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BUSM3201 Human Resource Management

Topic 1 The field of Human Resource Management

These slides include material provided in the course text Nankervis, Compton & Baird (2008) Human Resource Management: Strategies an processes 6th ed, Thompson by permission of the publisher

Introduction

• People are the key resource in any organization

• The nature of work and of workplaces is changing

• Because people are not machines they are inherently difficult to manage

• The role of ‘employee specialists’ continues to evolve

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From Personnel management to Strategic human resource management (HRM)

• Personnel management:– a set of functions or activities

• Human resource management:– an integrated set of personnel activities– Strong base on applied social science knowledge (predominantly organizational

psychology)– Individualization of the employment contract (‘psychological contract’)

• Strategic HRM– linked strategically with organisational objectives– Continuing basis in social science knowledge– Integration of behavioural research with strategic management research

Differences between PM and HRM

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RMIT University©

Human Resource Management functions in context

Organisationalrequirements•business objectives•HR plans

Individual needs•career plans•personal development

Social institutions•legislation•collective bargaining•educational programs

HR Flow within the organisation: systems & practices

Source: Michael Beer, Bert Spector, Paul Lawrence, D. Quinn Mills & Richard Walton (1985) Human Resource Management: A general Managers’ perspective, Free Press New York

Outflow

•termination

•outplacement

•redundancy

•retirement

Internal flow

•performance evaluation

•internal placement, promotion

and assignments

•career development

•education and training

Inflow

•recruitment

•assessment & selection

•induction & socialisation

RMIT University©

HRM brings a focus on behavioural approaches to the employment relationship

The formal contract

a formally regulated exchange in which the rights and obligations of employees and employers respectively are defined.

The psychological contract

a set of expectations held by the individual employee that specifies what the individual and the organisation expect to give and receive in the working relationship (Rousseau, 1990).

Source: Based on Paul Sparrow (1996) Transitions from the psychological contract, Human Resource Management Journal 6 (4)

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RMIT University©

From control to commitment: developing a new workplace culture

– based on the use of bureaucratic rules to control the quality and pace of work

– assumes unwilling and combative workers

– assumes that workers are motivated by money

– treats sub-cultures as disloyal

– the humanised workplace

– assumes that workers are motivated by good supervision

– continues to assume that attachment to work is instrumental

– accommodate to sub-cultures

– control through shared responsibilities

– tolerance of individual difference

– assumes people motivated by responsibility and a real job

– mutuality in labour relations - sub-cultures integrated into organization

Source: Based on Richard Walton (1985) From control to commitment in the workplace Harvard Business Review

Commitment

Human Relations

Control

Into the future - SHRM

• Issues impacting SHRM– globalisation– new technology– changes in the nature of work and jobs

What are the major implications of globalisation for HRM strategies and functions?

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SHRM into the future (cont.)• The employment contract

– psychological: the mutual expectations of employers and their employees with respect to rights, privileges and obligations within the employment relationship

– legal: terms and conditions of work– social: ‘the mutual expectations and obligations that employers,

employees and society at large have for work and employment relationships’

‘The psychological contract between employers and employees has changed irrevocably in response to labour market and generational

issues’Argue both sides of the statement.

Strategic HRM

The essence of SHRM is to adopt a flexible but strategic perspective which

accurately analyses both the internal and external environments of organisations

to ensure a good fit between HR strategies and practices, and between these and

business strategies.

Why are the theories of SHRM not always easy to implement in practice? What can be done to overcome these problems?

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Strategic Human Resource Management- managing people within an organisation

• Focus on the enterprise or organisational unit

• Integration of HR policies with business strategy

• Overall consistency in approach to management of people (systematic and consistent processes)

• Crucial role for line managers (line manager decisions about people linked directly to business strategy)

• Focus on organisational commitment and common values

• Shift from management-union relations to individual relationship with employees

See chapter 1 in Storey, J. (1995). 'Human Resource management: A critical text'. London, Routledge.

A Map of Human Resource Management

Original Source: Beer, M., Spector, B., Mills, D.Q. and Walton, R.E. (1985) Human Resource Management: A General Manager’s Perspective, Glencoe, Free Press.Stakeholder

interests:ShareholdersEmployer groupsEmployeesGovernmentUnionsConsumersSuppliers

Situational factors:workforce characteristicstechnologymanagement philosophyproduct marketslabour marketslegislationcommunity attitudeseconomic situation

Policy choicesEmployee InfluenceHR FlowWork systemsReward systems

HR Outcomes:CompetenceCommitmentCongruenceCost effectiveness

Long term consequences:individual well beingorganizational effectivenesssocietal well being

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Organisational and HRM policy

Following the Harvard model policies are: –guides to action–a bridge between strategies and operations

Policies fall into four main areas:–employee influence and involvement–human resource flow–reward systems–work systems

Schuler & Jackson (1987):

The match between generic business policy and needed employee role behaviours

Generic business policy

HR practiceNeeded role behaviours

•Innovation•Quality enhancement•Cost reduction

Source Schuler R.S & Jackson S. E. (1987) Linking competitive strategies with human resource management practices, Academy of Management Executive 1, 207-219

