HRM Weeks 1 & 2 - Lecture notes 1 & 2 PDF

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Christine Cross...

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TOPIC 1: INTRODUCING HRM What is HRM? Human Resource Management is a distinctive approach to employment management which seeks to achieve competitive advantage through the strategic deployment of a highly committed and capable workforce, using an integrated array of cultural, structural and personnel techniques (Storey, 1995:5)

In other words; people is the unique weapon you have compared to other companies and you have to know how to interconnect them and where they suit the better to succeed. HRM evolved as an organizational function: F.W. Taylor’s Scientific Management movement proposed a systematic approach to the design of jobs and employment and pay systems. But allied to these were tight control of workers and practices were often met with resistance from workers and their union representatives (representantes sindicales). Elton Mayo and his colleagues - Hawthorne Experiments - highlighted an emphasis on: a better understanding of group work and the importance of working conditions as a means of motivating employees, also in all areas that are covered by the work undertaken by today’s HR function. ! 1960s and 1970s - introduction of a large body of legislation which provided rights for employees ! 1980s recession - high unemployment levels and significant competition in the marketplace led to a focus on productivity and ‘excellence’ associated with leading-edge companies ! 1990s - Led to a shift from traditional manufacturing industries to growth in the service sector and a move towards a 24/7 society and an introduction of non-standard working hours

Personal department (1980) - It is reactive. - Focused on compliance - Pluralism: manager and employees doesn’t have the same frame of reference - “Hard” HRM approach: employees are just a number and doesn’t have personal importance for the company

Human Resources Department (1990) - Strategic approach for managing people. - Focused on commitment of the people (work harder, smarter, etc) - Unitarist frame of reference. All in the same boat. - “Soft” HRM approach: you are important for the company

The line manager is the one that controls the interests of the employees. Has employees directly reporting to them and have a higher level of responsibility than those employees. OPERATIONALISING HRM The key role of the HRM function is to enable the organization to achieve its strategic objectives and to positively impact organizational effectiveness by dealing effectively with all aspects of the employment relationship. HRM strategies are plans that address and solve fundamental strategic issues related to the management of human resources in an organization.

- HRM strategy is used to create a set of

- HRM policies designed to achieve

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the organization’s strategic goals HRM policies are then translated into specific HRM practices again aimed at meeting the strategic goals

EVOLUTION OF HRM ROLES Ulrich and Brockbank updated the roles for our century to reflect the changing roles in organizations:

- Strategic partner: strategy formulators, strategy implementers, and strategy facilitators (Business Partners) - Employee advocate: focus on meeting the current needs of employees. - Human capital developer: focus on meeting the future needs of employees in terms of their learning and development

- Functional expert: increase the administrative efficiency of the HR function by designing effective HR policies and practices

- Leader: requires mastering the previous four roles and working in collaboration with other business functions to set standards for strategic thinking and corporate governance THEORETICAL BASIS OF HRM 1. Michigan Business School Model (Fombrun et al, 1984) This model emphasizes the importance of matching the HR strategy to the corporate strategy and having a consistent set of HR practices and techniques that are integrated with each other and the goals of the organization. - Selecting the most suitable individuals to fit the needs of the business and managing their performance to achieve corporate objectives. - Appraising performance and providing feedback, and rewards for appropriate performance that achieve specific goals This model is based on 2 forms of fit: - Vertical fit (external): relates to the need for HR strategy to match the requirements for the organization’s business strategy. - Horizontal fit (internal): The HR policies and strategies should be complementary and consistent. In other words, policies should reinforce each other to create a coherent approach to the management of employees. This model forms the basis of the BEST FIT approach. 2. Harvard Business School Model (Beer et al, 1985)

3. Guest model of HRM (1987) Is founded on four key policy propositions that he proposed, if followed, will combine to increase organizational effectiveness: • Strategic integration: HR policies must be aligned to the needs of the business strategy, and the various aspects of HRM must be consistent and mutually supportive. ! • High commitment: commitment is sought in that employees are expected to identify closely with the interests of the organization and behave accordingly. ! • Flexibility: this involves both the ability and willingness of employees to demonstrate flexibility and adaptability to change as business demands change. ! • High quality: the quality of management and staff is important in achieving high performance. !

