1 HUMAN RESOURCE MANAGEMENT

Contents

1 HRM defined

2 Features of HRM

3 Goals of HRM

4 Versions of HRM

5 HRM activities

6 The development of the HRM concept

7 The matching model of HRM

8 The Harvard framework

9 The UK contribution to the HRM concept

10 The impact of HRM: research findings

11 The David Guest model of the link

between HRM and performance

12 How HR can make an impact on

organizational performance

13 Role of the HR function

14 Activities of HR professionals

15 Roles of HR professionals

16 HRM models: Tyson and Fell

17 HRM models: Storey

18 HRM models: Reilly

19 HRM models: Caldwell

20 The Ulrich/Brockbank 2005 model of HR roles

21 Competency framework for HR specialists

22 Key competency areas for HR professionals

23 The professional standards of the CIPD

24 Evaluating the HR function

25 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 organization’s most valued assets – the people working there, who individually and collectively contribute to the achievement of its objectives.

FEATURES OF HRM

Strategic:Integrate business and HR strategy

Coherent:Integrated and mutually supporting HR policies and practices

Commitment:Emphasis on gaining commitment to the organization’s mission and values

People treated as assets:Focus on developing human capital

Unitarist approach: Management and employees share the same interests

Line managers deliver HRM:Belief that HRM is essentially the responsibility of line managers

GOALS OF HRM

Achieve high performance

throughpeople

Enhance motivation, commitment

and jobengagement

Achieve human capital

advantage

Improveknowledge

sharing

Attract and retain the

skilled,committed and

motivated people required

Increasecapabilities

and potential

Value people

accordingto their

contribution

Develop a cooperative and

productive employee relationsclimate

VERSIONS OF HRM

HardTreating employees

‘rationally’ as as a key resource

from which competitiveadvantage can be

obtained

Soft Emphasis on the need to develop a high- commitment, high-trust organization – focus on ‘mutuality’, communication and involvement

Soft Emphasis on the need to develop a high- commitment, high-trust organization – focus on ‘mutuality’, communication and involvement

Hard/softUsing a mix of hard and soft approaches

HRM ACTIVITIES

Human resource management

Organization

Design

Development

Job design

ResourcingHuman

resource development

Reward management

Employeerelations

Human resourceplanning

Recruitment and selection

Talent management

Organizationallearning

Individuallearning

Managementdevelopment

Job evaluationand market surveys

Grade and paystructures

Contingentpay

Employeebenefits

Health and safetyand welfare

Knowledge management

Performance management

Industrial relations

Employee voice

Communications

HR services

Human capital management

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.

SelectionPerformancemanagement

Rewards

Development

Performance

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

THE HARVARD FRAMEWORKThe 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 organization’s 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

Long-termconsequences:• individual well- being• organizational effectiveness• societal well-being

HR outcomes:

• commitment

• congruence

• cost-effectiveness

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 integration2. high commitment3. high quality4. 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 manager–trade union relations to management–employee 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

Business strategy

HR strategy

HR practices

HR outcomes:employee

competence, commitment and flexibility

Quality ofgoods and

services

Productivity

Financialperformance

HReffectiveness

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

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

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.

ROLE OF THE HR FUNCTION

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 organization’s HR policies are implemented properly and consistently.

HRM MODELS: TYSON AND FELL

Clerk of worksHR activities are largely routine – employment and day-to-day administration. Policies are short-term and ad hoc.

Contracts manager

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.

Architect

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

Non-interventionary Interventionary

Tactical

CHANGE MAKERS ADVISERS

REGULATORS HANDMAIDENS

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

• 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.

HRM MODELS: REILLY

STRATEGIST/INNOVATOR

ADVISER/CONSULTANT

ADMINISTRATOR/CONTROLLER

CONTRIBUTION

TIME ORIENTATION

Short Long

Strategic

Tactical

The changing role of the HR practitioner

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

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 large- scale and multiple-change projects across the whole organization.

HRM MODELS: CALDWELL

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 today’s 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 organization’s 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.

Competency domain Components

1. Personal credibility Lives the firm’s 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 firm’s 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 111–17

KEY COMPETENCY AREAS FOR HR PROFESSIONALS

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 personnel’s 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.

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

EVALUATING THE HR FUNCTION

TEN WAYS OF ENSURING THAT THE HR FUNCTION INNOVATES EFFECTIVELY

1. Be clear on what has to be achieved and why.

2. Ensure that what you do fits the strategy, culture and circumstances of the organization.

3. Don’t follow fashion – do your own thing.

4. Keep it simple – over-complexity is a common reason for failure.

5. Don’t rush – it will take longer than you think.

6. Don’t 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.