HRM IS A STRATEGIC AND COHERENT APPROACH TO THE MANAGEMENT OF AN ORGANISATION’S MOST VALUED ASSETS’. DISCUSS. OVERVIEW OF THE TOPIC The discussion on the topic begins with definition/explanation of HRM and two useful models. Discussion proceeds with explanation of the aims of HRM, characteristics of HRM and concludes with the views of the group on HRM as a strategic and coherent approach to the management of the organizations’ most valuable asset. Meaning of HRM
Human Resource Management (HRM) is the strategic and coherent approach to the management of organisation’s most valued assets – the people working there who individually and collectively contribute to the achievement of the objectives of the business. It could be described as employing people, developing their resources, utilizing, maintaining and compensating their services in tune with the job and organizational requirements. (Ahrm. org. uk) According to John Storey (1989) HRM can be regarded as a ‘set of interrelated policies with an ideological and philosophical underpinning’.
He suggests four aspects that constitute the meaningful version of HRM: 1. A particular constellation of beliefs and assumptions; 2. A strategic thrust informing decisions about people management; 3. The central involvement of line managers; 4. Reliance upon a set of ‘levers’ to shape the employment relationship. MODELS OF HRM a)The Matching Model of HRM One of the first explicit statements of the HRM concept was made by the Michigan School (Fombrun et al, 1984). They held that HR systems and the organization structure should be managed in a way that is congruent with organizational strategy; they further explained that there is a human esource cycle which consists of four generic processes or functions that are performed in all organizations. These are: 1. SELECTION – matching available human resources to jobs 2. APPRAISAL– performance management 3. REWARDS – ‘the reward system is one of the most under-utilized and mishandled managerial tools for driving organizational performance’; it must reward short- as well as long-term achievements, bearing in mind that ‘business must perform in the present to succeed in the future’; 4. DEVELOPMENT – developing high-quality employees. ) The Harvard Model of HRM (from Beer et al, 1984) This framework is based on the belief that the problems of historical personnel management can only be solved: When general managers develop a viewpoint of how they wish to see employees involved in and developed by the enterprise, and of what HRM policies and practices may achieve those goals. Without either a central philosophy or a strategic vision – which can be provided only by general managers – HRM is likely to remain a set of independent activities, each guided by its own practice tradition.
Beer and his colleagues believed that ‘today, many pressures are demanding a broader, more comprehensive and more strategic perspective with regard to the organization’s human resources’. These pressures have created a need for: ‘A longer-term perspective in managing people and consideration of people as potential assets rather than merely a variable cost’. They were the first to underline the HRM tenet that it belongs to line managers.
They also stated that: ‘human resource management involves all management decisions and action that affect the nature of the relationship between the organization and its employees – its human resources’. The Harvard school suggested that HRM had two characteristic features: 1)LINE MANAGERS- Accept more responsibility for ensuring the alignment of competitive strategy and personnel policies 2) PERSONNEL MANAGERS/SPECIALISTS-Have the mission of setting policies that govern how personnel activities are developed and implemented in ways that make them more mutually reinforcing.
The Harvard framework as modeled by Beer et al is shown in According to Boxall (1992) the advantages of this model are that it: – incorporates recognition of a range of stakeholder interests; – recognizes the importance of ‘trade-offs’, either explicitly or implicitly, between the interests of owners and those of employees as well as between various interest groups; – widens the context of HRM to include ‘employee influence’, the organization of work and the associated question of supervisory style; acknowledges a broad range of contextual influences on management’s choice of strategy, suggesting a meshing of both product market and socio-cultural logics; – emphasizes strategic choice – it is not driven by situational or environmental determinism. AIMS OF HRM The overall purpose of human resource management is to ensure that the organization is able to achieve success through people. As Ulrich and Lake (1990) remark: ‘HRM systems can be the source of organizational capabilities that allow firms to learn and capitalize on new opportunities. Specifically, HRM is concerned with achieving objectives in the areas summarized below. 1. Organizational effectiveness ‘Distinctive human resource practices shape the core competencies that determine how firms compete’ (Cappelli and Crocker-Hefter, 1996). HRM strategies aim to support programmes for improving organizational effectiveness by developing policies in such areas as knowledge management, talent management and generally creating ‘a great place to work’. This is the ‘big idea’ as described by Purcell et al (2003), which consists of a ‘clear vision and a set of integrated values’.
More specifically, HR strategies can be concerned with the development of continuous improvement and customer relations policies. 2. Human capital The human capital of an organization consists of the people who work there and on whom the success of the business depends. Human capital has been defined by Bontis et al (1999) as follows: ‘Human capital represents the human factor in the organization; the combined intelligence, skills and expertise that give the organization its distinctive character.
