Strategic

HRM
Lecture 4

Strategic HRM
Aims of the session:

To outline the concept of strategic

HRM & explore several of its
components
To critically evaluate some of the
assumptions upon which strategic
HRM is founded

Approaches to strategic HRM

At least three theoretical approaches can be identified:
1.

A resource-based view of the firm & the perceived

value of human capital (Barney 1991).

2.

Alignment of employment policies & practices with

business strategy fit or contingency approach (the
Harvard framework).

3.

A one best way of managing human resources the

universalist approach.

Barney (1991)
For a resource to result in sustained
competitive advantage it must meet
four criteria:
1. It must be valuable
2. It must have rarity
3. It needs to be inimitable
4. It must be non-substitutable

Rarity is related to value...

The assumption that the most
valued competence is cognitive
ability due to future needs for
adaptability & flexibility,

Cognitive ability is distributed

unevenly & those with high levels
of it will be rare.

Inimitable
Competitive advantage is difficult to determine
where or what does it come from?
If an individual in Firm A goes to Firm B they can
never re-create what they did in Firm A why?
Because of social complexity & causal
ambiguity.

Non-substitutable
In the short term human resources
can be substituted by other
resources e.g. technology.

In the long run the human resource

cannot be substituted because its
the only resource that doesnt
become obsolete.

Fit or contingency approaches to

Strategic HRM
Fit or contingency approaches focus on two
areas - external & internal:

External: that HR strategy fits with the

demands of business strategy

Internal: that all HR policies & activities fit

together into a coherent whole & are mutually
reinforcing

Strategic HRM
External pressure

HR strategy
Business strategy

Fit

The fit between HR

Strategy &
business strategy
P.92 Tyson

Internal pressure

Universalist approach
David Guests model (1989) an example
of this approach HRM as best practice

One model of labour-management a

high commitment model is related to
high organisational performance in all
contexts

Has four central components

Guests model (1989)

1: A set of HRM policy goals
2: A set of HRM policies
3: A cement that binds the system
4: A set of organisational outcomes

Guests Model

HRM Outcomes

HRM Policy goals

Cement

that binds
the whole - culture

HRM Policies

HRMs policy goals

1. Strategic Integration: ensure that HRM is fully
integrated into strategic planning; HRM policies cohere
across policy areas & organisational hierarchies
2. Commitment: concerned with binding employees to the
organisation & securing commitment to high performance
3. Flexibility: the organisation as a whole must be flexible,
adaptive & receptive to innovation, at the individual level it
calls for functional flexibility
1. Quality: can only be delivered through the development
of quality staff & this is a priority for senior management

HRMs goals & policies are

A package - each is necessary to ensure the
right kind of organisational outcomes acceptance of the package is the basis of
strategic integration

Goals only achieved if the right policies are in

place & this is one element that makes it
strategic

There are 6 key policy areas

The HRM policies

1. Recruitment, selection & socialisation
2. Appraisal, training & development
3. Organisation & job design
4. Communication systems
5. Reward systems
6. Change management

The cement
Support from key leaders at every level of
the organisation
A strong culture, moulded by either the
present leadership or powerful founding
fathers
Conscious strategy to pursue success
through full & effective utilisation of
human resources

HRMs organisational outcomes

High job performance

High acceptance of innovation & change

High cost effectiveness

Low labour turnover, absences &

grievances

Guests model: a caveat

Four preconditions are necessary for it to have a
chance of success:
1. A green-field site
2. A professional management team
3. Intrinsically rewarding work
4. Security of employment

Guests Model
Values underpinning it are unitarist
Contrasts with the values of personnel
management which emphasised
collective & pluralist values
Question over the role of trade unions

How is the model translated into

practice?
Through the management of
performance at every level of the
organisation

By the use of tools such as

performance management &
performance appraisal

Critiques of Strategic HRM

Ambiguity over the term itself - what does
HRM mean?
In USA is a generic term & used
interchangeably with personnel
management
Hard & soft versions are a rewording of
Theory X and Theory Y
Torn between individualism & collectivism
Ability of line managers to manage people

Legge: contradictions in HRM

Serious problems with integration HRM strategies will always be
subordinate to business strategy
Decentralisation of costs/profits to
SBUs leads to short-term thinking
which undermines the developmental
direction of HRM
Flexibility vs. quality
Teamwork vs. individual pay

Legge (1996) critique of Guest

Commitment to what?
The organisation?
The job?
Work group?
Career?
Family?

Noone (1992)
HRM is a set of management practices
one approach & not a general theory of
management
HRM tries to resolve long-standing core
issues of labour management - power,
control, conflict, resistance, dependence
& consent its doing nothing new
Its origins in USA are also important

Summary
HR strategy must be context specific
Its impossible to replicate what another
organisation does
Difficult to say which HR policies are
critical & are the key triggers for change
Outcomes not always clear
Relationship between HR strategy &
business strategy is problematic

Further reading for this session

Barney, J. (1991) Firm Resources and Sustained Competitive Advantage, Journal
of Management, 17 (1): 99-120
Guest, D. (1987) Human Resource Management and industrial relations, Journal
of Management Studies, 24, 503-21
Guest, D. (1989) HRM: Implications for industrial relations in Storey, J. (ed) New
Perspectives on Human Resource Management. London: Routledge
Keenan, A and Paterson, J. (2008) Human Resource Management Ch 2
Legge, K. (1993) HRM: A Critical Analysis in Storey, J. (ed) New Perspectives on
Human Resource Management. London: Routledge
Legge, K. (1995) HRM: rhetoric, reality and hidden agendas in Storey, J. (ed)
New Perspectives on Human Resource Management. London: Routledge
Storey, J. 1995) (ed.) Human Resource Management: A Critical Text. London:
Routledge
Storey, J and Sisson, K. (1993) Managing Human Resources and Industrial
Relations. Buckingham: Open University Press