Business strategies and human resource management:
uneasy bedfellows or strategic partners?
John Purcell
University of Bath
School of Management
Working Paper Series
2005.16
This working paper is produced for discussion purposes only. The papers are expected to be
published in due course, in revised form and should not be quoted without the author’s
permission.
University of Bath School of Management
Working Paper Series
School of Management
Claverton Down
Bath
BA2 7AY
United Kingdom
Tel: +44 1225 826742
Fax: +44 1225 826473
http://www.bath.ac.uk/management/research/papers.htm
2005
2005.01
2005.02
Bruce A. Rayton
Catherine Pardo, Stephan C.
Henneberg, Stefanos
Mouzas and Peter Naudè
Specific Human Capital as an Additional Reason
for Profit Sharing
Unpicking the Meaning of Value in Key Account
Management
2005.03
Andrew Pettigrew and
Stephan C. Henneberg
(Editors)
Funding Gap or Leadership Gap – A Panel Discussion on
Entrepreneurship and Innovation
2005.04
Robert Heath & Agnes
Nairn
Measuring Affective Advertising: Implications of Low
Attention Processing on Recall
2005.05
Juani Swart
Identifying the sub-components of intellectual capital: a
literature review and development of measures
2005.06
Juani Swart, John Purcell
and Nick Kinnie
Knowledge work and new organisational forms: the HRM
challenge
2005.07
Niki Panteli, Ioanna
Tsiourva and Soy Modelly
Intra-organizational Connectivity and Interactivity with
Intranets: The case of a Pharmaceutical Company
2005.08
Stefanos Mouzas, Stephan
Henneberg and Peter Naudé
Amalgamating strategic possibilities
2005.09
Abed Al-Nasser Abdallah
Cross-Listing, Investor Protection, and Disclosure: Does It
Make a Difference: The Case of Cross-Listed Versus NonCross-Listed firms
2005.10
Richard Fairchild and
Sasanee Lovisuth
Strategic Financing Decisions in a Spatial Model of Product
Market Competition.
2005.11
Richard Fairchild
Persuasive advertising and welfare in a Hotelling market.
2005.12
Stephan C. Henneberg,
Catherine Pardo, Stefanos
Mouzas and Peter Naudé
Dyadic ‘Key Relationship Programmes’: Value dimensions
and strategies.
2005.13
Felicia Fai and Jing-Lin
Duanmu
Knowledge transfers, organizational governance and
knowledge utilization: the case of electrical supplier firms in
Wuxi, PRC
2005.14
Yvonne Ward and Professor
Andrew Graves
Through-life Management: The Provision of Integrated
Customer Solutions By Aerospace Manufacturers
2005.15
Mark Ginnever, Andy
McKechnie & Niki Panteli
A Model for Sustaining Relationships in IT Outsourcing with
Small IT Vendors
2005.16
John Purcell
Business strategies and human resource management: uneasy
bedfellows or strategic partners?
Business strategies and human resource management: uneasy
bedfellows or strategic partners?
John Purcell
University of Bath
Bath BA2 7AY
01225 386567
[email protected]
1
Business strategies and human resource management: uneasy bedfellows or strategic
partners?
One of the assignment questions for this year’s class studying ‘Strategy and Human Resource
Management’ (a very popular course) was:
Does, and should, competitive strategy determine the design of a firm’s HR system?
Give illustrations to support your answer.
One of the great advantages in working in a university which has top students is that you can
ask them questions you are not quite sure how to answer yourself! The best students gave
clear examples of such a link and then got stuck in to the ‘should’ part of the question often
noting the critical difference between competitive strategy and business strategy. Some even
went further into corporate strategy, the resource based, and knowledge based view as well as
ethics, culture and institutional setting. Surprisingly none of them questioned what was
meant by a firm’s HR system.
I will follow the same line of argument in this paper with thanks to the students, very few of
whom have any intention of becoming HR professionals. We start with some of the classics
in strategy and HRM, go on to look briefly at some major studies, or the ones that have
influenced my thinking. Thereafter the paper notes the problems with the assumed link with
competitive strategy as a dominant, or the dominant, force in determining an HR system.
Once the focus is widened to cover business strategy two very interesting, and linked,
phenomena can be observed. First, what we thought strategy was all about has changed
hugely. Second, our definition of what constitutes HRM (or the management of employment
relations) has broadened beyond recognition. This is where the definition of an HR system
2
becomes important. The paper will conclude with some observations on the problems and
benefits of such a broad scope to our subject – but is it our subject any more?