The human elements of the organization are those that are capable of learning, changing, innovating and providing the creative thrust which if properly motivated can ensure the long-term survival of the organization. ’ 3. Knowledge management Knowledge management is ‘any process or practice of creating, acquiring, capturing, sharing and using knowledge, wherever it resides, to enhance learning and performance in organizations’ (Scarborough et al 1999). HRM aims to support the development of firm-specific knowledge and skills that are the result of organizational learning processes. . Reward management HRM aims to enhance motivation, job engagement and commitment by introducing policies and processes that ensure that people are valued and rewarded for what they do and achieve, and for the levels of skill and competence they reach. 5. Employee relations The aim is to create a climate in which productive and harmonious relationships can be maintained through partnerships between management and employees and their trade unions. 6. Meet diverse needs
HRM aims to develop and implement policies that balance and adapt to the needs of its stakeholders and provide for the management of a diverse workforce, taking into account individual and group differences in employment, personal needs, work style and aspirations, and the provision of equal opportunities for all. 7. Rhetoric and reality The research conducted by Gratton et al (1999) found that there was generally a wide gap between the sort of rhetoric expressed above and reality. Managements may start with good intentions to do some or all of these things, but the realization of them – ‘theory in use’ – is often very difficult.
This arises because of contextual and process problems: other business priorities, short-termism, and lack of support from line managers, an inadequate infrastructure of supporting processes, lack of resources, resistance to change and lack of trust. CHARACTERISTICS OF HRM The characteristics of the HRM concept as they emerged from the writings of the pioneers and later commentators are that it is: 1. Diverse; 2. Strategic, with an emphasis on integration; 3. Commitment-orientated; 4. Based on the belief that people should be treated as human capital; 5.
Unitarist rather than pluralist, individual rather than collective, with regard to employee relations; 6. A management-driven activity – the delivery of HRM is a line management responsibility; 7. Focused on business values. 1. The diversity of HRM a)Hard version (HRM) A distinction was made by Storey (1989) between the ‘hard’ and ‘soft’ versions of HRM. The hard version of HRM emphasizes that people are important resources through which organizations achieve competitive advantage. These resources have therefore to be acquired, developed and deployed in ways that will benefit the organization.
The focus is on the quantitative, calculative and business-strategic aspects of managing human resources in as ‘rational’ a way as for any other economic factor. As Guest (1999) comments: ‘the drive to adopt HRM is… based on the business case of a need to respond to an external threat from increasing competition. It is a philosophy that appeals to managements who are striving to increase competitive advantage and appreciate that to do this they must invest in human resources as well as new technology. He also commented that HRM ‘reflects a longstanding capitalist tradition in which the worker is regarded as a commodity’. The emphasis is therefore on the interests of management, integration with business strategy, obtaining added value from people by the processes of human resource development and performance management and the need for a strong corporate culture expressed in mission and value statements and reinforced by communications, training and performance management processes. b)Soft Version (HRM) The soft version of HRM traces its roots to the human-relations school.
It emphasizes communication, motivation and leadership. As described by Storey (1989) it involves ‘treating employees as valued assets, a source of competitive advantage through their commitment, adaptability and high quality (of skills, performance and so on)’. It therefore views employees, in the words of Guest (1999), as means rather than objects. The soft approach to HRM stresses the need to gain the commitment – the ‘hearts and minds’ – of employees through involvement, communications and other methods of developing a high-commitment, high-trust organization.
Attention is also drawn to the key role of organizational culture. In 1998, Karen Legge defined the ‘hard’ model of HRM as a process emphasizing ‘the close integration of human resource policies with business strategy which regards employees as a resource to be managed in the same rational way as any other resource being exploited for maximum return’. In contrast, the soft version of HRM sees employees as ‘valued assets and as a source of competitive advantage through their commitment, adaptability and high level of skills and performance’.
It has, however, been observed by Truss (1999) that, ‘even if the rhetoric of HRM is soft, the reality is often hard, with the interests of the organization prevailing over those of the individual’. And research carried out by Gratton et al (1999) found that, in the eight organizations they studied, a mixture of hard and soft HRM approaches was identified. This suggested to the researchers that the distinction between hard and soft HRM was not as precise as some commentators have implied. 2)The strategic nature of HRM
Perhaps the most significant feature of HRM is the importance attached to strategic integration, which flows from top management’s vision and leadership, and which requires the full commitment of people to it. Karen Legge (1989) considers that one of the common themes of the typical definitions of HRM is that human resource policies should be integrated with strategic business planning. Keith Sisson (1990) suggests that a feature increasingly associated with HRM is a stress on the integration of HR policies both with one another and with business planning more generally.
