HRM Assignment

How can HRM become a source of competitive advantage for

organisations?

HRM and Organisational Behaviour

Submitted By:

DT015/Y1

Les Murphy

HRM Assignment
Contents
1.0

Abstract.

2.0

Introduction.

3.0

What is HRM.

4.0

What is Competitive Advantage.

5.0

Competitive Advantage through Leadership.

6.0

Learning and Development.

7.0

Organisational Behaviour and Culture.

8.0

Work Motivation & Psychological Contract.

9.0

Line Managers IN HRM.

10.0

Innovations in HRM.

11.0

Conclusion.

12.0

Bibliography

DT015/Y1

Les Murphy

HRM Assignment
1.0

Abstract.

As Ireland continues to deal with its financial crisis, organisations must

continue to operate in these unstable times. In order for organisations to
survive they are forced to restructure as markets contract. As with any
business human capital is a major expense and one which is swiftly reviewed
when savings are required. The commencement of right-sizing delayering
or recession fatigue process have become a major part of the Human
Resource Management (HRM) roles as jobs are shed around the country on a
daily bases.
As emigration figures show 1000 people leaving Ireland on a weekly bases.
An exodus of talent is being lost by organisations around the country. In order
for organisations to be in a position to benefit as and when the market
changes it is essential that the correct personnel are retained. With the lost of
human capital comes breaking of HRM patterns trust between employee and
employer as security of contract becomes unclear.
2.0

Introduction

The following report / literature review will aim to analyse the effectiveness of
HRM in organisations and shall endeavor to examine if HRM can be deemed
as a source of competitive advantage.
The subsequent sections will seek to review various literature available on
HRM, in relation to Competitive Advantange and Organisational behaviour in
an effort to investigate the substance of the title.
There are many features which contribute to human capital as a source of
competitive advantage. In Jassim 2002 he cites Pfeffer which states there are
sixteen practices of competitive advantage through people.
Six aspects of HRM make up the content of this report. (1) Competitive
Advantage through Leadership; (2) Learning and Development; (3)
Organisation Behavior and Culture; (4) Work Motivation & Psychological
Contract; (5) Line Managers IN HRM; (6) Innovation in HRM.
But First of all, we will briefly interpret what exactly is HRM and what it entails
and secondly what is, competitive advantage and the methods available to
achieving it.
3.0

What is HRM.

On review of various literature the term HRM has numerous definitions.

In Williams (2008) he describes the HRM as the conduit for acquiring and
retaining the necessary workforce through job satisfaction, security,
compensation, training programs, appropriate and frequent measurement of
the workforce, and finally providing flexibility with respect to the values of
different generations of workers.

DT015/Y1

Les Murphy

HRM Assignment
Torrington et al (2009) cites Armstrongs definition of HRM as a strategic,
integrated and coherent approach to the employment, development and well
being of the people working in organisations.
How organisations manage their personnel is key to their productivity.
Discontented employees will result in high turn over levels and will impact on
the organisations performance.
To maintain a high level of organization efficiency will require that the
organisations strategic HRM strategy be developed to match or underpin that
of the business strategy.
In Torrington et al (2009) cites Legge approach to further divide HRM into hard
and soft concepts.
With the hard concept focusing on utilitarian instrumentalism this perceives
that human capital as an expense of doing business or a factor in the
production process, rather than a competitive advantage.
Legge continues with HRM soft concept developmental humanism which
identifies that human capital can be a unique source of sustainable
competitive advantage because an organisation management process and
culture is unique hard to imitate or substitute. This identifies employees skill,
adaptability and commitment as valuable.
Torrington cites Schuler and Jackson and their work which illustrate that there
is a linkage between competitive strategy, HR practices and performance.
By hiring and retaining talented personnel and supporting their development
by contributions within an organisation, through a means of progressive HRM
strategic policy the literature gives credence that sustained competitive
advantage can be achieved.
4.0

What is Competitive Advantage

Armstong, M. (2009) cites Barney and the description of competitive

advantage, Which is the ability of an organisation to implement a value
creating strategy which is not being replicated at that time by its competitors,
this definition continues that an organisation can be said to have achieved a
sustainable competitive advantage if the competitors are unable to replicate
this strategy.
A method of producing a sustained competitive advantage is Innovation
Strategy which focuses on the development of products or services and aims
to diversify them from what its competitors is providing. A good example of this
type of strategy would be Apple Corporation which identifies its success can
be contributed to its work culture and "Work Hard Play Hard" ethic. Apple
strives in its passion for new products, through a work environment which is
relaxed and casual, but is very strong relating to its commitment to deadlines.