Competitive strategy and HRM
It was Miles and Snow (1984) with their distinction between ‘defenders’, ‘prospectors’ and
‘analysers’ and associated types of HR policies on staffing and development, performance
appraisal and pay policies, who set the benchmark. Oddly, their work was more influential in
strategic management than among HR researchers. Schuler and Jackson (1987) had much
greater impact in part, I suspect, because they used the dominant strategy paradigm
developed by Porter (1985) which is intuitively appealing. Schuler and Jackson were able to
argue that different competitive strategies imply the need for different kinds of employee
behaviour, especially between ‘differentiators’ and ‘cost leaders’, and thus different types of
HRM. Later this triggered the long running, but ultimately unsatisfactory, debate between
best fit and best practice, but I will not get diverted to this ‘cul-de-sac’ and ‘chimera’ again
(Purcell 1999). The conclusion of Schuler and Jackson’s model were obvious:
If management chooses a competitive strategy of differentiation through product
innovation, this would call for high levels of creative, risk-orientated and cooperative
behaviour.
The company’s HR practices would therefore need to emphasise …
“selecting highly skilled individuals, giving employees more discretion, using
minimal controls, making greater investment in human resources, providing more
resources for experimentation, allowing and even rewarding failure and appraising
performance for its long run implications” – on the other hand if management wants
to pursue cost leadership … (the model) suggests designing jobs which are fairly
repetitive, training workers as little as is practical, cutting staff numbers to the
3
minimum and rewarding high output and predictable behaviour. (Boxall and Purcell
2003: 53-4)
Critics of HRM from within the employment and industrial relations field note, with some
justification, that HRM is much more interested in the ‘developmental humanism’ (Storey
1992) implicit in the first set of practices linked to differentiation, than with the ‘bleak house’
(Sisson 1993) or the ‘bad and the ugly’ (Guest and Hoque 1994) type of HRM of cost
minimisation. If we really are interested in HRM and competitive strategy why don’t we
study these ‘right bastards’ – right because they link HRM to their competitive strategy,
bastards because … well HRM is also about ethics.
One of my favourite examples of competitive strategy and HRM is the clothing (or in the US
the apparel) industry. Here there is a seemingly clear divide between two strategies and their
implications for HRM, and for ethics. It is really only through sector level research that we
can get to grips with competitive strategy and HRM. The work by Bailey (1993) and
subsequently by Appelbaum, Bailey, Berg and Kalleberg (2000) is an exemplar. Here, in the
clothing industry, the distinction is between the progressive bundle system, essentially a
traditional Tayloristic assembly line type of production system, and the modular system, a
type of cellular manufacturing, TQM and work transformation. The latter produces higher
quality, faster turnaround and in some cases lower cost. Why do so few manufacturers adopt
it? Without getting distracted by the diffusion debate the focus here is on competitive
strategy. In essence, early implementers of the modular system were often unsuccessful.
Later, strategic coalitions between HRM, operations management, information systems and
supply chain management came together (with appropriate levels of finance) to link modular
production to ‘lean retailing’ pushed by major customers, like Wal Mart. The essential
4
requirement was for a three day turnaround, compared with around three weeks under the
progressive bundle system.
The critical point, however, is what particular markets are being served by the clothing
manufacturers?
The highly successful Spanish ladies fashion retailer, Zara, is a good
example. Here rapid changes in fashion, often with unpredictable demand (thus ruling out
warehousing and extended shelf life) requires fast response from manufacturers located near
retailers’ distribution depots, with integrated IT systems (the EPOS system of bar codes)
providing rapid response on data on demand linked to supply. Meanwhile, the closure of
clothing plants in Europe and North America is indicative of another trend.1 In commodity,
non fashion clothing, there is little need for a fast turnaround. Cost pressures are paramount
and low wage countries in the developing world become increasingly attractive. Clothing is a
labour intensive industry. The progressive bundle system is more appropriate where cost
minimisation is essential for viability and survival, let alone achieving competitive
advantage.
I do not know of studies of HRM in the clothing industry in developing countries but work by
Wilkinson and his colleagues (2001) in the Japan and Malaysia electronics industry is
instructive, noting the strict Tayloristic, short job cycle time, work in the latter country with
its concomitant control based HR systems. If we are serious about studying the links between
strategy and HRM we really ought to be doing much more comparative research across the
range of competitive conditions in a sector globally. This would also have to include studies
along the supply chain as well as end markets (Kinnie and Swart 2003)
5
Another example of the link between HRM and competitive strategy can, I think, be usefully
taken from call centres, which continue to grow rapidly, again in developing countries like
India with a ready supply of well educated, cheap labour. The growth continues in developed
nations, too, as technology, consumer preferences and the opportunity to reduce costs
coincide.
One of the interesting features of call centres, for our purposes, is how early
studies tended to lump all such centres together under the rubric of ‘the dark satanic mills of
the late 20th century’ and Panoptican controls (Fernie and Metcalf 1998; Bain and Taylor
2000). Reviewing data drawn from Batt and Moynihan’s (2002) study of 354 call centres in
the USA, the dominant impression is the variety of HR systems. They do not explicitly link
this to competitive strategy but I have tried to do so, following a line recently developed by
Kinnie et al (2000).
Here, markets, seen in the relationship with customers (from
transactional to relational) is matched with HRM practices from cost minimisation to high
commitment management. We could use the same terms ‘transactional’ and ‘relational’ in
HR, too, since they are commonly referred to in studies of the psychological contract.