STRATEGIC HRM When referring to SHRM we are referring to the linkage between human resource management policies and practices and the strategic objectives of the organization. SHRM takes a macro-level approach within the context of organizational performance, whereas HRM takes a microlevel. In SHRM are three different perspectives as to how SHRM can contribute to organizational success: 1. Contingency approach: seeks to match human resource practices with generic competitive strategies. It is based on the Fombrum et al model, The Best Fit approach. This consists on the selection for each company of the best set of polices and practices that suits them. But we can encounter 2 different strategies: - Cost reduction strategy (utilization): few incentives for the employees and very normal salaries, with limited pre training. - Differentiation strategy (facilitation): numerous incentives and extensive pre trained staff. 2. Universalism approach: Focuses on the existence of one set of HRM ‘best practices’ aimed at creating and enhancing high levels of employee commitment and performance. This will result in superior levels of organizational performance, regardless of the context in which the organization operates and the competitive strategy of the firm. Pfeffer identified 7 HRM practices, which result in a higher performance: • employment security ! • selective recruitment ! • self-managed teams or team working ! • high pay which is contingent on company performance ! • extensive training ! • reduction of status differentials ! • sharing information This is known as high performance work system (high involvement and high commitment practices).

LINKS BTW HRM AND PERFORMANCE HRM practices -> employee attitudes and beliefs -> employee performance -> financial and sales performance. ADDITIONAL THEORETICAL FRAMEWORKS 1. A.M.O: Individual performance is a function of employee ability, motivation and opportunity

2. Resource based theory: Recognises the organisation's employees as key assets in developing and maintaining SCA and HR function as a key strategic player in developing sustainable competitive advantage (SCA). It is the firm’s ability to learn faster than its competitors leads to sustainable competitive advantage.

IMPACT OF ENVIRONMENTAL CONTEXT ON HRM CHOICES. The environment is anything outside an organization that can affect an organization’s present or future activities. Thus, environment is context dependent and unique to each organization. Organisations have 2 choices about how to manage their relationship with their environment: - Reactive: Wait for the changes in the environment and then react to them. - Proactive: Predict the changes in the environment and plan their responses before these changes happen. This environment context is identified as comprising either:

- Internal organizational environment: organization are effectively all distinctive, and this distinctiveness is created by many different factors: • The size and structure of the organization ! • The sector the organization operates in ! • The length of time the organization has been operating ! • Workforce characteristics: education, background, demographics and aspirations.! • The financial health of the organization ! • Established ‘custom and practice’ ! • The organizational culture: “the way we do things around here”! • The values and managerial ideology of the senior management team.!

- External organizational environment: The factors are classified as STEEPLE, this analysis is a useful tool for understanding the big picture in which the organization operates. It is particularly useful for understanding the risks associated with the market growth of decline. • Sociocultural: demographic changes, lifestyle and MNCs • Technological: the rapid advances in technology have resulted in new ways of working, creation of new policies and affects how work is organized and managed. • Economic • Environmental • Political: governments and trade unions • Legal: introduction of new law and interpretation of legislation. • Ethical

REVIEW QUESTIONS 1. Human Resource Management is best described as: • a) A reactive function concerned with the administration of the employment cycle ! • b) A central administrative function concerned with the management of people in organisations ! • c) A strategic function, in which HRM is integrated into the development of business unit strategic planning ! • d) None of the above !

2. In the Harvard model of HRM (1984) the key components in HRM policy choices are reward systems, HR flows, work systems and employee influence: • a) True ! • b) False !

3. The Michigan Business School Model is most often associated with which of the following: • a) Best Practice Approach • b) Best Fit Approach! • c) Universalism Approach • d None of the above 4.Hard HRM is best represented by which of the following statements: a) Pat, as the line manager, allows John to work on his own initiative and without checking his work continually b) Pat, John’s line manager ensures that he tells John exactly what to do and how to do it and checks his work on a regular basis...