Evolution of HRM – Lecture 1 PDF

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Evolution of HRM – Lecture 1 General Comments of HR  Human resources is becoming a source of competitive advantage  Organizations are becoming increasingly dependent on human capital  Designing systems that allow organizations to achieve objectives and understand how to gain a competitive advantage. What is Human Resource Management?  Managing people within the employer-employee relationship as a result of its ongoing nature – evolving contract  Involves the effective and productive use of people to achieve an organization’s strategic business objective and goals  Psychological contract – motivation  Communication and aligning goals (Unitarian approach)  Sustaining level of performance (sustainable work practices)  There is no perfect HR model – one that is designed and contingent with the organization Contemporary HR – YouTube “HR Tips from Google” (Case Study)  Belonging – designing a community where workers are happy  Not hierarchal and more democratic – Flat Management Structure where ideas from employees are implemented to limit bureaucracy (not too many levels in management)  Encourage rotation + project teams working on cross functional organizational issues to build skills outside of area of expertise and encourage motivation  Managers’ success linked to the success of the team  Communication with employees and properly managing that employeremployee relationship  The nature of industry determines the management style Stages in the Development of HRM (History)

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Stage 1 (1900-1940s)  Early stages of the design of organizations – industrial revolution – labor wasn’t seen as a source of competitive advantage (rather an input) a cog in the process of work – develop and understand how the cogs would work as efficiently as possible  Scientific Management (Frederick Taylor, Frank Gilbreth, Alfred Sloan) - Job design, structured rewards systems and ‘scientific selection techniques’ - Focused on efficiency and consistency - Mechanistic view of the way work is done - Helped to refine personnel management practice in recruitment of skilled employees  Behavioral Science/Industrial Psychology added psychological testing and motivational systems (Elton Mayo)  Management Science contributed to the development of performance management programs Stage 2 (1940s-1970s)  More specialist and professional approach to personnel management in Australia  After WWII there was a flood of returning soldiers who were often unskilled and so employers began to focus on the importance of a wider range of personnel functions  Increased welfare services (ensured the retaining and productivity of employees)  Organizations began to employee specialists to conduct recruitment, training and welfare activities (  More aspects to human behavior than just physical input?  Monitoring and control  Hawthorne studies demonstrated that working groups were more motivated to work if they are managed and monitored  Evolution of human capital as more than just a raw input by understanding behavioral and organic science of labor  Organizations designing elements of the firm that was in charge of human resources  Human capital becomes the source of competitive advantage Stage 3 (1970s-1990s)  Start to see human resource management as a profession  Task of managing employment and human capital delegated to a specific person  Organizations begin designing elements of the firm to look after human resources

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Integrating personnel management, and industrial relations and HRM, into a coordinated and strategic approach to the management of an organization’s people (SHRM)  SHRM = macro perspective (strategies and policies)  HRM = micro perspective (activities, functions and processes)  Strategically focused on overall organizational effectiveness Stage 4 (2000+)  Not just about being managed by a professional group in the firm but about making the choices of human resources strategic and making that human management as a source of competitive advantage  Globalization of business means that HR professionals will need to be more proactive in relation to such issues such as business ethics, corporate social responsibility, corporate governance, and the management of employees’ work-life balance  Requirements for HR professionals to demonstrate a deep understanding of their organization’s business environment, the industry challenges and opportunities, and the ways in which HR programs deliver human capability for the business to compete 

Difference Between Personnel Management and HRM

Time and Planning Perspective

Psychological Contract Control Systems Employee Relations Perspective Preferred structure/system

Personnel Management Short term, reactive, ad hoc, marginal, high levels of control and monitoring

Roles

Compliance External Controls Pluralist, collective, low trust Bureaucratic/mechanistic, centralized, formal/defined roles Specialized/professional

Evaluation Criteria

Cost minimization

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HRM Long term, proactive, strategic, integrated, more about sustainable workforces, maximization of benefits from human labour force Commitment Self-control Unitarist, individual, high trust Organic, devolved, flexible roles Largely integrated into line management Maximum utilization (human asset accounting)