Figure 1 summarises my interpretation of Batt and Moynihan’s data. To do this I have
excluded some of their data. Production characteristics are shown to the left of the diagonal
line, HR system data to the right.
6
Figure 1: Best Fit in Call Centres
Relational
Customer
Markets
Large Business with High HCM % change sales 39.76
Call length 12.17 mins
Customers per day 42
Surveillance 7.66%
Software progs used 8.17
Small business with low HCM
% change sales 25.79
Call length 4.88 mins
Customers per day 88
Surveillance 44.19%
Software progs used 3.09
Transactional
Customer
Market
Operators – control
Surveillance 75%
Call length 0.52 mins
Customers per day
460
Software
progs
1.13
Quit rate 11.79
Education 15.91 years
Induction proficient 35.187 weeks
Training days 2.52
Pay (total) $76,258
Involvement score 72.29%
Variable pay 38.83 %
Quit rate 16.36
Education 13.07 years
Induction proficient 12.33 weeks
Training day 1.39 pa
Pay (total) $27,953
Involvement score 36.51%
Variable pay 14.74%
Quit rate 20.3%
Education 12.2 years
Induction proficient 11.15 weeks
Training days 0.67 pa
Pay (total) $19,061
Involvement score 27.53%
Variable pay 11.67%
Transactional HR
Relational HR
Adapted from Batt, R. and Moynihan, L. (2002) ‘The Viability of alternative call centre
production models’ in HRMJ Vol 12. No.4
7
What is evident is the marked differences between transactional call centres and large
business to business centres in terms of such things as number of software programs used,
percentage of the day electronically monitored, average call-handling time and the average
number of customers per employee per day. The work organisation is markedly different.
This, then, is reflected in the HR system seen in variations in skill requirements, training,
work design, compensation etc. Not surprisingly both the production system and
concommitant HR system are reflected in quit rates. It is tempting to suggest, then, that the
competitive strategy or competitive position of the firm in particular product markets is a
dominant influence on types of HR systems.
Look more closely at the data and another important conclusion can be drawn. Batt and
Moynihan use a ‘high involvement index score’ to summarise their HR data. Focussing on
residential call centres, where a mass production model is often found (typical in retail
finance, for example) big differences are observed between high and low involvement centres
in terms of all of the measures, apart from unionisation (table 1).
8
Table 1: Best Practice or Best Fit Residential Call Centres?
Low involvement score (32.68)
Quit rate
20.98%
Call length (mins)
.47
Customers per employee per day
127
% change sales
16.05
Education – school grade exit
12.52
Proficient weeks induction period
13.71
Training days per year
1.41
Software used: no. of programmes
3.06
Surveillance day %
59.64
Workforce in problem solving teams % 27.96
Self directed teams %
2.16
% full time
80.02
Total pay
$24,372
Variable pay %
10.61
High Involvement score (53.12)
9.20%
6.43
72
36.78
13.52
20.32
2.67
4.22
38.63
61.61
28.43
91.81
$33,465
16.84
Source: Bath. R. and Moynihan, L. (2002) HRMJ Vol.12 No.4 extracted from table 1, p.24
9
These data are a good example of the limits to the argument that competitive strategy
determines, or strongly influences, the design of HR systems.
We need to use other
explanatory tools here like strategic choice, management cognition and leadership values, for
example the belief (or not) among senior managers that employees are a strategic resource
(Bennett et al 1998; Sheppeck and Militello 2000). This is not surprising and it is with relief
that we can downplay the dominant role of competitive strategy.
Within firm studies, like
these of Wright et al (2003) and Bartel (2004), show variety in HRM and outcomes when
competitive strategy is held constant. We are back on familiar territory.
There are other reasons why competitive strategy can never be taken as the dominant force
determining HRM (the ‘should’ part of my students’ question). These relate, firstly, to the
static nature of the models used.
The point made by Wright and Snell (1998) on an
integration of ‘fit’ and ‘flexibility’ is well made. Markets, technology and supply lines
change as Marks and Spencer have found to their cost. Then too is the problem that firms
rarely face a single ‘pure’ market with various degrees of diversification, as means of risk
reduction, expected. Which competitive market should dominate and how should market
variety, and differences in market conditions and market share, be reflected in HRM? Can a
firm have different HR systems each linked to competitive strategy? How much flexibility
and knowledge sharing across markets is optimum? This is especially important for large
multi-divisional companies. Too prominent a position given to competitive strategy also
relegates ‘labour’ to a subservient position after market, technology, operational and
distribution choices have been made. Under this logic a failure to take account of employee
interests, reflected perhaps in collective and individual conflict expressions, would cause
competitive disadvantage but getting a fit between HR and competitive strategy is a takenfor-granted requirement of good management but which would not lead to competitive
10
advantage. Thus we find our strategy giants of yesterday talking of ‘operational effectiveness
as given’ (Porter 1996: 74), ‘sub-activities which are primarily administrative’ (Andrews
1968, quoted in Hoskisson et al 1999: 422), and ‘strategic decisions are primarily concerned
with external rather than internal problems’ (Ansoff 1985: 18).
