Managing People in
Organisations
Lecture 2 - HRM Strategy and its Fit
to Organisational Goals
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HRM Strategy and its ‘Fit’ to Organisational Goals Lecture 2 - 2.2
Learning Objectives for this Lecture
• Explore the theoretical building blocks
(assumptions) of HRM
• Examine the development and spread of
HRM ~ rhetoric or reality
• Consider the design of HRM Policies and
Interventions
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HRM Strategy and its ‘Fit’ to Organisational Goals Lecture 2 - 2.3
What is HRM?
HRM emphasises that employees are critical to
achieving sustainable competitive advantage,
that HR practices need to be integrated with
the corporate strategy, and that HR specialists
help organisational controllers to meet both
efficiency and equity objectives.
(Muller-Camen, Croucher, Leigh, 2008; Bratton & Gold, 1999)
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HRM Strategy and its ‘Fit’ to Organisational Goals Lecture 2 - 2.4
HRM Perspectives
Hard HRM: Utilitarian Instrumentalism
Soft HRM: Developmental
• Each perspective insinuates a distinct management
style leading to a set of ‘universal best practices’ or
‘best fit’ between the strategic intent of an
organisation and the utilisation of its human
resources.
(Marchington & Wilkinson 2005)
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HRM Strategy and its ‘Fit’ to Organisational Goals Lecture 2 - 2.5
Strategic - Hard HRM
•
•
•
•
•
Utilitarian Instrumentalism
An integrated approach
HR is a strategically driven process
Employees are a factor of production
The HR department’s preferred option
− Direction followed by an organisation in how it
secures, develops, and from time to time,
dispenses with human resources to help it
continue in the long run
(Legge 2005)
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HRM Strategy and its ‘Fit’ to Organisational Goals Lecture 2 - 2.6
Strategic - Soft HRM
Resource-based model draws attention to the
strategic value of the workforce
• Employee = Resource
• Training = Investment
• Employee development is the way to secure
competitive advantage
− engenders: commitment; adaptability; high quality of skills
and performance
− employees are proactive rather than passive inputs
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HRM Strategy and its ‘Fit’ to Organisational Goals Lecture 2 - 2.7
HRM Strategy and Best Practice
Framework
• Improved organisational performance can
be achieved by implementing best practice
• Mechanistically matching strategy with
HRM policies and practices
• Do successful practices in one organisation
work well in another? Are there normative
recipes for success?
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HRM Strategy and its ‘Fit’ to Organisational Goals Lecture 2 - 2.8
Limitations to Best Fit and
Practice Models
• Deterministic
• Ignores multiple influences within the pluralistic system
• Assumes managers have complete control over workers
• Models are static and do not focus on the process of change
• Neglects the significance of institutional forces e.g., EU
• Plausibility and utility of applying ‘best fit’ models in practice
• Strategic choice influenced by both the internal and external
environment
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HRM Strategy and its ‘Fit’ to Organisational Goals Lecture 2 - 2.9
Storey’s (1992) Model Of HRM
Beliefs and assumptions
• HR gives organisations a competitive
edge
• Commitment rather than compliance
• Selection and development are
central to HRM
Strategic qualities
• HR decisions are of strategic
importance
• Senior managers must be involved in
HRM
• HR policies need to be integrated into
business strategy
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Critical role for line managers
• HR too important to be left to
personnel specialists alone
• Line managers are deliverers and
key drivers of HR
• The management of managers is
critically important
Key levers
• Culture more important than
procedures and systems
• Integration of HR practices
• Emphasis on devolved
responsibilities and empowerment
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HRM Strategy and its ‘Fit’ to Organisational Goals Lecture 2 - 2.10
The Harvard Model After Beer et al. (1984)
STAKEHOLDER
INTERESTS
Shareholders
Management
Government
Community
Trade Unions
SITUATIONAL FACTORS
Workforce characteristics
Business strategy
Conditions
Management philosophy
Labour market
Trade Unions
Task Technology
Laws and societal values
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HRM
POLICY
CHOICES
HR OUTCOMES
LONG TERM
CONSEQUENCES
Commitment
Individual
Well-being
Employee
influence
HR flows
Competence
Organisational
Effectiveness
Reward
system
Work
systems
Congruence
Cost
effectiveness
Societal
well-being
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HRM Strategy and its ‘Fit’ to Organisational Goals Lecture 2 - 2.11
Guest’s (1989) Model
HIGH
Job performance
Organisational/
Job design
Strategic integration
HIGH
Problem solving
Change
Management of
change
Recruitment
Selection
Socialisation
Appraisal
Training and
development
Reward systems
Communication
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Commitment
Innovation
Flexibility
HIGH
Cost effectiveness
Quality
LOW
Labour turnover
Absence, Grievances
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HRM Strategy and its ‘Fit’ to Organisational Goals Lecture 2 - 2.12
Problems and Contradictions Within
HRM
• How extensive is HRM?
(WIRS 1984-2000)
− Increasing take up of HRM practices
− Pick-and-mix approach
− Hard aspects of ‘HRM’ ~
labour productivity and reduced costs
• A strategic role for HR managers?
• Devolvement v Development
• Empowerment or Intensification
• Flexibility v Commitment
• Strong Culture v Flexibility
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HRM Strategy and its ‘Fit’ to Organisational Goals Lecture 2 - 2.13
Corporate, Competitive, and
Operational Strategies
Johnson & Scholes (2002:10) define strategy
as:
• ‘the direction and scope of an organisation over the
long term, which achieves competitive advantage
for the organisation through its configuration of
resources within a changing environment and to
fulfil stakeholders expectations’
• Can HRM be viewed as a universalist, high
commitment, best practice model of people
management?
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HRM Strategy and its ‘Fit’ to Organisational Goals Lecture 2 - 2.14
Internal and External Dimensions of
the Strategic Problem
Internal Analysis
Strengths
Weaknesses
Resource-based Models
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External Analysis
Opportunities
Resource-based perspective is
a re-balancing of the literature
on strategy, reminding people of
the significance of internal
resources and their development
over time
Threats
Positioning Models
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HRM Strategy and its ‘Fit’ to Organisational Goals Lecture 2 - 2.17
HR Professionals in a Strategic Role
• Role changed from controllers to
consultants
• Architects of large, one-sized programmes
to smaller tailor-made solutions for specific
purposes
• Implementation of HRM practices devolved
to line managers
• A strategic role for HR managers?
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HRM Strategy and its ‘Fit’ to Organisational Goals Lecture 2 - 2.18
Role of Line Managers in HRM:
Sheffield Study
• Good news and bad news
• Line managers saw the necessity and value of doing HR work
but for various reasons were often unable to deliver
consistent results
• Line managers were willing to take on HR work but would
excuse any failings on their part by saying it was actually the
preserve of HR professionals
• Line managers valued HR professionals' input but wanted to
have the final say in any personnel decisions
• Line managers feel that much HR work is a matter of
common sense but it is clear that failures in devolved HR
come from lack of specific skills, e.g. negotiation
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HRM Strategy and its ‘Fit’ to Organisational Goals Lecture 2 - 2.19
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