Before HR management, there was personnel management The table shows the transition and difference between these two methods of human capital management Organizations are choosing to enhance the application of Tasset Knowledge – where a firm derives advantage by getting people to demonstrate their personal and inherent skills and knowledge

The changing “psychological contract”

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Paul Strebel (Academic)  put forth the theory that the way that employees and employers interact with each other is based on a social compact – a set of rules that define how parties interact The employment contract comprises a set of overlapping contracts: - Social: the expectations, unwritten rules and norms, development of culture of the organisation - Legal: according to the law, sets down rights and obligations - Psychological: the way in which employers and employees interact with each other and the reciprocal rights and obligations of the individual and their managers. Beliefs about fairness, trust and the delivery of worthwhile employments relationships Psychological Contract focuses on notion of reciprocity (I give you this, you give me that) Two elements of building psychological contract: - Interactional justice  individuals and the rapport built with their managers (how well is someone looking after me) - Procedural justice  about what time of access does a workforce have + the equality between colleagues and being subject to the same standards + having access to the same entitlements (I know that my colleagues and I with undergo the same reward and performance evaluation systems) - With the development of increased interactional and procedural justice, employees begin to develop: Organizational Citizenship Behaviour (OCB) – people going above and beyond what’s written in their social compact

Conceptualization of HR Management Frameworks/Theories The Harvard Model

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Theory: used to explain phenomenon and to provide an alternate perspective

Early framework (90s) that highlights how HR policy choice is shaped by stakeholders and their interest as well as the desire and objectives of the organization

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Needs to be made sure that choices made with the HR system are congruent (e.g. reward system compliments performance management system implemented) External choices by stakeholders and the environment will influence policy choice Well designed system leads to development of psychological contracts, commitments, cost effectiveness and a level of competitive advantage and benefits society with sustainable organizations

Soft HRM (Theory developed by John Story)  Humanistic approach  Emphasizes the strategic integration of HR, it also views competitive advantage as something which relies on human beings in the organisation  Aim is to generate resourceful employees through HRM via employee involvement and empowerment  Recognition that the contribution does not only lie with work effort but must encourage job satisfaction, motivation and internal knowledge Hard HRM  Firms pursue deliberate, rational, quantitative, strategies for managing human resources  Effective utilization of human capital to achieve organisation objectives  Doesn’t invest in human capital, but ensures that human resources works in the most efficient and cost effective method  Minimizing cost and obligation  Downsizing, outsourcing, and weakening their organizational culture Strategic HRM Model

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Several links between HRM and Business Strategy have been identified: - Accommodative: HR strategies follow business strategies, accommodating the existing needs which the business strategy generates - Interactive: a two-way communication process in which HRM contributes to, and then reacts to, corporate strategies - Fully Integrated: The HR specialist is involved as a partner in the overall strategic process in both formal and informal interactions with the highest levels of management HR managers needs to become strategy architects: instead of just executing tasks, they must be more integrated  implementing systems and influencing what the organisation itself is doing but to do this, HR managers must have an executive presence within the organisation The following table demonstrates how HRM strategies implemented are highly influenced by an organization’s strategy focus and must be tailored to the needs of each enterprise: Organisation Recommended HRM Strategies Strategy Focus Innovation 1. Jobs that require close interaction and coordination amongst groups/individuals 2. Performance appraisals 3. Jobs that allow employees to develop skills that can be used in other positions 4. Broad career paths to reinforce the development of a broad range of skills Quality 1. Relatively fixed and explicit job descriptions Improvement 2. High levels of employee participation in decisions relevant to the work and job conditions 3. Result oriented performance appraisals 4. Extensive and continuous training and development of employees Cost Reduction 1. Narrowly designed jobs and career paths to encourage specialization, expertise and efficiency 2. Short-term result oriented performance appraisals 3. Minimal levels of employee training and development

The Relationship with Industrial Relations  Some academics suggest that industrial relation systems interfere with the application of HRM theories  Others observe that the management of human resource s includes the management of industrial relations systems and practices of each organisation  And others see industrial relations as part of the overall environment within which HRM functions  Some of the issues raised in the relationship between HRM and IR include: - ‘Soft’ HRM models appear to bypass the collectivist nature of IR representation and negotiation

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The need for unions in the employment relationship is accordingly reduced, and unions become marginalized If HRM really delivers on employee commitment, why will organisation need to negotiate with a third party (unions)?