From competitive strategy to business strategy
The ‘positioning’ school of strategy exemplified by Porter (1985) and Ansoff (1985) has long
been challenged by the ‘design’ school seen most obviously in the work of Mintzberg (1990).
HR scholars, for whom the study of behaviour rather than rational choice is a central interest,
tend to gravitate to the Mintzberg camp. But, in fact, the whole strategy world, as taught and
researched, has opened up in recent years with competitive strategy seen as just one part of a
bigger picture. Quite how big this picture is, under the generic title ‘business strategy’ is
shown by Grant (2002)2 in his textbook on Contemporary Strategy Analysis:
The task of business strategy …
is to determine how the firm will deploy its
resources within its environment and so satisfy its long-term goals, and how to
organise itself to implement that strategy (Grant 2002: 13)
We find other clues to the breadth of strategic analysis later in the book. ‘Failure to match
strategy to the resources and capabilities of the organisation can be … disastrous’ (p.16).
‘Strategy is (now) a quest for performance focussed …. on sources of profitability’ (p.20).
‘Increasingly, strategic planning processes are becoming part of companies knowledge
management systems …’ (p.29). And finally ‘one of the most pernicious misconceptions in
the history of strategic management is the idea that the formulation of strategy can be
separated from its implementation’ (p.188). So much for Porter’s ‘operational effectiveness
as given’!
11
Figure 2: The Evolution of Strategic Management
PERIOD
1950s
1980s
Dominant
theme
Budgetary
planning and
control
Financial
control
through
operational
and capital
budgeting
Corporate
Planning
Planning
growth
Diversification and
portfolio planning
Principal
Concepts and
Techniques
Financial
budgeting
investment
planning
Project
appraisal
Business
forecasting
Investment
planning
models
Synergy
Strategic business
units
Portfolio planning
matrices
Organizational
Implications
Financial
management
the key
Rise of
corporate
planning
departments
and
mediumterm formal
planning
Diversification
Multidivisional
structures
Quest for global
market share
Main Issues
EARLY-MID
1970s
Corporate strategy
LATE 1970s AND
EARLY 1980s
Analysis of industry
and competition
LATE 1980s and
EARLY 1990s
The quest for
competitive
advantage
Choice of industries,
Sources of
markets and segments, competititive
and positioning within advantage within
them
the firm
Experience curve and
returns to market
share
Analysis of industry
structure
Competitor analysis
PIMS analysis
Greater industry and
market selectivity
Industry restructuring
Active asset
management
Grant (2002 Table 1.2, p.22)
12
Resource analysis
Analysis of core
competencies
Corporate
restructuring and
business process
reengineering
Refocusing and
outsourcing
LATE 1990s AND
EARLY 2000s
Strategic innovation and
the new economy
Competitive advantage
through strategic
innovation
Competing on
knowledge
Adapting to the new
digital, networked
economy
Organizational flexibility
and speed of response
Knowledge management
and organizational
learning
Competing for standards
Early-mover advantage
The virtual organization
The knowledge-based
firm
Alliances and networks
The quest for critical
mass
This broadening of the scope of strategic analysis, and thus its increasing resonance with
those concered with strategic, or macro, human resource management, is tabulated by Grant
and shown above in Figure 2.
It is not until the penultimate column – late 1980s and early 1990s that the convergence
between HRM and strategy becomes visible, but by the early 2000s it is startlingly obvious
with words like ‘innovation’, ‘knowledge’, ‘networked’, ‘organisational flexibility’,
‘organisational learning’, ‘the virtual organisation’,
‘the knowledge-based firm’.
The
problem now, it seems is that business strategy covers everything and sub-disciplines have
proliferated out of mathematics, economics, sociology, psychology, ecology, organisation
behaviour and, of course, HRM. To put some boundary around this, once the subject or
object of business strategy covers both internal and external resources, resource allocations
and implementation and strategic intentions, it is necessary to return to determining the
differences between strategic and operational decisions. Grant (2002:17) suggests strategic
decisions:
-
are important
-
involve a significant commitment of resources
-
are not easily reversible
Johnson (1987: 4-6) addds that:
-
they involve a high degree of uncertainty (ie risk)
-
demand an integrated approach to management ‘involving managers crossing
boundaries within the firm’
-
they are likely to be concerned with change … ‘involving the persuasion and
organisation of people to change from what they are doing’
13
This should help us to deliniate strategic HRM from operational decisions.
An interesting area for analysis, not yet much developed in HRM, where strategic decisions
are much in evidence, is the dynamics of industry based competition from birth and early
establishment, to maturity and renewal crises (Boxall 1998). This has a special flavour
within diversified companies (still) following the dictates of the Boston Consulting Group
analysis of cash cows, stars, dogs and wildcats (Purcell 1989).
