Chapter 2
Strategic Human Resource Management
John
Bratton
CHAPTER OVERVIEW
In Chapter 1, we
examined the theoretical debates on the nature of the HRM. Chapter 2 discusses
the concept of strategic HRM (SHRM) and explores various themes associated with
SHRM. It begins with introducing the student to the traditional prescriptive
strategic management model, the SWOT model. The chapter then goes on to examine
competing SHRM models: the ‘matching’ model, the ‘control-based’ model, the
‘resource-based’ model and an ‘integrative’ model, before reviewing some
important dimensions associated with SHRM: organizational performance,
re-engineering, leadership, workplace learning and trade unions.
Chapter
objectives
After reading this chapter, you should be
able to:
¨
Explain the meaning of
strategic management and give an overview of its conceptual framework.
¨
Describe the three levels of
strategy formulation and comment on the links between business strategy and
human resource management.
¨
Explain three models of HR
strategy, control, resource and integrative.
¨
Comment on the various
strategic HRM themes of HR-performance link, re-engineering, leadership,
workplace learning and trade unions.
CHAPTER OUTLINE
Introduction
Strategic planning model shows how
corporate and business level strategies, as well as environmental pressures
determine the choices of HRM structures, policies and practices.
A number of important questions are
addressed: How do higher-level corporate decisions affect HRM? Is it possible
to identify a cluster or ‘bundle’ of HR practices with different strategic
competitive models? Do firms that adopt certain bundles of HR practices
experience superior performance?
Strategic
management
Definition: strategic management refers to
a pattern of managerial decisions and actions that determines the long-run
performance of the organization.
Strategic management requires constant
adjustment of three interdependent poles, figure 2.1.
HRM in
Practice 2.1 ‘Raising
the Profile of the HR Agenda’ this example emphasizes the importance for
managers and HR professionals of understanding the links between business
strategy and HR strategy.
Model
of strategic management
The prescriptive management literature
describes many different strategic planning models. Most however replicate what
we have done, they reduce the basic idea to the SWOT model.
Model reduces the strategic management
process into five neatly delineated steps (see figure 2.2).
Hierarchy
of strategy
The prescriptive model depicts different
levels of strategy: corporate, business, and functional. Strategies must be
integrated.
Business-level strategy and HRM
At functional level, HR strategy is
formulated and implemented to facilitate the business strategy goals.
Business-HRM links are classified in terms
of low-cost,
differentiation and focus.
Four simple business-level strategies are discussed
with relevant examples: low-cost leadership strategy
(e.g. Wal-Mart),
Differentiation strategy
(e.g. Tommy Hilfiger),
Focused low-cost leadership strategy
(e.g. Rent-a- Wreck car hire)
and Focused differentiation (e.g. Mountain Equipment Co-operative).
Miles and Snow’s (1984) strategic models
are examined: Defenders,
Prospectors, Analyzers and Reactors. Proactive
- HR specialist helps formulate strategy.
Reactive - HR function is fully subservient.
Some models emphasize the importance of the
environment as a determinant of HR policies and practices.
HRM in Practice 2.2
- ‘Culture Shift Invigorates Dell’
This
report illustrates a culture change and the adoption of an alternative business
strategy at Dell computers.
Strategic
HRM
SHRM
literature is rooted in manpower [sic] planning.
Strategic HRM
is described as the process by which managers seek to
link human assets to the strategic needs of the organization.
HR strategy
is discussed in terms of an ‘outcome’ – the pattern of
decisions relating to HR policies and practices.
The Four-task model
of HRM provides the rationale that guides the strategic
choice of HR policies and practices.
The environment as a determinant of HR
strategy is examined as is the notion of ‘upstream’ or ‘first-order’ strategic
decisions. HR approaches are ‘third-order’ strategic decisions.
The matching model
In Devanna’s et al model, HRM strategy and structure are linked to and influenced
by environmental forces, figure 2.6.
This model proposes that SHRM should be
concerned with matching the “five ps” which reinforce employee role behaviour
for each generic Porterian competitive strategy.
The notion of ‘fit’ is also a central tenet
of Beer’s et al model (refer you back to chapter 1 and figure 1.3)
Limitations of the matching model.
Conceptual -
predicted upon the rational view of strategic decision-making.
Empirical -
limited empirical support for the model
Human
resource strategy models
This section of the chapter examines the
link between business strategy and HR strategy. HR strategies are the pattern
of decisions regarding HR policies and practices used by management to design
work, select, train and develop, appraise, motivate and control employees.
