e-HRM

Digital Approaches, Directions & Applications

Mohan Thite, Mohan Thite

• Publisher: Routledge
• Year: 2018
• ISBN:
  9781351698719
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

As with other parts of business, technology is having a profound effect on the world of work and management of human resources. Technology is a key enabler for faster, cheaper and better delivery of HR services and in some cases can have a transformational as well as unintended negative effect.

Designed for the digital era, e-HRM is one of the first textbooks on these developments. It incorporates the most current and important HR technology related topics in four distinct parts under one umbrella, written by leading scholars and practitioners drawn from across the world. All the chapters have a uniform structure and pay equal attention to theory and practice with an applied focus. Learning resources of the book include chapter-wide learning objectives, case studies, debates on related burning issues, and the companion website includes lecture slides and a question bank.

Part I

Key approaches to e-HRM

2 Strategic management approach to technology-enabled HRM

Mark L. Lengnick-Hall, Cynthia A. Lengnick-Hall & Derrick McIver

Learning objectives

• Explain the concept of strategic human resource management and its importance to organizations.

• Provide an overview of major theory lenses that underpin strategic human resource management.

• Describe major trends in organizations, organizational work, and the role of human resources.

• Understand the most significant threats and opportunities emerging technology creates for human resource management policies and practices.

• Explain how e-HRM is influencing organizations.

Introduction

After a wildly successful run on Broadway, the producers of the musical “Hamilton” are expanding their productions to also include Chicago and Los Angeles in addition to New York (marketplace.org, 2017). They are currently conducting rehearsals for a London show. There are expectations that they will continue to expand and offer shows throughout the world. The show’s business strategy is simple: continue to expand show locations, provide customers with a consistently great experience, and provide high financial returns to owners and investors. But, as with many business organizations experiencing rapid growth, they are confronting human resource management issues that must be managed strategically.

From a strategic human resource management perspective, staffing and training requirements for a single show in a single location are challenging enough. Now consider the challenges when the production opens up new locations around the world. Much like running a multinational business, the production of “Hamilton” faces the challenge of maintaining multiple shows each with their own casts. But what happens when one location has a key cast member out, and no backup locally? The producers need to manage their human resources in a way that supports the business strategy, maintains high quality productions, and enhances the well-being of their employees. Human resource practices have to be carefully crafted to create the organizational capability for them to deliver great shows one day after another. This is the essence of strategic human resource management.

In this chapter, we provide an overview of human resource management from a strategic perspective. We begin with a review of the concepts, theories, and research that forms the basis for managing human resources strategically. Next, we describe the changing technological environment, which poses both threats and opportunities for the management of human resources. Finally, we examine the role of e-HRM in this context.

Strategic human resource management

In this section, we first define strategic human resource management and distinguish it from traditional human resource management. Second, we identify the five different levels of strategic human resource management. Third, we explain the role of fit and flexibility in strategic human resource management. Fourth, we discuss how strategic human resource management is different in a global context. Fifth, we describe the three major theories that provide an underpinning for strategic human resource management. And sixth, we summarize the past and future of strategic human resource management research.

Strategic vs. traditional human resource management

Strategic human resource management has been defined as “the pattern of planned human resource deployments and activities intended to enable an organization to achieve its goals” (Wright & McMahan, 1992, p. 298). Two factors distinguish strategic human resource management from traditional HRM. One, human resource practices are specifically aligned with the organization’s business strategy, and two, human resource practices are considered in concert with one another rather than as isolated activities.

As Wright and McMahan (1992, pp. 298–299) put it, strategic human resource management focuses on “the determinants of decisions about human resource practices, the composition of the human capital resource pool (skills and abilities), the specification of required human resource behaviors, and the effectiveness of these decisions given various business strategies and/or competitive situations.” The focus is typically on creating strategic capabilities that can lead to competitive advantage because they are valuable, rare, inimitable, non-substitutable, and able to be exploited by the firm (Barney, 1995).

Corporate vs. business unit strategies

The strategy in strategic human resource management has different meanings depending upon the perspective taken. A large multi-unit organization may have both a corporate strategy and business unit strategies that it is pursuing. Corporate strategy generally refers to how an organization as a whole creates value across its different businesses (see Table 2.1).

A business unit strategy refers to how a particular business unit creates value within the context of the overall corporation. Strategic HR decisions at the business unit level involve such issues as which policies, programs, and practices best support and reinforce the organization’s intended objectives, increase revenues and reduce costs, and create a sustainable competitive advantage.