The shift in focus to business strategy makes long standing topic areas within HRM yet more
relevant especially once implementation is seen as a central concern of strategy.
To give
three examples, among many – the formation, cognition and ‘leadership’ of top teams, the
people who make strategic decisions is important. Workforce alignment, compliance and
motivation, can never be taken for granted, and line managers as the enactors of strategy have
always been problematic and not just because of the principal – agent problem loved by
economists. We have much to say about each one of these.
The Resource-based view and the HRM supernova
The biggest influence the changing forms of strategy analysis have had on HRM are those
relating to the resource based, and knowledge based view of strategy and the preoccupation
with performance rather than planning.
The latter I will not discuss since it is a separate
topic. RBV, however, deserves serious consideration here. There is no need to repeat more
than the basics of the theory before looking at the implications for HRM. The 15 years or so
since it came to prominance in strategic analysis have seen substantial innovations in HRM’s
link and contribution to RBV. At its heart, RBV seeks to explain the sources of sustained
competitive advantage (and perhaps, too, to viability) in turbulent conditions where external
14
positioning is uncertain. Looking at internal sources of viability and advantage, emphasis is
placed on resources which are critical to organisational success yet are rare, or not commonly
available, are not substitutable (people by technology for example) and are combined
together to form organisational capabilities or processes which are imperfectly imitable, or
hard for others to copy. It is interesting how many of these attributes are similar to those
used by the Aston School (Hickson et al 1971) way back in 1971 to look at the intra
organisational power of different occupational or hierarchical groups, and used so effectively
by Legge (1978) in her analysis of power in personnel management.
The central argument in RBV is that while tangible resources have often declined in their
strategic value, intangible and human resources have increased as a source of value. Grant
sees intangible resources as technology (which means more about how it is used rather than
what it is), reputation and culture. Human resources he describes as specialised skills and
knowledge, communcative and interactive abilities, and motivation. This is the bread and
butter of HRM. Our central concerns are ability, motivation and opportunity to participate
and practice or AMO for short (Boxall and Purcell 2003, chapter one). The successful firm
not only has to have better than average human capital, through recruitment (where firm
reputation is important), selection and development and then appropriate job design,
motivation, communication and involvement systems, but also better processes or
capabilities.
These combine human and non-human resources together in ways highly
appropriate for end users and markets and in ways which other firms find hard to copy.
This has been described by Boxall (1996) as Human Resource Advantage which is the sum
of human capital advantage (HCA) and organisational process advantage (OPA).
The
former, HCA, is familiar territory but OPA takes in a much wider area of interest, and has
15
implications for the boundaries of our subject and our magpie habit of taking useful theories
from cognate subjects. In trying to explain OPA we find crucial ideas of path dependency
(Leonard 1998: 35) or unique historical conditions, (Barney 1991: 107), social complexity
(Wright, McMahan and McWilliams 1994) and causal ambiguity (Barney 1991). We could
add more recent interest in social capital (Nahapiet and Goshal 1998) and organisational
learning. The better the firm is in these mirky areas of organisational behaviour, the greater
the barriers to imitation.
Two other areas of intereset have developed linked to RBV. If critical resources are scarce
how does the firm erect ‘resource mobility barriers’ (Mueller 1996)? And if people with such
rare skills or human capital are powerful (following the Hickson model) how does the firm
manage appropriation (Kamoche 1996, Kamoche and Mueller 1998)? This is particulary
pertinent to knowledge intensive firms where knowledge is the traded commodity. In such
organisations, for example in software engineering or legal practice and consulting, there are
at times, ‘talent wars’. Resource mobility barriers beyond financial reward (which is rarely a
rare attribute) focus on factors which embed these resources (people) in such a way that their
value inside is greater than outside (firm specific knowledge), or the cost of leaving is greater
than the predicted gain of joining another firm (organisation and team based commmitment).
Here organisation culture and climate may play a role not just as a mobility barrier but as a
source of inimitability. Indeed Barney saw culture as critical:
Firms with sustained superior … performances typically are characterised by a strong
set of core managerial values that define the ways they conduct business (Barney
1986:656)
16
At the same time the appropriation problem can be acute. As well as the need to manage
knowledge workers the firm must manage knowledge through knowledge sharing along the
various tacit-explicit dimensions. The HRM implications of this (Swart and Kinnie 2003) are
fascinating, but not often found in HRM textbooks. It would seem that HRM has to
understand the organisation as a dynamic organism. Partial, functional vision is no longer
enough. Indeed it has been noted (Wright et al 1994) that HR policies are very unlikely to be
a source of sustained competitive advantage as they are easily copied, or are institutionally
embedded in societies via legislation and social practice (Paauwe and Boselie 2003). The
HRM we have to be interested in, then, is not policy development along the life cycle of the
employees, but enactment as revealed in human behaviour in organisational settings. This is
a very wide scope of analysis. Maybe my students were right to avoid defining ‘the firm’s
HR system’ since it has become a near meaningless concept.