Three models to
differentiate ‘ideal types’ of HR strategies:
a)
Controlled-based model
b)
Resource-based model
c)
Integrated model
Controlled-based model discusses
management structures and HR strategy as instruments to control all aspects of
the labour process in order to secure higher efficiency and profitability.
Individual, bureaucratic and technical controls are discussed.
a)
Limitations of resource-based model –
conceptual:
conceptual vagueness, imbalance giving too much
attention to internal resources at the expense of external competition.
Empirical:
little evidence that many firms have adopted the
‘learning organization’ or ‘soft’ SHRM model.
b)
Integrative Model characterizes two dimensions of
HR strategy:
a)
Acquisition and development
focuses on internal human capital
b)
Locus of control focuses on
monitoring employees’ compliance
Two dimensions (a and b) yield four
‘ideal types’
of dominant HR strategies:
commitment, collaborative, paternalistic and traditional.
HRM in Practice 2.3 –
‘Airline hopes to cut costs, regain market
share’
Case illustrates
how a North American airline, Air Canada, introduced a low-cost leadership
business strategy (Zip Air Inc) and a low-cost HR strategy to achieve its
strategic goals. Can you think of any European examples of low-cost leadership
business strategies?
Evaluating
SHRM and HR Strategy
Critical
organizational theorists have questioned the linear and ‘rational’ choice model
because lack of information, time and ‘cognitive capacity’.
SHRM and HR
strategy thesis focuses too much on the link between external marketing
strategies the HR function and pays insufficient attention to internal
operating strategies.
The notion that
a commitment HR strategy follows from
a real or perceived ‘added value’ competitive strategy is plausible in theory
but problematic in practice. Managerial behaviour is influenced also by the indeterminacy of the employment
contract.
Achieving the
goal of ‘close fit’ of business
and HR strategy may contract the goal of employee commitment and cooperation.
The foregoing analysis suggests that there is ‘no one best way” of managing
contradictions.
Dimensions
of Strategic HRM
This part of the
chapter examines five important themes associated with SHRM. With the exception
of leadership, they provide an introduction to the following chapters in the
text.
1. Organizational performance
- examines the
HRM-firm performance link and introduces you to some of the methodological
challenges of measuring the impact of HRM that are examined in more detail in
Chapter 14.
2. Organizational architecture
- it is claimed that
the process leads to flatter organizational structures, ‘reengineering’,
redesigned work teams, use of IT, senior management commitment.
3. Leadership -
considered important in the ‘soft’ HRM model in order
to develop a high level of employee commitment and cooperation.
4. Workplace learning -
posited to be a central building block in the
resource-based SHRM model and in the ‘learning organization’. See also Chapter
9.
5. Trade unions -
draws attention to the contradictions between the
normative HRM model and trade unions and introduces the debate on ‘partnership’
between management and unions see also chapter 11.
For more theory and case studies on: http://expertresearchers.blogspot.com/
For Premium Academic and Professional Research: jumachris85@gmail.com
ENGAGING IN CRITICAL THINKING
·
RELECTIVE QUESTION/ESSAY
QUESTION
Is the
resource-based SHRM model distinctive? How does this model relate to the debate
on ‘hard’ and’ soft’ variants of HRM?
·
HELP
This
question requires you to evaluate strategic HRM models. You may wish to suggest
that a comprehensive answer would define strategy and explain HRM-business strategy
links. One way for you to explain the difference between the SHRM models is to
use the SWOT approach. The matching model emphasizes external ‘opportunities’
and ‘threats’ facing the firm, whereas the resource-based model draws attention
to internal ‘strengths’. Barney’s (1991) four criteria for identifying
potential strategic resources should be discussed: a) volubility b) rarity c)
inimitability (d) substitutability. It may be suggested that a focus on
external forces mirrors the ‘hard’ HRM model. The resource-based approach, with
its focus on ‘knowledge capital’ and learning reflects many of the features
contained in the ‘soft’ version of HRM. Look at Figure 2.8 and consider the
merits of ‘commitment HR strategy’ versus ‘traditional HR strategy’.
CHAPTER
CASE STUDY: AIR NATIONAL
This case
can be used to illustrate the HRM-business strategy links. The case is based
upon Trevor Colling’s 1995 article, “Experiencing turbulence: competition,
strategic choice and the management of human resources in British Airways” and
post September 11, 2001 newspaper reports on restructuring in the airline
industry. Look at ‘HRM in Practice 2.3’, which discusses a new business and HR
strategy recently introduced by Air Canada. Visit Air Canada’s Web site and, in
particular, the company’s new services. Note the union-management implications
and the different reward systems for Air Canada’s new business strategy. Also
link case study to four HR strategies depicted in figure 2.8
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