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1 HUMAN RESOURCE MANAGEMENT

Contents
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HRM defined
Features of HRM
Goals of HRM
Versions of HRM
HRM activities
The development of the HRM concept
The matching model of HRM
The Harvard framework
The UK contribution to the HRM
concept
The impact of HRM: research findings
The David Guest model of the link
between HRM and performance
How HR can make an impact on
organizational performance
Role of the HR function

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Activities of HR professionals
Roles of HR professionals
HRM models: Tyson and Fell
HRM models: Storey
HRM models: Reilly
HRM models: Caldwell
The Ulrich/Brockbank 2005 model of
HR roles
Competency framework for HR
specialists
Key competency areas for HR
professionals
The professional standards of the CIPD
Evaluating the HR function
Ten ways of ensuring that the HR
function innovates effectively

HUMAN RESOURCE MANAGEMENT DEFINED

Human resource management (HRM) is a strategic and coherent approach to the


management of an organizations most valued assets the people working there,
who individually and collectively contribute to the achievement of its objectives.

FEATURES OF HRM

Strategic:

Coherent:

Commitment:

Integrate business
and HR strategy

Integrated and
mutually
supporting HR
policies and
practices

Emphasis on gaining
commitment to the
organizations
mission and values

People
treated as
assets:
Focus on
developing human
capital

Unitarist
approach:

Line managers
deliver HRM:

Management and
employees share
the same interests

Belief that HRM is


essentially the
responsibility of line
managers

GOALS OF HRM
Enhance
motivation,
commitment
and job
engagement

Achieve high
performance
through
people

Attract and
retain the
skilled,
committed and
motivated people
required

Improve
knowledge
sharing

Increase
capabilities
and potential

Achieve
human capital
advantage

Value
people
according
to their
contribution

Develop a
cooperative and
productive
employee
relations
climate

VERSIONS OF HRM

Soft
Soft

Hard

Emphasis
Emphasison
onthe
theneed
need
totodevelop
a
highdevelop a highcommitment,
commitment,high-trust
high-trust
organization
organizationfocus
focus
on mutuality,
on mutuality,
communication
communicationand
and
involvement
involvement

Treating employees
rationally
as as a key resource
from which competitive
advantage can be
obtained

Hard/soft
Using a mix of hard
and soft approaches

HRM ACTIVITIES
Human resource
management

Human capital management

Organization

Resourcing

Human
resource
development

Design

Human resource
planning

Organizational
learning

Job evaluation
and market surveys

Industrial
relations

Development

Recruitment
and selection

Individual
learning

Grade and pay


structures

Employee
voice

Job design

Talent
management

Contingent
pay

Communications

HR services

Health and safety


and welfare

Knowledge
management

Management
development

Performance
management

Reward
management

Employee
relations

Employee
benefits

THE DEVELOPMENT OF THE HRM CONCEPT

The concept of HRM was first developed in 1982. The common use of HR or HRM
as an alternative term to personnel management took place in the second half of the
1990s. Those who dislike the term HRM often refer to people management.
The main developments in the US have been described by Boxall (1992) as the
matching model and the Harvard framework and these are illustrated in the following
models. Since the pioneering US efforts, a number of British commentators have
developed the notion of HRM in the UK as summarized later.

THE MATCHING MODEL OF HRM

The matching model of HRM as developed by Fombrun, Titchy and Devanna (1984)
is illustrated below.

Rewards

Selection

Performance
management

Performance

Development

Adapted from Fombrun et al (1984) Strategic Human Resource Management, Wiley

THE HARVARD FRAMEWORK


The main contention of the Harvard School of Michael Beer and his colleagues was that:
Today, many pressures are demanding a broader, more comprehensive and more strategic
perspective with regard to the organizations human resources (this involves) the
consideration of people as potential assets rather than variable costs. Their framework is
modelled below.
Stakeholder
interests:
shareholders
management
employees
government
unions

Situational factors:
work force
characteristics
business
strategy and
conditions
management
philosophy
labour market
unions
task technology
laws and social
values

HRM policy
choices:
employee influence
human resource
flow
reward systems
work systems

HR outcomes:
commitment
congruence
cost-effectiveness

Long-term
consequences:
individual wellbeing
organizational
effectiveness
societal
well-being

Source: Beer, M et al (1984) Managing Human Assets, The Free Press

THE UK CONTRIBUTION TO THE HRM CONCEPT


David Guest (1987) The four policy goals of HRM are:
1. strategic integration
2. high commitment
3. high quality
4. flexibility.
Karen Legge (1989) The common HRM themes are that:

human resource policies should be integrated with business planning and reinforce or change
the organizational culture

human resources are valuable and a source of competitive advantage

mutually consistent policies are developed to promote commitment and encourage employees
to act flexibly in the interests of the organization.
Keith Sisson (1990) The four main features of HRM are:
1. Integration of personnel policies with one another and business plans.
2. The responsibility for personnel management no longer resides with specialist managers.
3. The focus shifts from managertrade union relations to managementemployee relations,
from collectivism to individualism.
4. There is a stress on commitment and the exercise of initiative.
John Storey (1993) Four features comprise the meaningful version of HRM:
1. A particular constellation of beliefs and assumptions.
2. A strategic thrust informing people management decisions.
3. The central involvement of line managers.
4. Reliance on a set of levers to shape the employment relationship.