RBV has big implications for HR architecture (Lepak and Snell 1999), and these can be
disturbing to those who have a universalistic view of best practice. The logic that rare human
capital is only likely to apply to a segment of an organisation’s work force is inescapable.
Even if we could argue, or demonstrate, that all workers in the firm have such rare skills and
develop sophisticated organisational processes, we would need to go beyond the boundaries
of the firm into sub-contracting or externalisation. For example ‘the HP way’ (if it still
exists) may apply to all workers but only because Hewlett Packard has outsourced much of
routine, as opposed to developmental, manufacturing to lower labour cost areas. This is what
Wilkinson et all (2001) noted in their study of Japanese and Malaysian electronics
manufacturing.
At the same time workers with high levels of generic, technical or
professional skills who do not require unique, firm specific knowledge to practice (as is true
of many knowledge workers) have more boundaryless identities requiring more market based
17
as opposed to commitment based HR (Lepak and Snell 1999, Boxall and Purcell 2003). The
logic of the core-periphery model of diverse HR systems within, and beyond, the firm to the
supply chain, thus applies. This has ethical consequences of course, but is it more ethical to
have ‘bad’ jobs placed in developing economies and among the disadvantaged in our
societies, or no jobs at all? The answer is different for the employment strategy of the firm
than for the workforce strategy of the nation. Is the firm as the unit of analysis our sole
consideration?
RBV (and KBV) are particularly pertinent to large, multi-divisional and multi-national
companies. It was in such settings that Prahalad and Hamel (1990) developed their analysis
of ‘the core competence of the corporation’. This takes us into corporate, as opposed to
business, strategy with its problems of internal capital markets, integration or separation of
business units and resource allocation and development. There is some HR analysis here
(Purcell and Ahlstrand 1994) and comparative and international human resource management
is showing more interest beyond the perennial issue of managing ex-pats. Meanwhile, within
the strategy domain we find a similar convergence between ‘then’ and ‘us’ as in the realm of
business strategy.
Whittington and Mayor (2000), for example, trace the evolvement of
strategy thinking and practice within the multi divisional (m-form) company.
Toward the
latter half of the twentieth century they suggest that the key resource was scale and scope (as
in markets and operations), the key technique was planning and the key function was
corporate planning. By the end of the century, they suggest the key resource was knowledge,
the technique was exchange and the key function human resources. At the same time it
became more accepted to refer to the successful MNC as an N-form where N = networks
(Hedlund 1994) while the M-form is now an ‘organisational fossil’ (Bettis 1991). In the Mform Chandler’s famous dictum was that ‘structure follows strategy’. In the N form with its
18
post modern emphasis on social and organisational processes, structure is strategy. To some
strategy writers ‘the human resource function has become central to making the new forms of
organisation work’ (Whittington, Pettigrew, Peck, Fenton and Conyoin 1999: 587). This is a
challenge which I do not think HR scholars have reallly grasped yet. When will the HRM
supernova disintegrate as it expands more and more into the strategy universe?
Conclusion
If Whittington et al see human resource as the key function in MNCs, and recent work in
macro HR has become nearly boundaryless we need to recognise that this view is not
universally shared. Grant, for one, who at least gives some recognition to HRM in strategy
analysis, unlike strategy writers in the past, has a narrow, economist view of our subject.
The central role for HRM is establishing an incentive system that supports the
implementation of strategic plans and performance targets through aligning employee
and company goals (Grant 2002: 219).
Even if we accept that ‘the problem of aligning employee goals with those of the firm is a
central problem’ (ibid) (sometimes, for example, in more regulated economic and political
systems, or where labour supply is restricted, it may be that the goals of the firm need to be
adapted to those of employees), we know of many other, more powerful means of achieving
alignment than incentive systems, and we, unlike him, do not see ‘shirking’ as a major
problem
But maybe he is right to have a narrow view of HRM since this is ‘our’ area in and around
AMO. At least here there is a reasonable body of knowledge and theory. As we push the
19
boundaries of our subject are we in danger of losing the nucleus, of becoming ‘all things to
all men (and women)’. But why should this matter?
After all, says Grant (2002:31) ‘strategic management lacks an agreed, internally consistent,
empirically validated body of theory’. For as long as we link much of our work to business
strategies then, if strategic analysis has a problem with scope and theory, so will we. We are
both strategic partners and uneasy bedfellows with our strategy and OB colleagues. We can
keep asking our students to answer questions we don’t quite know the answers to in the hope
that, some day, we will find a truth. Meanwhile I, for one, seek to avoid some of the
disfunctional definitional disputes by referring to ‘people management’ rather than to HRM
since it allows us to look at every aspect of how the organisation, and the wider society,
manages people and copes with the inevitable tensions, contradictions and ethical dilemmas.
20
Endnotes
1
It was announced on 4 June 2004 that the clothing manufacturer, Desmods, was to close
with the loss of 300 jobs following the loss of their supply contract to Marks and Spencers,
the UK’s largest clothes retailer. They made underwear, rarely a fashion item! Marks and
Spencer, which itself has failed to respond to changing competitive conditions and is now the
subject of a hostile takeover, supplied 80% of its clothing from the UK five years ago. Now
the figure is 10% (Guardian 4 June 2004, p.17). Underwear is now supplied from Turkey and
Bangladesh.