John Storey (1989) suggests that: ‘the concept locates HRM policy formulation firmly at the strategic level and insists that a characteristic of HRM is its internally coherent approach’. 3)The commitment-orientated nature of HRM The importance of commitment and mutuality was emphasized by Walton (1985) as follows: ‘The new HRM model is composed of policies that promote mutuality – mutual goals, mutual influence, mutual respect, mutual rewards, and mutual responsibility. The theory is that policies of mutuality will elicit commitment which in turn will yield both better economic performance and greater human development. David Guest (1987) wrote that one of the HRM policy goals was the achievement of high commitment – ‘behavioural commitment to pursue agreed goals, and attitudinal commitment reflected in a strong identification with the enterprise’. 4)People as ‘human capital’ Armstrong and Baron (2002) stated that: ‘People and their collective skills, abilities and experience, coupled with their ability to deploy these in the interests of the employing organization, are now recognized as making a significant contribution to organizational success and as constituting a significant source of competitive advantage. ’ )HRM as a management-driven activity HRM can be described as a central, senior-management-driven strategic activity, which is developed, owned and delivered by management as a whole to promote the interests of the organization that they serve. John Purcell (1993) thinks that ‘the adoption of HRM is both a product of and a cause of a significant concentration of power in the hands of management’, while the widespread use ‘of the language of HRM, if not its practice, is a combination of its intuitive appeal to managers and, more importantly, a response to the turbulence of product and financial markets’.
He asserts that HRM is about the rediscovery of management prerogative. He considers that HRM policies and practices, when applied within a firm as a break from the past, are often associated with words such as ‘commitment’, ‘competence’, ‘empowerment’, ‘flexibility’, ‘culture’, ‘performance’, ‘assessment’, ‘reward’, ‘teamwork’, ‘involvement’, ‘cooperation’, ‘harmonization’, ‘quality’ and ‘learning’. But ‘the danger of descriptions of HRM as modern best management practice is that they stereotype the past and idealize the future’.
Keith Sisson (1990) suggested that: ‘The locus of responsibility for personnel management no longer resides with (or is “relegated to”) Specialist managers. ’ More recently, Purcell et al (2003) underlined the importance of line management commitment and capability as the means by which HR policies are brought to life. 6)Unitarist philosophy The HRM approach to employee relations is Unitarist not pluralist – it is believed that employees share the same interests as employers.
In the words of Gennard and Judge (1997), organizations are assumed to be ‘harmonious and integrated, all employees sharing the organizational goals and working as members of one team’. Guest (1987, 1989a, 1989b, 1991) considers that HRM values are: Unitarist to the extent that they assume no underlying and inevitable differences of interest between management and workers; and individualistic in that they emphasize the individual–organization linkage in preference to operating through group and representative systems. )Focus on business values The concept of HRM is largely based on a management- and business orientated philosophy. It is concerned with the total interests of the organization – the interests of the members of the organization are recognized but subordinated to those of the enterprise. Hence the importance attached to strategic integration and strong cultures, which flow from top management’s vision and leadership, and which require people who will be committed to the strategy, who will be adaptable to change and who will fit the culture.
By implication, as Guest (1991) says: ‘HRM is too important to be left to personnel managers. ’ In 1995 Karen Legge noted that HRM policies are adapted to drive business values and are modified in the light of changing business objectives and conditions. She describes this process as ‘thinking pragmatism’ and suggests that evidence indicates more support for the hard versions of HRM than the soft version. Summary
Human capital can be regarded as the prime asset of an organization, and businesses need to invest in that asset to ensure their survival and growth. HRM aims to ensure that the organization obtains and retains the skilled, committed and well-motivated workforce it needs. This means taking steps to assess and satisfy future people needs and to enhance and develop the inherent capacities of people – their contributions, potential and employability – by providing learning and continuous development opportunities.
It involves the operation of ‘rigorous recruitment and selection procedures, performance-contingent incentive compensation systems, and management development and training activities linked to the needs of the business’ (Becker et al, 1997). It also means engaging in talent management – the process of acquiring and nurturing talent, wherever it is and wherever it is needed, by using a number of interdependent HRM policies and practices in the fields of resourcing, learning and development, performance management and succession planning.
HRM philosophy, as mentioned by Karen Legge (1995), holds that ‘human resources are valuable and a source of competitive advantage’. Armstrong and Baron (2002) stated that: ‘People and their collective skills, abilities and experience, coupled with their ability to deploy these in the interests of the employing organization, are now recognized as making a significant contribution to organizational success and as constituting a significant source of competitive advantage. David Guest (1987, 1989a, 1989b, 1991) believes that a key policy goal for HRM is strategic integration, by which he means the ability of the organization to integrate HRM issues into its strategic plans, to ensure that the various aspects of HRM cohere, and to provide for line managers to incorporate an HRM perspective into their decision making.
Inferring from the above summary, our group agrees with the notion that people should be regarded as the organisations most valuable asset and that HRM should be integrated into the strategic plans of organisations. There should be a longer-term perspective in managing people and consideration of people as potential assets rather than merely a variable cost THANK YOU