Summary - Boxall and Purcell - Strategy and Human Resource Management PDF

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Summary of the book "Strategy and Human Resource Management' by Boxall & Purcell...

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Chapter 1. Human resource management: what and why?

Fundamentals of HRM Human resources: characteristics that are intrinsic to human beings, which can be applied to various tasks and challenges. People are independent agents who possess human resources, which can be deployed and developed. HRM: management activity concerned with ‘human resources’ and the process through which management builds the workforce and tries to create the human performances the organisation needs. -

Managers need to gain access to human capital that is relevant to the organisations survival and that will make them successful

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Managers need to adopt policies and practices for organising work and employing people to build human and social capital

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To renew a business, there should be individuals with the kind of insight and leadership abilities to make this happen

Strategic Goals Managements goals for HRM can be divided into two categories: the economic and the socio-political. The economic goals of HRM: cost-effective labour, organisational flexibility and human resource advantage.

Cost-effective labour -

HRM is always located in an economic context

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The primary problem for managers in to secure the economic viability of their firm in the market in which they compete. Economic viability: a firm generates a return on investment that its shareholders consider acceptable or that it meets the obligations of its bankers/leaders.

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For HRM to contribute to economic viability  managers need to ensure that the firm has access to people it needs and that they can be employed in a way that is

affordable  management needs to establish a cost-effective system for managing the people the business requires. -

Cost-effectiveness: the idea that a firm needs people they can afford who are effective and skilled at what the firm wants them to do. Both effectiveness and cost. The fundamental economic motive in HRM is making the firm’s human capabilities productive at an affordable cost in the market concerned. Managers can ask: What HR systems are cost-effective or ‘profit-rational’ in our specific context?

Organisational flexibility -

Change is inevitable and so an element of flexibility is an issue for managers  managers should adopt HR practices that will enhance organisational flexibility.

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Goals in area of flexibility can be distinguished between: -

Short-run responsiveness: managerial attempts to bring numerical flexibility, policies which make it easier to hire and shed labour. E.g. to achieve numerical flexibility: ‘zero-hours contracts’ which means that the worker isn’t guaranteed any set number or regular schedule of working hours. This provides a very high level of flexibility for employers.

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Long-run responsiveness: whether a firm can survive in an environment that can change radically. Does the firm have the capacity to create or cope with long-run changes in products, costs and technologies? What elements of its HR strategy might need to be flexible to achieve this?

Human resource advantage -

Competitive advantages are built to enhance profitability to survive.

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Advantages may be temporary or more sustained.

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Human resource advantage can be broken down in two dimensions; -

Human capital advantage: a firm enjoys when it employs more talented individuals than its rivals. Outstanding, intellectual, emotional and physical performances of individuals employed in the firm.

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Organisational process or social capital advantage: occurs in firms that have developed superior ways of combining the talents of individuals in collaborative activities. E.g. Make best use of brilliant individuals by organisational processes in team work and cross-functional coordination.

The socio-political goals of HRM: social legitimacy and managerial power Social legitimacy -

Firms operate in societies where they are regulations and laws on employing and how employees are treated

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Managers are influenced by a range of social forces, which can be defined as three pillars of institutions: the regulative, the normative, the cultural-cognitive -

Regulative: different codes of employment law, legal rules

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Normative: normative or moral pressures, social values and norms on how to treat people in a workplace

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Cultural-cognitive: ways in which people customarily think and behave in society, usual ideas of legitimate or appropriate behaviour in how people are employed affect the standing of the organisation.

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Legitimate goal is to avoid prosecution and bad publicity

Managerial power -

Firms can be seen as political systems in which management hols legitimate authority

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Management decisions are subject to legal and moral challenges

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Goal to maximise managerial control over an uncertain environment including threats to its power base from work groups and trade unions.

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Strategic tensions and problems in HRM Firms need a cost-effective approach and social legitimacy in societies which they compete, to develop some degree of flexibility and think about human resource advantages to survive.

The problem of labour scarcity -

Firms need to compete to others in labour markets to attract and retain skilled individuals they need

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Winners in labour market on different levels: -

Firm level: large, well-recognised and well-resourced organisations can compete well by offering higher salaries and greater career development opportunities

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Industry level: industries with attractive working conditions

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Societal level: rich, large countries

The problem of employee motivation -

Problems associated with the motivation of employee behaviour

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Management reliant on employee cooperation

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Thinking of employment relation as a bargaining model = the parties are mutually dependent and each has room to negotiate or bargain with the other party.