2
I use Robert Grant’s well known, and excellent , textbook to represent the contemporary
field of strategy analysis.
21
REFERENCES
Appelbaum, E., Bailey, T. & Berg, P. (2000) Manufacturing Advantage: Why HighPerformance Systems Pay Off. Ithaca: ILR Press
Ansoff, I.C. (1985) Corporate Strategy London: Penguin.
Bailey, T. (1993) ‘Organizational Innovation in the Apparel Industry’ Industrial Relations 32
30-48
Bain, P. and Taylor, P. (2000) ‘Entrapped by the “Electronic Panoptican”? Worker resistance
in the call centre’ New Technology, Work and Employment 15:1, 2-18.
Barney, J. (1991) ‘Firm resources and sustained competitive advantage’, Journal of
Management 17(1): 99-120.
Barney, J. (1986) ‘Organizational Culture’: can it be a source of competitive advantage’
Academy of Management Review 6:3, 59-75.
Batt, R. and Moynihan, L. (2002) ‘The viability of alternative call centre production models’
Human Resource Management Journal 12:4, 14-34.
Bennett, N., Ketchen, D. and Schultz (1998) ‘An examination of factors associated with the
integration of human resource management and strategic decision making’ Human
Resource Management 37:1, 3-16
Bettis, R. (1991) ‘Strategic Management and the Straight-Jacket: an Editorial Essay’.
Organization Science 2:3 315-19
Boxall, P. (1998) ‘Achieving Competitive Advantage through Human Resource Strategy:
Towards a theory of industry Dynamics’ Human Resource Management Review 8:3,
265-288
22
Boxall, P. (1996) ‘The strategic HRM debate and the resource-based view of the firm’,
Human Resource Management Journal 6(3): 59-75.
Boxall, P. and Purcell, J. (2003) Strategy and Human Resource Management Palgrave
Macmillan.
Fernie, S. and Metcalfe, D. (1998) ‘(Not) Hanging on the telephone: payment systems in the
new sweatshops’ Centre for Economic Performance, London School of Economics,
Discussion Paper No.390.
Grant, R. (2002) Contemporary Strategy Analysis: Concepts, Techniques, Applications (4th
edition) Malden, MA: Blackwell Publishers.
Guest, D. and Hoque, K. (1994) ‘The good, the bad and the ugly: human resource
management in new non-union establishments’ Human Resource Management
Journal 5:1, 1-14
Hedlund, G. (1994) ‘A Model of Knowledge Management and the N-Form Corporation’.
Strategic Management Journal 15: 73-90
Hickson, D., Hinings, C., Lee, G., Schneck, R. and Pennings, J. (1971) ‘A “strategic
contingencies” theory of intra organisation power’ Administrative Science Quarterly
16, 216-229.
Hoskisson, R., Hitt, M., Wan, W. & Yiu, D. (1999). ‘Theory and research in strategic
management: swings of a pendulum’. Journal of Management 25(3): 417-56.
Johnson, G. (1987) Strategic Change and the Management Process, Oxford: Blackwell
Kamoche, K. (1996). Strategic human resource management within a resource-capability
view of the firm. Journal of Management Studies 33(2): 213-33.
Kamoche, K. & Mueller, F. (1998). Human resource management and the appropriationlearning perspective. Human Relations 51(8): 1033-1060.
23
Kinnie, N. and Swart, J. (2003) ‘Knowledge intensive firms: the influence of the client on HR
systems’ Human Resource Management Journal 5:1, 1-14
Kinnie, N., Purcell, J. and Hutchinson, S. (2000) ‘Managing the employment relationship in
telephone call centres’ in Kate Purcell (ed) Changing Boundaries in Employment
Bristol, Bristol Academic Press.
Legge, K. (1978) Power, Innovation, and Problem-solving in Personnel Management,
London: McGraw-Hill.
Leonard, D. (1998). Wellsprings of Knowledge: Building and Sustaining the Sources of
Innovation. Boston: Harvard Business School Press.
Lepak, D. and Snell, S. (1999) ‘The Strategic Management of Human Capital: determinants
and implications of different relationships’ Academy of Management Review 24:1 118.
Miles, G., Snow, C. C. & Sharfman, M. P. (1993) Industry variety and performance. Strategic
Management Journal 14: 163-77.
Mintzberg, H. (1990) ‘The design school: reconsidering the basic premises of strategic
management’, Strategic Management Journal 11(3): 171-95.
Mueller, F. (1996) Human resources as strategic assets; an evolutionary resource-based
theory. Journal of Management Studies 33(6): 757-785.
