INTRODUCTION TO HUMAN RESOURCE MANAGEMENT Flashcards
HUMANS OR RESOURCES?
A historical overview of how the role of Human Resource Management (HRM) has evolved over time:
* 1890s-1950s: HRM focused on employment administration, working conditions, and employee welfare. During this
time, there were no formal HR departments, and HR functions were typically handled by line managers.
* 1950s-1980s: HRM shifted towards more collective bargaining and union membership, as well as an adversarial stance
between management and employees. The focus was on negotiating and enforcing labour contracts and resolving
labour disputes.
* 1980s and beyond: HRM has become more strategic and focused on treating employees as assets, with an emphasis on
efficient acquisition and effective deployment of human resources. This has involved a greater focus on talent
management, employee development, and aligning HR strategy with overall business strategy.
Example
The recent UK industrial disputes and strikes can be seen as a reflection of the ongoing tension between employees and
employers over the management of human resources, which has been a part of the evolution of HRM over time.
Another example is the ongoing strikes by University and College Union (UCU) members at UK universities overpay and
pensions. These strikes reflect the importance of employee welfare and working conditions, as well as the need for effective
deployment of human resources in the education sector.
WHAT IS INVOLVED IN HUMAN RESOURCES TODAY?
There are two main areas of HRM: “Micro” HRM and “Strategic” HRM.
Micro HRM refers to the practices and roles involved in managing employees at the operational level.
* recruitment and selection
* job design and specification
* engagement and training
* performance and reward management
* succession planning
* legal compliance
* payroll
* benefits administration.
These activities are typically handled by HR professionals who are responsible for ensuring that the organization’s human
resources are effectively managed and aligned with business objectives.
Strategic HRM: involves a proactive effort to engage employees in attaining organizationally important outcomes.
* understanding how the micro-HR activities can be best integrated with each other
* how they relate to the business context.
* examining how HR practices impact organizational performance, such as the belief or assumption that investing in
employees through training and development can lead to improved performance outcomes.
Relevance
What type of people are needed, how to attract and hire them, how to motivate them and develop skills, legal and social
expectations VS difference between the goals of the organisation and the leader, cutting personnel costs might be effective
short term
“HARD HRM” THE MATCHING MODEL
The three bubbles in the centre of the model represent mission and strategy, organizational structure, and human resource
management. These three components must align with each other in order to achieve a tight fit between HR and business
strategy. The triangle labelled “the firm,” represents the organization.
The three bubbles pointing to the triangle, political forces, economic forces, and cultural forces, represent the external factors
that influence the organization and its HR practices.
There is a focus on business priorities and a tight fit between HRM activities and the business strategy. This model views people
as resources, similar to any other resource, and relies on quantitative appraisal methods such as resource planning and
psychometric tests to inform decision-making. HR is seen as a partner to the business and is responsible for deploying strategic
resources to meet business objectives. The rational deployment of resources ensures that the organization’s human resources
are used effectively to achieve business goals.
This model is often criticized for its instrumental view of employees, which may lead to a lack of consideration for the human
aspect of HRM.
This model is based on the assumption that the most effective way to manage people varies from organization to organization,
and that HR policies and systems should be developed to meet the specific needs of each organization.
In the centre of the model, there is “Develop HR policy & systems to meet business needs,” which represents the idea that HR
policies and systems should be designed to support the overall business strategy. The five bubbles coming from this central
point represent key HR functions, including the selection of the most suitable people, performance management, appraisal and
monitoring, reward management, and skills and knowledge development.
The contingency model is often associated with unitarism, the belief that a situation free of conflict in the workplace is possible.
This means that the HR policies and systems should be designed to create a unified and harmonious work environment in which
everyone works together towards common goals
“SOFT” HRM: THE HARVAD MODEL
It acknowledges the situational factors that impact HRM, such as workforce characteristics, business strategy, management
philosophy, labour market, unions, task technology, laws, and societal values. The Harvard model highlights the importance of
stakeholder interests, which include shareholders, management, employee groups, government, community, and unions.
The HRM policy choices in this model include employee influence, human resource flow, reward systems, and work systems.
The ultimate goal of these policy choices is to achieve HR outcomes such as commitment, competence, congruence, and costeffectiveness.