Strategic human resource management levels

Strategic human resource management occurs at many levels in an organization (see Table 2.2).

Arthur and Boyles (2007) identify five levels of a strategic human resource management system: HR philosophy, HR policies, HR programs, HR practices, and HR climate. The HR philosophy or principles provides the overarching guidelines for how human resources will be managed within the organization. It is defined as the stated values, beliefs, and norms regarding what drives employee performance and how organizational resources and rewards should be allocated. HR policies refer to organizational goals or objectives for managing human resources. This level reflects the relative emphasis among different HR functional areas such as staffing, training, rewards, and so on. HR programs are the set of formal HR activities used in the organization. This level is typically described as bundles of internally consistent HR initiatives and actions, such as those that comprise high performance work systems. HR practices are defined as the implementation and experience of an organization’s HR programs by lower-level managers and employees. This definition captures the variation in employees’ perceptions and experiences of a HR program based on the quality of the HR implementation. Merely having a HR program does not mean that employees are aware of it, use it, or are encouraged or discouraged from using it by managers. And lastly, HR climate is defined as the shared employee perceptions and interpretations of the meaning of the HR principles, policies, programs, and practices in the firm.

Table 2.1 Corporate vs. business unit strategies—strategic HRM issues

Level of strategy	Definition	Strategic HRM issues
Corporate strategy	How an organization as a whole creates value across its different businesses; this may involve such decisions as mergers and acquisitions of either related or unrelated businesses, the overall product and market scope of the organization, the organizational identity, and the basic value proposition for the firm	How much should HR policies, programs, and practices be the same across business units versus how much should each business unit be able to adapt HR policies, programs, and practices to its own unique conditions? What HR policies, programs, and practices are most crucial for value creation?
Business unit strategy	How a particular business unit creates value within the context of the overall corporation; this generally involves identifying specific sources of competitive advantage and understanding how each unit contributes to and complements the overall portfolio	Which HR policies, programs, and practices best support and reinforce the organization’s intended objectives, increase revenues and reduce costs, and create a sustainable competitive advantage? How do employees contribute to organizational success and competitiveness?

Source: Authors.

Table 2.2 Strategic human resource management levels

Strategic human resource management level	Definition	Example
HR philosophy	Provides the overarching guidelines for how human resources will be managed within the organization	From Richardson & Company, LLP: “To create a friendly, dynamic work environment under a team concept while maintaining professionalism.” “Provide an enjoyable and rewarding environment for all individuals to learn, grow and develop to their fullest potential.”
HR policies	Organizational goals or objectives for managing human resources	Starbucks Base Pay Policy: “Determined by the competitive market pay rate for your job, your skills, experience and job performance.”
HR programs	The set of formal HR activities used in the organization	From Zappos: “The Zappos Family New Hire program is four weeks of training designed to grow our culture, build a stronger team, and create lasting relationships throughout the entire company.”
HR practices	The implementation and experience of an organization’s HR programs by lower-level managers and employees	From an employee’s Glassdoor Review: “The hours were long and maintaining a work-life balance became extremely difficult. It frequently felt like there was more to do than could possibly be done and it was all critical work.”
HR climate	The shared employee perceptions and interpretations of the meaning of the HR principles, policies, programs, and practices in the firm	From an employee’s Glassdoor Review: “ReveNew treats you well, looks out for each other and encourages each employee to take ownership of their success and rewards that success.”

Source: Authors.

Fit vs. flexibility

Strategic human resource management focuses on fit and on flexibility (see Table 2.3). An underlying principle in strategic human resource management is that organizations should strive for alignment or fit between their human resource practices and their business strategy. This is sometimes referred to as external fit or vertical fit. The underlying logic is that if an organization is pursuing a business strategy of cost leadership for example (in which it seeks to have the lowest cost of operations in its industry), then it makes sense to emphasize human resource practices that focus employees on cost reduction, such as performance appraisals that assess efforts to reduce costs and create efficient operations and rewards for actually doing so. Surprisingly, research has failed to provide overwhelming evidence for this proposition, although it may be a result of how past research has been conducted (Wright & Ulrich, 2017).

Table 2.3 Key strategic HRM concepts

Concept	Definition	Example
External/vertical fit	Organizations should strive for alignment or fit between their human resource practices and their competitive business strategy.	If an organization is pursuing a business strategy of cost leadership, it should emphasize human resource practices that focus employees on cost reduction, such as performance appraisals that assess efforts to reduce costs and create efficient operations with minimal errors.
Internal/horizontal fit	The fit or alignment among the various human resource practices in a particular organization; whether message...