Nahapiet, J. and Ghoshal, S. (1998) ‘Social capital, intellectual capital and the organizational
advantage’. Academy of Management Review 23(2): 242-66
Paauwe, J. and Boselie, P. (2003) ‘Challenging’ strategic HRM and the relevance of
institutional setting’ Human Resource Management Journal 13:3, 37-55.
Porter, M. (1985) Competitive Advantage: Creating and Sustaining Superior Performance,
New York: Free Press.
Porter, M. (1996) ‘What is Strategy’ Harvard Business Review (Nov-Dec): 61-78
24
Prahalad, C. and Hamel, G. (1990) ‘The Core Competence of the Corporation’ Harvard
Business Review May-June 79-91
Purcell, J. & Ahlstrand, B. (1994) Human Resource Management in the Multidivisional
Company, Oxford: Oxford University Press.
Purcell, J. (1999) ‘The search for “best practice” and “best fit”: chimera or cul-de-sac?’,
Human Resource Management Journal 9(3): 26-41.
Purcell, J. (1989) ‘The impact of corporate strategy on human resource management’ in J.
Storey (ed) New Perspectives on Human Resource Management London: Routledge
Schuler, R. & Jackson, S. (1987) ‘Linking competitive strategies and human resource
management practices’, Academy of Management Executive 1(3): 207-219..
Shepeck, M. and Militello, J. (2000) ‘Strategic HR configurations and organisational
performance’ Human Resource Management 39:1, 5-16
Sisson, K. (1993) ‘In Search of HRM’ British Journal of Industrial Relations 31:2 201-10.
Storey, J. (1992) Developments in the Management of Human Resources Oxford: Blackwell
Swart, J. and Kinnie, N. (2003) ‘Sharing knowledge in knowledge intensive firms’ Human
Resource Management Journal 13:2, 60-75.
Whittington, R. and Mayer, M. (2000) The European Corporation: Strategy, Structure and
Social Science Oxford, Oxford University Press
Whittington, R., Pettigrew, A., Peck, S., Fenton, E. and Conyon, M. (1999) ‘Change and
Complementarities in the New Competitive Landscape: A Europoean Panel Study,
1992-1996’ Organization Science 10:5 583-600
Wilkinson, B., Gamble, J., Humphrey, J. and Morris, J. (2001) ‘The New International
Division of Labour in Asian Electronics: Work Organisation and Human Resources in
Japan and Malaysia’. Journal of Management Studies 38:5 675-698
25
Wright, P., Gardner, T. and Moynihan, L. (2003) ‘The impact of HR practices on the
performance of business units’ Human Resource Management Journal 13:3, 21-36.
Wright, P. & Snell, S. (1998) ‘Toward a unifying framework for exploring fit and flexibility
in strategic human resource management’, Academy of Management Review 23(4):
756-72.
Wright, P., McMahan, G. and McWilliams, A. (1994). ‘Human resources and sustained
competitive advantage: a resource-based perspective’. International Journal of Human
Resource Management 5(2): 301-326.
26
University of Bath School of Management
Working Paper Series
Past Papers
School of Management
Claverton Down
Bath
BA2 7AY
United Kingdom
Tel: +44 1225 826742
Fax: +44 1225 826473
http://www.bath.ac.uk/management/research/papers.htm
2004
2004.01
Stephan C. M.
Henneberg
Political Marketing Theory: Hendiadyoin or Oxymoron
2004.02
Yi-Ling Chen &
Stephan C. Henneberg
Political Pulling Power. Celebrity Political Endorsement and
Campaign Management for the Taipei City Councillor Election
2002
2004.03
Stephan C. Henneberg ,
Stefanos Mouzas & Pete
Naudé
Network Pictures – A Concept of Managers’ Cognitive Maps in
Networks
2004.04
Peter Reason
Education for Ecology: Science, Aesthetics, Spirit and Ceremony
2004.05
Yvonne Ward &
Andrew Graves
A New Cost Management & Accounting Approach For Lean
Enterprises
2004.06
Jing Lin Duanmu &
Felicia Fai
Assessing the context, nature, and extent of MNEs’ Backward
knowledge transfer to Chinese suppliers
2004.07
Richard Fairchild
The effect of product differentiation on strategic financing
decisions.
2004.08
Richard Fairchild
Behavioral Finance in a Principal-agent Model of Capital
Budgeting
2004.09
Patrick Stacey & Joe
Nandhakumar
Managing the Development Process in a Games Factory: A
Temporal Perspective
2004.10
Stephan C. M.
Henneberg
Operationalising a Multi-faceted Concept of Strategic Postures of
Political Marketing
2004.11
Felicia Fai
Technological Diversification, its Relation to Product
Diversification and the Organisation of the Firm.
2004.12
Richard Fairchild and
Ganggang Zhang
Investor Irrationality and Optimal Open-market Share
Repurchasing
2004.13
Bruce A. Rayton and
Suwina Cheng
Corporate governance in the United Kingdom: changes to the
regulatory template and company practice from 1998-2002
2004.14
Bruce A. Rayton
Examining the interconnection of job satisfaction and
organizational commitment: An application of the bivariate probit
model