can be deployed. No matter how regulated the job, people tend to have degrees of discretionary effort which they can withhold or commit. As a result, a great deal of time has been spent in thinking about how managers can ‘motivate’ and how they can ‘engage’ workers so that they will be sufficiently committed to go the extra mile in their work. This attempt to win hearts and minds has long been core to HRM. Much recent discussion of the theme when applied to the application of effort towards organizational-wide rather than ‘merely’ task focus is based on the concept of ‘organizational citizenship behaviour’ (OCB). For example, it has been shown that High Performance HR practices can drive organizational citizenship behaviour which can in turn increase productivity and decrease labour turnover – when certain mediating variables are taken into account (Sun et al., 2007).

However, individuals do not usually work in a vacuum. They are surrounded by co-workers: peers, subordinates, and managers in their work group, as well as in other work groups across the organization. Often, the effectiveness of one’s own contributions depends upon the network of relationships one has with others around the firm. The communications and trust with others form the basis for what is referred to as ‘social capital’ (Nahapiet & Ghoshal, 1999). This aspect was reflected in Robert Putnam’s (2000) book Bowling Alone which lamented the decline of community in the USA. At the organizational level, this translates into an agenda based on shared sense of purpose and corporate citizenship. The concept is also closely entwined with that of ‘trust’. The agenda on social capital necessarily extends beyond the workplace into the wider society and connects with issues of health, crime and social participation. Some in turn argue that the loosening of social ties is not unconnected with changes in polices and practices in the work domain (David Coats in this volume, Chapter 7).

As Nahapiet and Ghoshal (1998) have argued, competitive advantage can derive from a combination of social capital and human or intellectual capital. The latter term is used by Youndt et al. (2004) to denote the aggregation of all knowledge in an organization which can be leveraged for competitive advantage. The implication is that SHRM needs not only to tackle the resourcing and development of individual abilities, but in addition to attend to the fuller utilization and development of shared and complementary capabilities (Subramaniam & Youndt 2005). The relationship between HRM and the knowledge literature is still in its infancy. Further exploration of this relation is to be found in the chapter by John Storey in this volume (Chapter 6).

At an organization level, HR practices may be used to build organization capabilities (Ulrich & Smallwood, 2007). Organizations develop identities, often called cultures, social capital, or simply things the organization is known for and good at doing. When HR practices align to create and shape an organization’s capabilities, the organization creates a unique identity that enables it to better research its strategy. Wal-Mart desires to be known for low prices, a distinct part of its strategy. When HR practices align to this identity, Wal-Mart is more able to sustain this organization capability. In this volume, the Wright and Snell chapter (Chapter 20) attempts to examine the links between HR, resources, capabilities, and dynamic capabilities.

Ultimately, HR builds both individual ability and organizational capability, human capital and social capital. When taken together, these individual (competence and commitment) and organizational (capability or social capital) outcomes concern cooperation and working together in a mutually dependent way to deliver positive outcomes. The examination of how HR links to these outcomes is addressed by a number of chapters in this volume, most notably in the study of the link between SHRM and financial outcomes by Beatty and Huselid (Chapter 28); the link with employee outcomes (Worrall and Cooper, Chapter 29) and the link with customer outcomes (Bowen and Pugh, Chapter 30). Arguably, the positive reinforcement between high-involvement practices and high performance could be even greater if corporate analysts and forecasters took into account the degree and efficacy of these practices. According to recent research, analysts tend to neglect such variables and indeed find access to relevant data difficult (Benson et al., 2006).

Even from these initial observations, it is evident that SHRM has to deal holistically with a range of variables. In dealing with the range of variables, theorists and practitioners have developed a number of analytical frameworks to guide thinking and decisions about the linkages between HR, strategy, and various individual and organizational outcomes. We turn to some of these frameworks next.

Analytical Frameworks

Contemporary SHRM is the confluence between diverse streams of academic work. The field of HRM has various roots in economics, sociology, and psychology, and similarly SHRM has evolved as a somewhat multidisciplinary field of inquiry. Wright and McMahan (1992), in their analysis of theory in SHRM, identified economic, sociological, and psychological theories that have been used to explain HR practices. However, without question, theoretical developments in strategic management literature have been of special importance. The resource-based view of the firm has been especially influential (Barney, 1991; Pfeffer, 1994; Wright et al., 2001). The resource-based view focuses on the valuable and unique internal resources and capabilities that firms possess that enable them to outperform their competitors. Building on this framework, many early authors focused on the concept of ‘human capital’, or the talent pool, as having the potential to be sources of competitive advantage. Lepak and Snell (1999) specifically recognized that different human capital pools within the firm varied in terms of the value and uniqueness of their skills, and that these differences implied different HR systems to manage them. Moving another step forward in this vein, Boudreau and Ramstad contend that the part of HR focused on talent is ripe for upgrading into a more sophisticated ‘Decision Science’. Their concept of decision science suggests that value and uniqueness of human capital can be measured, and that the measurement of such is critical to effective HR decision making. They discuss this framework in Chapter 2.

An additional set of analytical approaches tends to not only focus on how individuals perform but also on how organizations perform through the capabilities embedded in the organization itself. This is examined in this volume through chapters on building capabilities such as leadership, talent, capacity for change, culture, accountability, strategic clarity, customer service, efficiency, collaboration, or learning. For example, an approach to linking human capital to organizational outcomes focuses on the concept of knowledge management. Because a number of authors within the strategic management literature have suggested such ideas as the ‘knowledge-based view of the firm’ (Curado & Bontis, 2006; Quinn, 1992) and knowledge resides at least partially in the people of the firm, authors have begun to examine HR’s role in knowledge management (Kang et al., 2007). Storey’s chapter in this volume (Chapter 8) presents another approach to exploring the links between HR and knowledge.

Using these analytical frameworks, considerable and extensive analysis of the HR function itself may be done. This analysis covers the strategic reshaping and evolution of the HR function (Ulrich, Younger and Brockbank, Chapter 12) and the competencies required of HR professionals to deliver against increased expectations (Brockbank and Ulrich, ...

Table of contents

• Cover Page
• Half-Title Page
• Title Page
• Copyright Page
• Table of Contents
• List of Illustrations
• List of Contributors
• Part 1: Introduction
• Part 2: Analytical Frameworks
• Part 3: The External Environment of SHRM
• Part 4: The Strategic Role of HR
• Part 5: The HR Function
• Part 6: Areas of Practice
• Part 7: The Capability-Building Perspective
• Part 8: Changing Contexts
• Part 9: Regions
• Part 10: Performance Outcomes
• Index