The long-term consequences of these HR outcomes are individual well-being, organizational effectiveness, and societal wellbeing. The Harvard model emphasizes the importance of employee-centred HR discourse, which includes issues of fairness,
communication, training, development, security, and well-being. However, this could be seen as dismissing the potential fir
tensions.
This focuses on long-term employees’ commitment and motivation:
* HRM deals with issues of fairness, communication, training, development, security and well being
* The HR discourse is employee centric so the HR director must have a place on the board to exert influence.
Enabled by stakeholders:
* People within the organisation are regarded as active, competent agents, not passive resources
* Typically informed by corporate culture management to build consensus, flexibility and engagement.
UNIVERSALIST OR BEST PRACTICE SCHOOL OF HRM
➢ HRM is a distinctive approach to employment management that seeks to achieve competitive advantage through the
strategic deployment of a highly committed and capable workforce, using various cultural, structural, and personnel
techniques
➢ Assume:
o belief that a set of practices aimed at higher employee commitment will benefit any organization
o more effective organizations tend to adhere to principles such as integration (integrate HRM into strategy),
high employee commitment, flexibility (HRM strengthens motivation which contributes to responsiveness and
adaptation to innovation), and quality of work (a sophisticated selection and management of employees)
Rethink your Employee Value Proposition
This highlights the importance of re-evaluating the traditional employee value proposition (EVP) in light of the changing nature
of work and employee expectations. They suggest that companies should shift from a transactional approach to an experiential
approach to attract and retain top talent. This involves focusing on creating a sense of purpose and meaning for employees,
fostering a culture of learning and development, providing flexibility and autonomy, and prioritizing employee well-being. The
authors also emphasize the importance of co-creation and ongoing feedback in developing an effective EVP
STRATEGY-MAKING PROCESS AND HRM
ORGANISATION STRATEGY
The organization’s strategy is developed through a shared understanding of the competitive environment, an intended course of
action for competitive success, and an objective appraisal of available resources. The strategy formulation process can be
product/market-based or resource-based. The implementation process involves hierarchical planning and change management.
STRATEGIC HRM
Strategic HRM, on the other hand, is a long-term view of HR that ensures the right resources are in place when needed. It
supports and directs employee behaviour in line with organisational objectives. Strategic HRM can be integrated into the
organisation through best fit, best practice, or HR as an internal source of competitive advantage. It can also adapt to the
organisation’s needs through HR policies and practices, such as high performance and high commitment.
STRATEGIC HRM
BEST FIT
The best-fit approach involves a top-down approach, where senior management cascades objectives to departments and
individuals, and HR passes on information to enable strategic decision-making.
Focuses on vertical fit so aligning HR policies and practices with
o Strategic choices on how to attain sustainable competitive advantage
o Contingent factors such as the stage of organisational development
Assume:
o Employees are a means to implement the business strategy
o Effective strategies fit organisational strategy and internal/ external context
o Objectives cascaded down from senior management through departments to departments to individuals
o A two-way conversation limited to HR passing on info to enable strategic decision
BEST FIT- LIFECYCLE
The best-fit approach of Strategic HRM recognizes the importance of aligning HR policies and practices with the external
environment and internal context of an organization. The approach acknowledges that HR policies and practices should vary
according to the lifecycle stage of an organization.
➢ In the introductory stage, organizations need flexibility in HR to allow for growth.
➢ During the growth stage, formal and differentiated HR procedures are needed to support the expansion of the
business.
➢ In the maturity stage, cost control becomes crucial as margins decrease, and the focus shifts to retaining viability.
➢ Finally, in the decline stage, rationalization, downsizing, and redundancy may be necessary to manage the contraction
of the business.
The best-fit approach assumes that employees are a means to implement the business strategy, and HR strategies should fit the
organizational strategy and the internal/external context. HR objectives are cascaded down from senior management through
departments to individuals, and two-way conversation is limited to HR passing on information to enable strategic decisionmaking
BEST FIT COMPETITIVE ADVANTAGE
The ‘Vertical fit’ of Strategic HRM to align
* employee behaviour reinforced by HRM
* competitive strategies are chosen by the organization.
Cost leadership strategy
* HRM strategy: monitoring and control while maximizing efficiency.
* HR policies and practices: explicitly defined and narrowly designed, with career paths that encourage specialization and
expertise., higher concern for output and a result-oriented appraisal
* Employee role behaviour: characterized by repetitive and predictable activities, short-term focus,
autonomous/individual activities, market pay levels, and minimal investment in training and development.