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Labour process theory (LPT): analyses tensions between employer strategies of control and worker strategies of resistance

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Impact of fairness and equity on employee motivation

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Motivational challenges at worst: Collective action e.g. lowered work norms and strikes or individual resistance e.g. dysfunctional levels of absenteeism and employee turnover.

Change tensions in labour management -

Reality of change creates strategic tensions

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Need to establish stable production system and organisational flexibility  a dilemma for management strategy

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Resilient firms are those which can evolve a clever balance between stability and flexibility while maintaining employee trust and confidence.

Tension between management power and social legitimacy -

Strategic tension lies in managers accepting constraints on its power that is an effect of establishing appropriate social order.

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Historically, trade unions and the state have been necessary to enforce actions because of the non-willingness of managers

Complexity and politics in management -

Politics, power struggles and conflicts between managers in the organisation

The term HR strategy -

Term describing the critical set of economic and socio-political choices that managers make in building and managing work force.

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Is not be confused with a HR function strategy, which covers decisions around how to use HR specialists to support HR or workforce strategy.

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Is usually segmented – while there are overlaps, firms typically have different models of HRM for different employee groups (e.g. different models for operating workers and for managers)

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Like strategy in general, is easiest to define at the business-unit level

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Is more complex in multidivisional firms in which different business units face different markets and in which there are political interactions between the corporate, divisional and business-unit levels

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Is more complex in firms that operate across national boundaries because of the impact of different societal contexts

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Management may seek a climate that delivers efficient production or service with interest in innovation and empowerment, which should be a part of HR strategies

Conclusions -

HR is critical for basic survival and relative success of organisations

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The process through which management builds the workforce

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Concerned with work and employment policies and practices

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Strategic goals that underpin the behaviour of HRM managers are both economic and socio-political

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Fundamental economic goal in HRM is to develop a cost-effective way

Chapter 2. Strategy and strategic management

Strategic problems and the strategies of firms Establishing a viable business -

To establish a viable business, it will need table stakes (Hamel & Prahalad) = the minimum set of capabilities simply to participate in a particular industry. E.g. a package-delivery company need a team of trained drivers, but it will also need access to suitable vehicles, office, parking and storage.

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Decisions of table stakes are strategic

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Four essential elements of any business that need to be perceived and managed if the firm wants to be successful:

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Questions for firms to ask: ‘What goals are appropriate for our business?’ ‘What resources are relevant to our goals?’

Struggling for competitive advantages -

How to achieve competitive advantages is dominant in strategic management, firms need competitive advantages to survive

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Sustained competitive advantage (Porter): firm that builds a relatively consistent pattern of superior returns for its shareholders have developed this.

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Superior financial performance: bringing greater rewards to the firm’s owners and executives

The strategies of firms -

Strategies of firms are attempts to engage with the strategic problems in their environment and ways in which managers understand goals and develop resources

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Best strategies: those that lay a basis for sustained competitive advantage

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Strategic choice perspective: better understanding the strategies of firms as a set of strategic choices

Strategy and the life cycle of the firm Phases of industry evolution

Establishment context -

Founding stage of the firm where the firm introduces product or service innovations that create new competitive space  developing a new offering that provides a better solution to an existing need that customers have or want.

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Firms are established by people who ‘sense, shape and seize’ opportunities to create new sources of value.

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Key challenge in this context is to find these people.

Mature context -

The industry settles into a period of stable growth based around ‘dominant designs’ for products or services.

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In this context, bureaucratic style of management is developed and new leaders are often hired.

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The firm needs to adopt formalised procedures and policies because of challenges of size, increasing workforce complexity, various regulations and greater public visibility.

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Bureaucratisation can result in irritation and feelings of loss

Renewal context -

Disturbs continuities built up over the establishment and mature phases, threatening to turn strengths into weaknesses

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Challenge is to change core features of the organisation

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Turnaround managers: the firm needs leaders who will retain their relevance in the future

The process of strategic management Strategic decision-making in two key ways: cognitively and politically Strategic management and human cognition -

Human cognition: psychological term for thinking processes, the ability to process information and make decisions.

