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01
The essence of
human resource
management (HRM)
K e y co n c e p t s a n d t e r m s
Added value Humanism
Agency theory Institutional theory
AMO theory Matching model of HRM
Commitment Motivation
Contextual model of HRM Organizational behaviour theory
Contingency theory Organizational capability
European model of HRM Resource-based theory
5-P model of HRM Resource dependence theory
Hard HRM Soft HRM
Harvard framework Strategic alignment
HR philosophy Strategic human resource management
Human capital theory (SHRM)
Human relations Transaction costs theory
Human resource management (HRM) Unitarist
L e a r n i n g o u tcom e s
On completing this chapter you should be able to define these key concepts. You should
also know about:
●● The fundamental concept of HRM and ●● The underpinning theories
how it developed ●● The reservations made about HRM
●● The meaning of HRM ●● Models of HRM
●● The goals of HRM ●● The position of HRM today
●● The philosophy of HRM
4 Part 1 The Practice of Human Resource Management
it emphasized the notion that people should be original concept can lead us to believe. This is
regarded as assets rather than variable costs. illustrated by the various models summarized in
this section which provide further insights into the
nature of HRM. The chapter ends with an assess-
The conceptual framework of HRM ment of where the concept of HRM has got to
now. Following this analysis the next two chapters
HRM as conceived in the 1980s had a conceptual explain how in general terms HRM is planned
framework consisting of a philosophy underpinned through the processes of strategic HRM and deliv-
by a number of theories drawn from the behavioural ered through the HR architecture and system, the
sciences and from the fields of strategic manage- HR function and its members, and, importantly,
ment, human capital and industrial relations. The line managers.
HRM philosophy has been heavily criticized by
academics as being managerialist and manipulative
but this criticism has subsided, perhaps because it
became increasingly evident that the term HRM HRM defined
had been adopted as a synonym for what used to be
called personnel management. As noted by Storey Human resource management can be defined as
(2007: 6): ‘In its generic broad and popular sense a strategic, integrated and coherent approach to
it [HRM] simply refers to any system of people the employment, development and well-being of the
management.’ people working in organizations. It was defined by
Boxall and Purcell (2003: 1) as ‘all those activities
associated with the management of employment
HRM practice today relationships in the firm’. A later comprehensive
definition was offered by Watson (2010: 919):
HRM practice is no longer governed by the original
philosophy – if it ever was. It is simply what HR HRM is the managerial utilisation of the efforts,
people and line managers do. Few references are knowledge, capabilities and committed behaviours
made to the HRM conceptual framework. This is which people contribute to an authoritatively
a pity – an appreciation of the goals, philosophy co-ordinated human enterprise as part of an
and underpinning theories of HRM and the various employment exchange (or more temporary
HRM models provides a sound basis for under- contractual arrangement) to carry out work tasks
standing and developing HR practice. But account in a way which enables the enterprise to continue
needs to be taken of the limitations of that philo into the future.
sophy as expressed by the critics of HRM set out
later in this chapter.
The goals of HRM
The goals of HRM are to:
Aim of this chapter
●● support the organization in achieving its
The aim of this chapter is to remedy this situation. objectives by developing and implementing
It starts with a selection of definitions (there have human resource (HR) strategies that are
been many) and elaborates on these by examining integrated with the business strategy
HRM goals. Because the original concept of HRM (strategic HRM);
is best understood in terms of its philosophy and
●● contribute to the development of
underpinning theories these are dealt with in the
a high-performance culture;
next two sections. Reference is then made to the
reservations made about HRM but it is noted that ●● ensure that the organization has the talented,
while these need to be understood, much of what skilled and engaged people it needs;
HRM originally set out to do is still valid. However, ●● create a positive employment relationship
as explained in the next section of the chapter, between management and employees and
HRM is more diverse than interpretations of the a climate of mutual trust;
6 Part 1 The Practice of Human Resource Management
●● encourage the application of an ethical therefore HR policies should be integrated into the
approach to people management. business strategy.
An earlier list of HR goals was made by Dyer and
Holder (1988: 22–28) who analysed them under
the headings of contribution (what kind of em-
ployee behaviour is expected?), composition (what
Underpinning theories of
headcount, staffing ratio and skill mix?), com HRM
petence (what general level of ability is desired?) and
commitment (what level of employee attachment The original notion of HRM had a strong theore
and identification?). Guest (1987) suggested that tical base. Guest (1987: 505) commented that:
the four goals of HRM were strategic integration, ‘Human resource management appears to lean
high commitment, high quality and flexibility. heavily on theories of commitment and motivation
And Boxall (2007: 63) proposed that ‘the mission of and other ideas derived from the field of organ
HRM is to support the viability of the firm through izational behaviour.’ A number of other theories,
stabilizing a cost-effective and socially legitimate especially the resource-based view, have contributed
system of labour management’. to the understanding of purpose and meaning of
HRM. These theories are summarized below.