THE IMPACT OF HRM: RESEARCH FINDINGS


Researcher(s)

Findings

Arthur (1990, 1992,


1994)

Firms with a high commitment strategy had significantly higher levels of both
productivity and quality than those with a control strategy.

Huselid (1995)

Productivity is influenced by employee motivation; financial performance is influenced


by employee skills, motivation and organizational structures.

Huselid and Becker


(1995)

Firms with high performance work practices had economically and statistically higher
levels of performance.

Patterson, West,
Lawthom and Nickell
(1997)

HR practices explained significant variations in profitability and productivity (19% and


18% respectively). Two HR practices were particularly significant: (1) the acquisition
and development of employee skills and (2) job design including flexibility,
responsibility, variety and the use of formal teams.

Thompson (1998)

The number of HR practices and the proportion of the workforce covered appeared to
be the key differentiating factor between more and less successful firms.

Guest et al, (2000)


The Future of Work
Survey.

A greater use of HR practices is associated with higher levels of employee


commitment and contribution and is in turn linked to higher levels of productivity and
quality of services.

Purcell et al (2003)

The most successful companies had what the researchers called the big idea. They
had a clear vision and a set of values that were embedded, enduring, collective,
measured and managed. They were concerned with sustaining performance and
flexibility. Clear evidence existed between positive attitudes to HR policies and
practices, levels of satisfaction, motivation and commitment, and operational
performance. Policy and practice implementation (not the number of personnel
practices adopted) is the vital ingredient in linking people management to business
performance and this is primarily the task of line managers.

THE DAVID GUEST MODEL OF THE LINK


BETWEEN HRM AND PERFORMANCE

HR
effectiveness

Business strategy
HR practices

HR outcomes:
employee
competence,
commitment
and flexibility

HR strategy

Source: David Guest et al (2000) Effective People Management, CIPD

Quality of
goods and
services
Financial
performance
Productivity

HOW HR CAN MAKE AN IMPACT ON


ORGANIZATIONAL PERFORMANCE

Develop and successfully implement high performance work practices,


particularly those concerned with job and work design, flexible working,
resourcing, employee development, reward and giving employees a voice.

Formulate a clear vision and set of values (the big idea) and ensure that it is
embedded, enduring, collective, measured and managed.

Develop a positive psychological contract and means of increasing the motivation


and commitment of employees.

Formulate and implement policies that meet the needs of individuals and create
a great place to work.

Provide support and advice to line managers on their role in implementing HR


policies.

Manage change effectively.


Source: John Purcell et al (2003) Inside the Box: How people management impacts on organizational
performance, CIPD

ROLE OF THE HR FUNCTION

The role of the HR function is to enable the organization to achieve its objectives by
taking initiatives and providing guidance and support on all matters relating to its
employees. The basic aim is to ensure that management deals effectively with
everything concerning the employment and development of people and the
relationships that exist between management and the workforce. A further key role
for the HR function is to play a major part in the creation of an environment that
enables people to make the best use of their capacities and to realize their potential
to the benefit of both the organization and themselves.

ACTIVITIES OF HR PROFESSIONALS

Service provision providing services to internal customers on all aspects of


HRM.

Guidance to management and line managers on strategies, policies and people


management issues.

Advice to management and line managers on the development and


implementation of HR policies and practices.

ROLES OF HR PROFESSIONALS

Business partner sharing responsibility with their line management


colleagues for the success of the enterprise.

Strategist addressing major long-term issues affecting the management and


development of people and the employment relationship.

Interventionist/innovator developing new approaches to people


management.

Internal consultant analysing and diagnosing problems and proposing


solutions.

Monitor ensuring that the organizations HR policies are implemented


properly and consistently.

HRM MODELS: TYSON AND FELL

Clerk of works

Contracts manager

Architect

HR activities are largely routine employment


and day-to-day administration. Policies are
short-term and ad hoc.
The HR department will use fairly sophisticated
systems. The HR manager is likely to be a
professional or very experienced in industrial
relations but will not be on the board and will act
mainly in an interpretative, not a creative or
innovative, role.
HR policies exist as part of the corporate
strategy. Human resource planning and
development are important concepts and a
long-term view is taken. The head of HR is
probably on the board with power derived from
professionalism and contribution to the
business.