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Schuler & Jackson:HR policies for an Innovation strategy

innovation

Needed role behaviour

creative behaviour • long term focus

• cooperative & interdependent behaviour

• moderate concern for quality

• equal concern for results

• greater degree of risk taking

• high tolerance for ambiguity

HR practice• jobs defined to facilitate interaction & coordination

• skills development for whole organisation

• broad career path

• performance appraisal focus on long term and group outcomes

• pay rate low but flexibly packaged

• compensation focus on internal equity rather than market

Source Adapted from: Schuler R.S & Jackson S. E. (1987) Linking competitive strategies with human resource management practices, Academy of Management Executive 1, 207-219

Schuler & Jackson:HR policies for a quality enhancement strategy

HR practice• relatively fixed & explicit job descriptions

•high employee involvement in decisions on immediate work & job

•extensive & continuous training

•mix of individual & group appraisal criteria, mostly results & short term

•egalitarian treatment of employees & some security of tenure

Quality enhancement

Needed role behaviour

• repetitive & predictable

•medium term focus

•moderately cooperative & interdependent behaviour

•high concern for quality

•modest concern for quantity

•high concern for process

•low risk taking

•commitment to organisational goals

Source Adapted from: Schuler R.S & Jackson S. E. (1987) Linking competitive strategies with human resource management practices, Academy of Management Executive 1, 207-219

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Schuler & Jackson:HR policies for a cost reduction strategy

HR practice• fixed & explicit job descriptions with little ambiguity

• narrowly defined jobs & career paths encouraging efficiency

• minimal training and development

• appraisal focus on short term results

•close attention to market pay rates for equivalent jobs

Cost reduction

Needed role behaviour

• repetitive & predictable

• short term focus

• individual job focus

• moderate concern for quality

• high concern for quantity

• high concern for results

• low risk taking

• desire for stability

Source Adapted from: Schuler R.S & Jackson S. E. (1987) Linking competitive strategies with human resource management practices, Academy of Management Executive 1, 207-219

Resource based competitive advantage requires …..

• building unique capabilities over time

• proactive leadership

• effective top management teams

• Innovative approaches to organisation of work

• stimulate organisational learning processes

• foster innovation

• acknowledgement of the strategic significance of internal resources

Source: Wright, Patrick M., McMahan Gary C, and Abigail McWilliams, (1994) “Human resources and sustained competitive advantage.” International Journal of Human Resource

Management 5(2):301-326.

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Unitarist or Pluralist?

• Unitarist approach assumes:– Common interests– Commitment to goals set from senior managers– Little employee ‘voice’– Close supervision necessary to obtain control

• Pluralist assumes:– Some organisational conflicts and disagreements over

policy and action are inevitable– Negotiation & resolution is one way of handling

differences– Involvement in decisions a way of increasing agreed

goals

General Approaches to HRM

• Instrumental HRM (hard approach)

– stresses the rational, quantitative and strategic aspects of managing human resources.

– Stress on management /organisational needs and requirements as ffocus for employee behaviour

– Performance management techniques used to ‘align’ performance with organisation

– Effective utlilisation of people a measure of management performance

• Humanistic HRM (soft approach)

– while emphasising the integration of HR practices with strategic objectives

– Assumes competitive advantage is achieved by developing and enhancing employees work related skills

– Focus on development of ‘soft skills’ in negotiation, counselling and mentoring for managers

– Employees involved in decision making to enhance outcomes

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Other ways of linking strategy and HR practice

• HR choices follow from business cycle– e.g. Kochan T.A. & Barocci A. (1985) Human resource management and industrial relations,

Little Brown

• Competitive advantage will follow from enhancement of HR and organizational competence - The Resource based theory of competitive advantage

– e.g. Wright, Patrick M., McMahan Gary C, and Abigail McWilliams, (1994) “Human resources and sustained competitive advantage.” International Journal of Human Resource Management 5 (2):301-326.

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Strategic International HRM

Is concerned with the management of global workforces

Managing a global workforce leads to a greater range of specialist activities including

–Expatriation and repatriation management–Management of expat. family related issues–global teamwork –international commuting (‘fly in - fly out’ assignments)–virtual work assignments–international remuneration and performance management–OHS issues related to travel and offshore location (travel stress, fatigue,

terrorism, DVT)

• Heightened focus on managing a cross cultural workforce

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Some limitations of conventional theories

• Based on US and sometimes Japanese experience

• Assumes relatively stable business environment

• Based on experiences of large or multinational employers

• Questions:Do the concepts apply in China?What about small and family businesses?What about organisations not operating in a competitive market situation?What strategies can HR managers adopt to cope with the impact of the

GFC?

Other SHRM constraints

• Status of HR practitioners

• Lack of acceptance of HRM by senior organisational managers

• Ability of HR practitioners to exercise a more strategic approach

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SHRM model themes

• Awareness of and responsiveness to external environments

• Input of HR business acumen and knowledge

• Responsiveness of HR strategy to business requirements

• HR plans and policies a guiding influence and integratedwith each other

• Effectiveness reflected in organisational outcomes

• Process is long term, cyclical and flexible

Relationship of HR to Organisational structure

• Initiatives changing organisational structures:– enterprise and individual bargaining

– organisational reviews and restructuring

– use of virtual workplaces

– autonomous work teams

– `flexible firm’ model (see chapter 2)

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Organisational culture

• Includes philosophies, values, beliefs, work systems and practices and expectations of and limitations on employee behaviour

• Four broad types:–elite–meritocratic–collegial–leader focused

• Role of HR specialist

Summary

HRM is:

• Linked to business needs

• Focussed on knowledge about employee behaviour and motivation

• Places responsibility on line managers as well as HR specialists

• Crucial to organisational success