Armstrong's Handbook of Strategic Human Resource Management

Improve Business Performance Through Strategic People Management

Michael Armstrong

• Publisher: Kogan Page
• Year: 2020
• ISBN:
  9781789661736
• Edition: 7
• Topic: Business
• Subtopic: Human Resource Management
• Index: Business

Armstrong's Handbook of Strategic Human Resource Management is a complete guide to integrating HR strategies with wider organizational goals and objectives approaches to achieve sustained competitive advantage. Supported by key learning summaries, source reviews and practical real-life examples from organizations including UNICEF and General Motors (GM), this book provides coverage of HRM strategies in key areas of the function such as employee engagement, talent management and learning and development, as well as strategic HRM approaches in an international context. This fully revised seventh edition of Armstrong's Handbook of Strategic Human Resource Management contains new chapters on evidence-based strategic HRM, employee wellbeing strategies and HR analytics, as well as additional case studies and updated wider content to reflect the latest research and thinking. It remains an indispensable resource for both professionals and those studying HR qualifications, including undergraduate and masters degrees and the CIPD's advanced level qualifications. Online supporting resources include lecture slides and comprehensive handbooks for lecturers and students which include self-assessment questions, case study exercises, and a glossary and literature review.

Part One

Strategic human resource management (SHRM)

01

Human resource management

Introduction

Human resource management (HRM) is concerned with all aspects of how people are employed, managed and developed in organizations. The concept of HRM originated in the 1980s in the form of a philosophy on how people should be managed. It replaced the term personnel management. Boxall (2013: 13) explained that: ‘Human resources include the knowledge, skills, networks and energies of people and, underpinning them, their physical and emotional health, intellectual capabilities, personalities and motivations.’ HRM is delivered through the HR architecture of systems and structures, the HR function and, importantly, line managers.

The notion of referring to people as resources as if they were any other factor of production is often criticized. Osterby and Coster (1992: 31) argued that: ‘The term “human resources” reduces people to the same category of value as materials, money and technology – all resources, and resources are only valuable to the extent they can be exploited or leveraged into economic value.’ Revulsion to the term human resources has encouraged the use of ‘people management’ as an alternative but it has not been made clear how people management differs from HRM and a clarification will be undertaken in Chapter 6 of this book. However, in spite of its connotations, HRM is the term which is still most commonly used, although it generally refers to a set of practices – the HR system as described in a later section of this chapter – rather than the original philosophy.

This chapter starts with an analysis of the nature of HRM and then examines how HRM is delivered through the HR system. Consideration is then given to two aspects of HRM that affect the way HR strategy is developed, namely the impact HR has on performance and the ethical dimension of HRM. Finally a review of the state of HRM today is undertaken.

The nature of HRM

HRM as first conceived had a conceptual framework consisting of a philosophy underpinned by a number of theories drawn from the behavioural sciences and from the fields of strategic management, human capital management and industrial relations. The two basic models of HRM are those produced by Beer et al (1984) and Fombrun et al (1984).

HRM philosophy

HRM philosophy is based on ‘the guiding principles that identify and characterize the value and treatment of employees covered within a particular HRM system’ (Kepes and Delery, 2007: 390). The following explanation of the original HRM philosophy was made by Legge (1989: 25), whose analysis of a number of HRM models identified the following common themes:

That human resource policies should be integrated with strategic business planning and used to reinforce an appropriate (or change an inappropriate) organizational culture, that human resources are valuable and a source of competitive advantage, that they may be tapped most effectively by mutually consistent policies that promote commitment and which, as a consequence, foster a willingness in employees to act flexibly in the interests of the ‘adaptive organization’s’ pursuit of excellence.

Storey (2001: 7) noted that the beliefs of HRM included the assumptions that it is the human resource that gives competitive edge, that the aim should be to enhance employee commitment, that HR decisions are of strategic importance and that therefore HR policies should be integrated into the business strategy.

The HRM philosophy has been heavily criticized by some academics as being managerialist and manipulative. But as noted by Storey (2007: 6): ‘In its generic broad and popular sense it [HRM] simply refers to any system of people management.’ HRM practice today is no longer governed by the original philosophy, if it ever was.

Underpinning theories of HRM

The original notion of HRM had a strong theoretical base. Guest (1987: 505) commented that: ‘Human resource management appears to lean heavily on theories of commitment and motivation and other ideas derived from the field of organizational behaviour.’ Resource-based theory, expressed as ‘the resource-based view’, is also important. This theory states that competitive advantage is achieved if a firm’s resources are valuable, rare and costly to imitate. It is claimed that HRM can play a major part in ensuring that the firm’s human resources meet these criteria.

Models of HRM

Over the years a number of models have defined the philosophy of HRM. Of these, the ‘Harvard framework’ and the ‘matching model’ have been the most influential.

The Harvard model of HRM

Beer et al (1984) produced what has become known as the ‘Harvard framework’, as modelled in Figure 1.1. They started with the proposition that: ‘Human resource management (HRM) involves all management decisions and actions that affect the nature of the relationship between the organization and employees – its human resources’ (Beer et al, 1984: 1). They believed that: ‘Today… many pressures are demanding a broader, more comprehensive and more strategic perspective with regard to the organization’s human resources’ (Beer et al, 1984: 4). They also stressed that it was necessary to adopt ‘a longer-term perspective in managing people and consideration of people as a potential asset rather than merely a variable cost’ (Beer et al, 1984: 6). Michael Beer and his colleagues suggested that HRM had two characteristic features: 1) line managers accept more responsibility for ensuring the alignment of competitive strategy (thus they were the first to underline the HRM tenet that it belongs to line managers and HR policies); 2) HR has the mission of setting policies that govern how HR activities are developed and implemented in ways that make them more mutually reinforcing. The importance of respecting the interests of all stakeholders – employees as well as owners – was recognized; although little attention has since been given to this as...