Differentiation (quality enhancement)
* HRM Strategy: promoted some flexibility and adaptation and develop more reliable and committed behaviour
* HRM policies and practices: relatively explicit and fixed job descriptions, greater participation in decisions, resultoriented appraisal with a mix of individual and group criteria and a higher concern for quality
* Employee role behaviour: a relatively repetitive and predictable more long-term focus, moderately cooperative with
job security and continuous training and development.
Focus (Innovation):
* HRM Strategy: promote cooperation and exchange of ideas and encourage tolerance to unpredictability.
* HRM policies and practices: flexible job designs that require interaction and coordination with broader skill
development and career path support, performance is linked to group achievement and a moderate concern for
quality.
* Employee role behaviour: high degree of creativity and a longer-term focus with interdependent behaviour and a
freedom to choose a pay package.
RESOURCE-BASED VIEW
➢ Sees HR as an internal source of competitive advantage
➢ Assumes an HR-driven level of vertical fit meaning that HR policies and practices are aligned with and support the
overall strategic direction of the organization. The goal is to create a set of HR practices that are valuable, rare, difficult
to imitate, and non-substitutable, leading to sustained competitive advantage.
Assume:
* Employees are a key source of competitive advantage
o Employees are a key source of unique organization-specific competencies
o That enables the business to react and flex as strategic needs change
* HR strategy is geared towards managing people for competitive advantage
* HR policies and procedures are designed to develop and sustain skills, commitment, and behavioural flexibility.
This view assumes an HR-driven level of vertical fit,
Info: Ulrich and Dave Lake, argue that an organization’s internal capabilities are the primary source of competitive advantage.
This perspective challenges traditional models of strategy, which focus primarily on external factors such as industry structure,
competition, and market positioning. Instead, the resource-based view emphasizes the importance of internal resources, such as
human capital, as the key driver of competitive advantage.
VRIO
The VRIO framework is an analytical tool used within the resource-based view approach to Strategic HRM. It helps to evaluate
the potential of human resources within an organization to provide a sustainable competitive advantage.
The four key dimensions of VRIO:
* Valuable: Human resources are considered valuable if they provide the greatest leverage and potential for
differentiation. If not, they might result in a disadvantage for the organization.
* Rare: Human resources are considered rare if they exhibit features that are unique within the industry and can be
exploited in an exclusive way. If not, they might lead to competitive parity, which means that the organization’s
advantage is not unique.
* Inimitable: Human resources are considered inimitable if they are difficult to attain by competitors and are firmspecific, such as synergies from social complexity. If not, the advantage might be temporary as competitors can
replicate it.
* Organized: Human resources are considered organized if there is a coherent system of HR practices in place that
enables employees to reach their potential. If not, the potential advantage might not be capitalized upon, and the
organization might not achieve its full potential
RESOURCE-BASED VIEW- COMPETENCIES
The concept of organization-specific competencies within the resource-based view approach to SHRM suggests that an
organization’s unique competencies can be developed through its people’s competencies.
The core competency management model
* portfolio of unique skills and technology “bundles” is valuable to customers
* leadership intent to pursue broader opportunities is necessary.
Organizational-specific competencies focus on:
* turning people’s competencies into organizational competencies
* developing the ability to react and flex as strategic needs change
* learning across individual skill sets and organizational units.
The implications for HR include a purposely developed competency through high-performance people:
* combining technical knowledge with learning and innovation
* retention through internal mobility and acquisition through links with education
* significant investment in development and creative capacity for use in job evaluation
* peer and customer feedback to establish contribution and flexible compensation systems.
BEST PRACTICE APPROACH
The ‘best practice’ approach to Strategic HRM:
➢ aims to identify and gain commitment to key practices of effective HRM.
➢ Employee commitment is achieved by a ‘horizontal’ fit between best HRM practices and organizational strategy.
Organizational strategy: a strong commitment to the organisational goals and values provides a competitive advantage
HR Strategy: the closer the organisation gets to the ideal set of practices, the better it will perform
o Employment security
o Rigorous selection
o Team working/ self-management
o Performance linked pay
o Extensive training and skill development
o Involvement in decision-making
This bundle of practices mutually reinforces each other, leading to a better organisational structure.