DT015/Y1

Les Murphy

HRM Assignment

Another means of achieving competitive advantage is through a Quality

Enhancement Strategies which primarily focuses on developing the product
or services by changing the production process so workers are more involved
and more flexible. Areas which have adapted this type of mechanism include
Hospitals and Educational sectors.
A third mechanism which can provide competitive advantage is Cost
reduction strategy which is an attempt to gain the advantage by being the
lowest cost producer. An example of this would be Ryanair which provides it
product / services with little regard to HRM.
In each strategy an alignment of the organisations HRM strategy must be
adapted which will hire the right personnel and who will motivate the human
resource capital. The correct HRM strategy and practices will retain these key
personnel and develop the resources and in doing so will create a competitive
advantage.
5.0

Competitive Advantage through Leadership.

As with any change to organization behaviour with out the backing from
management at the top level the likelihood of the amendments being
successfull is reduced.
Essential to the success of any organisation is its employees. In order to
sustain any competitive advantage gained through its human capital it must
strive to strengthen and develop its personnel in order to develop individuals
to their full potential. .
Schuler and MacMillan (1984) explains, employees depend on their
managers, and organisation on their managers for success. They state that
Many researchers believe that for organisations to maintain a competitive
advantage, they must focus on enhancing performance through a process of
continual learning and effective leadership skills at every level which will act to
motivate individuals, teams and human networks to achieve peak
performance.
6.0

Learning and Development.

Were previously short falls in the skill set of an organisation, presented

management with the task of identifying the training needs required. In recent
times the strategy of learning and development has shifted. As a result the
focus has changed and the focus is now towards identifying what the learning
needs are for each employee. By taking this approach the ownership of the
development passes to the individual. In Torrington et al (2008) the learning is
described as the result of learning to be changed or new behaviour resulting
from new or reinterpreted knowledge that has been derived from an external
or internal experience.

DT015/Y1

Les Murphy

HRM Assignment

As organizations set up to deal with change it is key to create a company-wide

learning philosophy involving all the organisational members and were
individual learning encompasses organizational learning.
Torrington continues by identifying the importance off providing activities to
improve learning motivation. E.g. helping with employees to recognize their
development needs and rewarding for the skill development undertaken.
Methods of learning programmes include formal development, on-the-job
development i.e. coaching and mentoring, peer relationships and selfdevelopment.
Were e-learning appeared to be a low cost method, which attracted extensive
interest on its initial emergence. CIPD (2003) reported e-learning as one of
the most significant changes in training over the last five years. The
enthusiasm toward e-learning has been steadily reducing as organisations
recognize that their employees may be unwilling to use this method. The need
to motivate learning has been identified as critical to its success as well as the
support system available to aid the technique. The result is now that elearning has become part of a blended learning experience in many
organisations.
Key to the success of learning and development is the evaluation process.
This represents a means to ascertain and measure the level of learning
achieved by the individual as well as the value for money aspect to the
organisation. Although in the literature the process is presented as difficult to
obtain its true value. A technique used is the Questionnaire, which provides a
method of immediate feed back from persons attending the learning
experience. Torrington explains the feedback from such a method can be
limited and misdirected on to the ability of the tutor and visual aids used and
not what has been learnt. Torrington cites Kilpartrick as the most well
referenced approach for evaluation under four levels. (1) reaction level; (2)
learning level (has the learning level been met); (3) behaviour (changes to the
individual back in the occupation); (4) results and impact on the bottom line
(impact of training on performance).
7.0

Organisation Behavior and Culture.

The following section will aim to investigate what is organisational culture and
how it influences people and their experiences within organization life.
ODonnell & Boyle 2008 cites Schein definition of Organisation culture as the
system of shared beliefs and values that develops within an organisation and
guides the behaviour of its members.
ODonnell & Boyle also cite Rosette & Watson and their clarification that there
is increasing evidence that values within an organisation directly impacts on
individual behavior in ways that support the organisations goals and
objectives.