These concerns merit attention, but the more im- proposition that: ‘Human resource management
portant messages conveyed by the original notion (HRM) involves all management decisions and
of HRM such as the need for strategic integration, actions that affect the nature of the relationship be-
the treatment of employees as assets rather than tween the organization and employees – its human
costs, the desirability of gaining commitment, the resources’ (ibid: 1). They believed that: ‘Today... many
virtues of partnership and participation and the key pressures are demanding a broader, more compre-
role of line managers are still valid and are now hensive and more strategic perspective with regard
generally accepted, and the underpinning theories to the organization’s human resources’ (ibid: 4). They
are as relevant today as they ever were. also stressed that it was necessary to adopt ‘a longer-
And it should be remembered that these objec- term perspective in managing people and consider
tions, with the exception of the last one, mainly ation of people as a potential asset rather than merely
apply to the original concept of HRM. But today, as a variable cost’ (ibid: 6). Beer and his colleagues were
explained in the final section of this chapter, HRM the first to underline the HRM tenet that it belongs
in action does not necessarily conform to this con- to line managers. They suggested that HRM had
cept as a whole. The practice of HRM is diverse. two characteristic features: 1) line managers accept
Dyer and Holder (1988) pointed out that HRM more responsibility for ensuring the alignment of
goals vary according to competitive choices, tech- competitive strategy and HR policies; 2) HR has
nologies, characteristics of employees (eg could be the mission of setting policies that govern how HR
different for managers) and the state of the labour activities are developed and implemented in ways
market. Boxall (2007: 48) referred to ‘the profound that make them more mutually reinforcing.
diversity’ of HRM and observed that: ‘Human re-
source management covers a vast array of activities
and shows a huge range of variations across occu- Contextual model of HRM
pations, organizational levels, business units, firms,
industries and societies.’ There are in fact a number The contextual model of HRM emphasizes the
of different models of HRM as described below. importance of environmental factors by including
variables such as the influence of social, institu-
tional and political forces that have been under
estimated in other models. The latter, at best,
Models of HRM consider the context as a contingency variable.
The contextual approach is broader, integrating
The most familiar models defining what HRM is the human resource management system in the
and how it operates are as follows. environment in which it is developed. According to
Martin-Alcázar et al (2005: 638): ‘Context both
conditions and is conditioned by the HRM strat-
The matching model of HRM egy.’ A broader set of stakeholders is involved in
Fombrun et al (1984) proposed the ‘matching the formulation and implementation of human
model’, which indicated that HR systems and the resource strategies that is referred to by Schuler
organization structure should be managed in a way and Jackson (2000: 229) as a ‘multiple stakeholder
that is congruent with organizational strategy. This framework’. These stakeholders may be external
point was made in their classic statement that: ‘The as well as internal and both influence and are influ-
critical management task is to align the formal enced by strategic decisions
structure and human resource systems so that they
drive the strategic objectives of the organization’
(ibid: 37). Thus they took the first steps towards the The 5-P model of HRM
concept of strategic HRM.
As formulated by Schuler (1992) the 5-P model of
HRM describes how HRM operates under the five
The Harvard model of HRM headings of:
Beer et al (1984) produced what has become known 1 HR philosophy – a statement of how the
as the ‘Harvard framework’. They started with the organization regards its human resources,
10 Part 1 The Practice of Human Resource Management
The diversity of HRM been expressed about it. There may be something in
these criticisms, but the fact remains that as a
Many HRM models exist, and practices within different description of people management activities in
organizations are diverse, often only corresponding organizations HRM is here to stay, even if it is applied
to the conceptual version of HRM in a few respects. diversely or only used as a label to describe
traditional personnel management practices.
Reservations about HRM
On the face of it, the concept of HRM has much to
offer, at least to management. But reservations have
Questions
1 What is HRM? 6 What is the essence of the philosophy of
2 What was the main message of the Harvard HRM?
framework? 7 What is resource-based theory?
3 What was the main message of the matching 8 What is the significance of contingency theory?
model? 9 What are the key reservations made by
4 What are the goals of HRM? commentators about the early version of
5 What is the difference between hard and soft HRM?
HRM? 10 What is the position of HRM today?
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