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The work of strategic management  finding a desirable path for the firm and managing its resources accordingly  complex work that takes place in environment of risk and uncertainty  Human performance becomes increasingly variable in job of high complexity

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Human cognitive issues affect strategic management:

1. We have reasons or goals for our actions that by some people aren’t smart  understanding of the world varies 2. We often act without knowing everything  complexity and uncertainty are facts of life  in strategic management, we do not know the future. 3. We commit emotionally to a failing course of action  people do not like to lose face. 4. We tend to search for confirming rather than disconfirming evidence to support or views  common trap in employee selection 5. In problem-solving, we leap to a preferred solution without disciplining ourselves to diagnose the problem more deeply and mapping consequences  mental models tend to limit our range of thinking about solutions to new problems. 6. No single executive in a large business is likely to have all the answers to complex problems  strategic management needs people with complementary strengths and styles. 7. Recognition of need for management teamwork, knowledge of how things work, how the firm best responds to threats and new technology  should be spread throughout the firm, not held by heroic executives 8. Management process tends to repeat yesterday’s success formula  takes a long time to change the focus on ‘what worked before’  one firm’s mindset or ‘strong culture’ is another firm’s competitive opportunity.

Strategic management and organisational politics -

Politics matter, particularly in large organisations  strategic management is about steering a course in a politically constituted organisation

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We must expect that major initiatives involves political management, particularly where investors must be persuaded to support changes or when employee groups are being asked to make changes that threatens their interests.

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Intra-management political problems: political difficulties of strategic management often occur within the management structure itself. Managers are offered opportunities for personal enrichment.

HRM and the strategic management process -

The quality of HRM can make a major difference on the quality of its strategic management: -

By recruiting, retaining and developing suitable managers that will hamstring company performance

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By developing and implementing team processes, because these are vital to performance

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Belbin’s model of team roles: analyses strengths and weaknesses of senior management teams. Management teams should not only be based on functional expertise, it should also enjoy a healthy mix of complementary team work styles.

Conclusions - Strategic choices are fateful for a firm’s survival - Fundamental strategic problem = choosing a market and establishing a viable business in it

- A firm needs table stakes: a set of resources appropriate to the specific context - A firm needs a suitable approach to marketing, production and finance = a firm needs a cost-effective approach

- Firms have different struggles during different phases of industry development = those that build a consistent pattern of superior returns for their shareholders have developed a sustained competitive advantage.

- Strategic management is a risky process, both intellectually and politically = it takes place in a complex environment

- Improving the process of strategic management involves people = HR is involved in recruiting, developing and retaining key people, but also forms of team work

Chapter 3. Strategic HRM: ‘best fit’ or ‘best practice’?

Strategic HRM: the best-fit school - Argues that managers tailor their HR practices to their specific context, which is the variety we see in HRM

- Firms may underperform or fail if not adapting to their environment

Best fit: broad analytical frameworks

- The Harvard framework: managers are encouraged to set their own priorities in HRM based on consideration of stakeholder interests and situational/contextual factors.  HR outcomes are seen as longer-term impacts on organisational effectiveness and individual wellbeing.  HR choices might be adopted by considering differences between bureaucratic, market and clan models of HRM.

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Bureaucratic: traditional authority, control and efficacy, job descriptions and job evaluation  to provide order and equity. Relevant to markets with stable technology and employment.

- Market: treat employees like sub-contractors, fostering short-term exchanges and performance related pay systems. Relevant to fast-changing markets such as advertising and high fashion merchandising.

- Clan: building diffuse kinship links, fostering shared values, teamwork and strong commitment in organisations seeking ‘long-term adaptability’. Relevant to firms pursuing quality and innovation.

- Combining two or three models are useful in complex environments. - The purpose is to fit with broader business strategy and with the environment of the business by internal consistency in HR choices

The Harvard ‘map of the HRM territory’:

‘Best fit’: research and critique Best fit research is looked at on three analytical levels: society, industry and organisation.

Societal fit -

Is about whether organisations adapt to characteristics of the societies in which they are located

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Behaviour of firms is heavily shaped by labour law, and all firms sought to comply with it

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Research shows that if economic growth in a country is strong and labour markets tight, firms adjust their employment practices

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Evidence suggests that differences in cultural attitudes find their way into HR practices. E.g. Hofstede’s study that distinguishes how cultures affect people, for example in societies low in ‘power distance’, employees prefer egalitarian types of decision making.

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Studies show that organisations are more effective if managers work with cultural differences, rather than against them.

Industry fit -

Encapsulates the relationship between firms and factors that are specific to their industry

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Industry characteristics make a major impact on the ways firms manage work and people.

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Broad differences between private sector and public sector HRM

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Major variations across industries within each sector

Organisational fit -

Issue is whether managers can and should mould their HR strategies to fit with other parts of the business, like struc...