Source: Tyson, S and Fell, A (1986) Evaluating the Personnel Function, Hutchinson

HRM MODELS: STOREY


Strategic
CHANGE MAKERS

ADVISERS

Interventionary

Non-interventionary

REGULATORS

HANDMAIDENS

Tactical

Change makers (interventionary/strategic) close to the HRM model.

Advisers (non-interventionary/strategic) who act as internal consultants, leaving much of HR practice to line
managers.

Regulators (interventionary/tactical) who are managers of discontent concerned with formulating and monitoring
employment rules.

Handmaidens (non-interventionary/tactical) who merely provide a service to meet the needs of line managers.

Source: Storey, J (1992) New Developments in the Management of Human Resources, Blackwell

HRM MODELS: REILLY

Strategic
STRATEGIST/INNOVATOR

CONTRIBUTION
ADVISER/CONSULTANT

ADMINISTRATOR/CONTROLLER

Tactical
Short

Long
TIME ORIENTATION

The changing role of the HR practitioner

Source: Reilly, P (2000) HR Services and the Re-alignment of HRM, Institute for Employment Studies

HRM MODELS: CALDWELL

Caldwell concentrates on the role of HR managers as change agents and has


identified four types:

1. Change champions who envision, lead or implement strategic change.


2. Change adapters who act as reactive pragmatists who adapt the vision to the
realities of the organization and view organizational change as a slow iterative
process.
3. Change consultants who implement a discrete change project or the key
stages of an HR change initiative.
4. Change synergists who strategically co-ordinate, integrate and deliver largescale and multiple-change projects across the whole organization.

Source: Caldwell, R (2002) Champions, adapters, consultants and synergists: the new change agents in HRM,
Human Resource Management Journal, 11(3)

THE ULRICH/BROCKBANK
2005 MODEL OF HR ROLES
Employee advocate focuses on the needs of todays employees through
listening, understanding and empathizing.
Human capital developer in the role of managing and developing human capital
(individuals and teams), focus on preparing employees to be successful in the
future.
Functional expert concerned with the HR practices that are central to HR value,
acting with insight on the basis of the body of knowledge they possess. Some are
delivered through administrative efficiency (such as technology or process design),
and others through policies, menus and interventions. Necessary to distinguish
between the foundation HR practices recruitment, learning and development,
rewards etc and the emerging HR practices such as communications, work process
and organization design and executive leadership development.
Strategic partner consists of multiple dimensions: business expert, change
agent, strategic HR planner, knowledge manager and consultant, combining them
to align HR systems to help accomplish the organizations vision and mission,
helping managers to get things done, and disseminating learning across the
organization.
Leader leading the HR function, collaborating with other functions and providing
leadership to them, setting and enhancing the standards for strategic thinking and
ensuring
corporate governance.
Source: Ulrich, D and Brockbank, W (2005) The HR Value Proposition, Harvard Press, Cambridge, Mass

COMPETENCY FRAMEWORK
FOR HR SPECIALISTS
Business and
cultural awareness

Understands: (1) the business environment, the competitive pressures it faces and its critical
success factors, (2) the business key activities and processes and how these affect business
strategies, (3) the culture (core values and norms) of the business, (4) how HR policies and
practices can impact on business performance puts this understanding to good use.

Strategic capability

(1) Seeks involvement in business strategy formulation and contributes to the development of
the strategy, (2) contributes to the development for the business of a clear vision and set of
integrated values, (3) develops and implements coherent HR strategies which are integrated
with the business strategy and one another, (4) understands the importance of human capital
measurement, introduces measurement systems and ensures that good use is made of them.

Organizational
effectiveness

(1) Contributes to the planning and implementation of cultural change and organizational
development programmes, (2) helps to develop resource capability by ensuring that the
business has the skilled, committed and well-motivated workforce it needs, (3) helps to develop
process capability by influencing the design of work systems to make the best use of people,
(4) contributes to the development of knowledge management processes.

Internal consultancy

(1) Carries out the analysis and diagnosis of people issues and proposes practical solutions,
(2) adopts interventionist style to meet client needs; acts as catalyst, facilitator and expert as
required, (3) uses process consultancy approaches to resolve people problems, (4) coaches
clients to deal with own problems; transfers skills.

Service delivery

(1) Anticipates requirements and sets up appropriate services to meet them, (2) provides
efficient and cost-effective services in each HR area, (3) responds promptly and efficiently to
requests for HR services, help and advice, (4) promotes the empowerment of line managers to
make HR decisions but provides guidance as required.