Unitarism  Assumes common interests between employers and employees, and attempts to encourage commitment by both inclusive (communication, consultation, reward systems) and exclusive (discouragement of union membership, greenfield sites)  May prove effective in countries with low rates of union membership, authoritarian management traditions or high unemployment levels Pluralism  Recognizes that employers and their employees will experience conflicts of interest, which HRM will need to negotiate and resolve in order to meet organizational goals 10 Cs to Effective HRM (Alan Price)  Comprehensive: draft a system of HR management and includes all aspects of people management  Coherent: systems compliment each other and do not contradict (form a meaningful whole)  Control: ensure performance is consistent with business objectives  Cost-Effectiveness: competitive, reward and promotion systems  Credibility: interactional justice, staff must trust top management and believe in their strategies  Communication: Objectives understood and accepted by all employees: open culture with no barriers  Competence: Organisation competent to achieve its goals dependent on individual competencies  Creativity: competitive advantage comes from unique strategies  Change: Continuous improvement and development essential for survival  Commitment: Employees motivated to achieve organizational goals Critics and Skeptics of SRHM  A lot of discussion of how poorly executed HR is  HR managers either don’t exist in firms or don’t have the skills  Debate about the extent to which HRM has become a strategic area of management  SHRM theory assumes that senior managers and HR specialists have the managerial capacity and commitment to engage in broad and long-term planning  Research evidence suggests that SHRM has been constrained by several factors: - Status of HR practitioners (representation on boards and senior executive committees is close to non-existent  17% of top organizations have HR specialists on board of directors - Lack of acceptance of HRM by senior managers

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Limits to ability of HR practitioners to establish a strategic approach and influence. Why? Issues such as difficulty demonstrating credibility and contribution HR makes to performance

Criticisms of SHRM  SHRM continues to “commodify” workers – provides more systems of managerial control  HRM facilitates the reassertion of managerial prerogative  Constraints genuine “flexibility” for both workers and employers – is it really creating flexible workplaces for both parties? - Determined that only functional and numerical flexibility for employers is established - Functional: the idea that workers are required to do more than traditional job roles with same wage (production) - Numerical: is about when and how a worker works (hours)  Sidelines the role of other institutional actors (State, Trade Unions) because HR management advocated direct relationships with individual workers rather than groups Ethics and HRM  Whether organizations should go beyond laws and written rules in order to maintain sustainability  Unethical HR managerial practices have, in the past, led to the collapse of various organizations (Enron, Lehman Brothers)  HR resource roles (recruitment/selection/staff development/enterprise bargaining/performance management) need an underpinning of trust and ethics - Loss of this leads to loss of reputation to attract the best people, markets and shareholder value  Discussion of ethical issues in HRM presupposes that organizations have moral responsibilities towards all their stakeholders (government, customers, employees, suppliers, managers, shareholders)  There has been a development of broad HR ethical systems that generally focus on: - Normative evaluations of HRM practices - Perceptions of these practices by employers and managers - Overall evaluation of the effects of HRM policies and processes  Twin theories of moral philosophy (deontology and teleology) which underpin the evaluation of HRM ethical systems and processes - Deontology: ethics of duty and regards ethical behaviour as the result of acting in accordance with ethical principles - Teleology: considers a process/action/system as ethical if it creates the maximum benefit when compared to other alternatives  Study of HR professionals and ethical codes - Six stakeholder obligations: employers, clients, colleagues, society, profession and professional societies - Study concluded by emphasizing the need for integrity, respect for employees’ rights, legal compliance, enhancing professional competence, guarding confidentiality. 8

Next week  context of HRM

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