Continuous
professional
development

(1) Continually develops professional knowledge and skills, (2) benchmarks good HR practice,
(3) keeps in touch with new HR concepts, practices and techniques, (4) demonstrates
understanding of relevant HR practices.

KEY COMPETENCY AREAS


FOR HR PROFESSIONALS
Competency domain

Components

1. Personal credibility

Lives the firms values, maintains relationships founded on trust, acts with
an attitude (a point of view about how the business can win, backing up
this view with evidence).

2. Ability to manage
change

Drives change: ability to diagnose problems, builds relationships with


clients, articulates a vision, sets a leadership agenda, and implements
goals.

3. Ability to manage
culture

Acts as keeper of the culture, identifies the culture required to meet the
firms business strategy, frames culture in a way that excites employees,
translates desired culture into specific behaviours, encourages executives
to behave consistently with the desired culture.

4. Delivery of human
resource practices

Expert in speciality, able to deliver state-of-the-art innovative HR practices


in such areas as recruitment, employee development, compensation and
communications.

5. Understanding of the
business

Understands strategy, organization, competitors, finance, marketing,


sales, operations and IT.

Source: Brockbank, W, Ulrich, D and Beatty, D (1999) HR professional development: creating the future
creators at the University of Michigan Business School, Human Resource Management, 38, Summer, pp
11117

THE PROFESSIONAL STANDARDS OF THE CIPD


Personal drive and
effectiveness

The existence of a positive, can do mentality, anxious to find ways round obstacles and
willing to exploit all the available resources to accomplish objectives.

People management
and leadership

The motivation of others (whether subordinates, seniors or project team members)


towards the achievement of shared goals, not through the application of formal authority
but rather by personal role modelling, the establishment of professional credibility and the
creation of reciprocal trust.

Professional
competence

Possession of the professional skills and technical capability associated with successful
achievement in personnel and development.

Adding value through


people

A desire not only to concentrate on tasks, but rather to select meaningful outputs that will
produce added-value outcomes for the organization, or eliminate/reduce performance
inhibitors, whilst simultaneously complying with all legal and ethical considerations.

Continuing learning

Commitment to continuous improvement and change by the application of self-managed


learning techniques, supplemented where appropriate by deliberate planned exposure to
external learning sources (mentoring, coaching etc).

Thinking and applied


resourcefulness

Application of a systematic approach to situational analysis, development of convincing,


business-focused action plans and (where appropriate) the employment of
intuitive/creative thinking to generate innovative solutions and pro-actively seize
opportunities.

Customer focus

Concern for the perceptions of personnels customers, including (principally) the central
directorate of the organization, a willingness to solicit and act upon customer feedback as
one of the foundations for performance improvement.

Strategic capability

The capacity to achieve a strategic vision for the future, to foresee longer-term
developments, to envision options (and their probable consequences), to select sound
courses of action, to rise above the day-to-day detail, to challenge the status quo.

Influencing and
interpersonal skills

The ability to transmit information to others, especially in written (report) form, both
persuasively and cogently, display of listening, comprehension and understanding skills,
plus sensitivity to the emotional, attitudinal and political aspects of corporate life.

EVALUATING THE HR FUNCTION


General criteria

contribution to organizational effectiveness


achievement of specified goals
specified quantified measures
stakeholder perspective (management, line managers and employees)

Organizational quantified
criteria

added value per employee


added value per of employment costs
sales value per employee
costs per employee

Employee behaviour
criteria

retention and turnover rates


absenteeism
frequency/severity rates of accidents
ratio of grievances to number of employees
time lost through disputes
number of references to employment tribunals

HR function service-level
criteria

average time to fill vacancies


time to respond to applicants
cost of advertisements per reply/engagement
training hours/days per employee
time to respond to and settle grievances
cost of induction training per employee
cost of benefits per employee

TEN WAYS OF ENSURING THAT THE HR


FUNCTION INNOVATES EFFECTIVELY
1.
2.

Be clear on what has to be achieved and why.


Ensure that what you do fits the strategy, culture and circumstances of the
organization.
3.
Dont follow fashion do your own thing.
4.
Keep it simple over-complexity is a common reason for failure.
5.
Dont rush it will take longer than you think.
6.
Dont try to do too much at once an incremental approach is generally best.
7.
Assess resource requirements and costs.
8.
Pay close attention to project planning and management.
9.
Remember that the success of the innovation rests as much on the
effectiveness of the process of implementation (line manager buy-in and skills
are crucial) as it does on the quality of the concept, if not more so.
10. Pay close attention to change management communicate, involve and train.