DT015/Y1

Les Murphy

HRM Assignment
The term organisational culture is among one of the less tangible aspects of
organisational life. Organisation culture is however seen as a major topic in
HRM.
Rosette & Watson continues emphasising that an important trend in
managerial thinking in recent decades has been one of encouraging
managers to try to create strong organisational cultures.
On review of the blocks which forms this organisational culture, ODonnell &
Boyle review Deal and Kennedy and their three important levels or layers of
culture analysis in organisations.
Observable culture: "the way we do things around here" e.g What is passed
on when training new members. Includes unique stories, corporate rituals that
has been successful for the organization.
Shared values: implies the group is a whole and Identifies the values as a
means of linking people together and provide motivation for the members of
the culture. All may not agree with these values but are exposed to them and
have been stated of their importance.
Common assumptions: taken-for-granted truths that corporate members
share as a result of their joint experience.
On review of the characteristics of Organisational culture four key aspects are
recognized pervasiveness or homogeneity; strength; replication and
functions.
In Deal and Kennedy a theme in organisation culture states strong cultures
are associated with superior organisational performance. Harpden-Turner
argues that culture is strong particularly when people need reassurance and
certainty.
In Replication, as an organization grow the culture may change but short term
strategies and tactics used will condition new staff to the organisational
culture. This is provided the New staff will fit in. Hall (1987) explains how
members that have absorbed the culture pass it on to newcomers learn the
ropes and that this is a positive event for newcomers as an induction helps to
settle in and establish what is expected, this will also help reduce any
anxieties associated with starting a new job in unfamiliar surroundings
In Robbins, (2003) he reviews the term Organisational culture and defines it
as a system of specific values and the communal importance of organization
members which separates them from other organisations.
From the literature is clear that the perspective is that cultural differences can
have a major impact on the performance of organisations and the quality of
work life experienced by their personnel.

DT015/Y1

Les Murphy

HRM Assignment
8.0

Work Motivation & Psychological Contract.

The expectations employees have about their employment role and what the
organisation is prepared to give them in return for their service are the
concepts, which are dealt with in the psychological contract.
Motivation among employees is essential, without enthusiastic and committed
human resources little will be achieved. A related concept to motivation is the
psychological contract between employee and employer. This contract can
influence motivation, commitment, job satisfaction, job involvement and
performance. The concept was originally expressed by Schein (1980)
referring to the three types of contract which exists, the formal, the informal
and the psychological contract.
In Rollinson (2008) The types of contracts are described. The formal contract
deals with salary for the employment exchange and is underpinned by the
legal form of contract. The informal contract deals with the social aspects
(give and take) with in an organisation i.e how colleagues should be treated
or time keeping and working late and how this is dealt with etc. Both of the
above contracts and what is generally entitled with in each is known to both
parties and can be discussed.
The contents of the third the psychological contract are rarely discussed as
consist of unvoiced expectations and obligations. Employees have
individual expectation to be treated with courtesy and fairness and if this
happens will probably feel an obligation to be fair and loyal to the organisation
in return. The awareness of this concept and the existence of a psychological
contract is seldom addressed by employees or given any attention until
expectations are not being met.
Each of the contracts effect the relationship between employee and the
organisation.
There is no relationship with the formal contract and its acceptance. The
informal aids the formal contract whilst allowing for slight mutual deviations
between the parties to accommodate each other. But if each feel the
psychological contract is unacceptable, unequal or favours one party the
relationship can be damaged and the reaction to the imbalanced will be
replicated by the effected party which will lead ultimately to a reduction in
integration.
In Julie Beardwell, Tim Claydon (2007) the types of psychological contracts
are analysed further with three types identified, Coercive, Calculative and Cooperative Contracts. Coercive contracts are contracts were employees feel
there are forced to contribute efforts in excess of the rewards received. This
will lead to motivation being low or non existent or could even be negative.
The calculative contracts are excepted by the individual this deals with what is
expected to be done as part of the employees position in exchange for the
rewards i.e pay or status. Most common in organisations, motivation in this
type of psychological contract can only be increased if the rewards to the

DT015/Y1

Les Murphy

HRM Assignment
individual are improved through pay or promotion. Failure by the organisation
to address these issues in exchange for an increase in effort will result in the
psychological contract reverting to a coercive one and motivation may
become negative.
Co-operative contracts are for individuals that wish to become personally
identified with the organisations and their motivation is to further their
achievements through work goals. A co-operative contract is entered into
voluntarily by the individual. This type of employee is normally part of the
decision making. With high motivation and achievement.
One factor which is key to employees personnel satisfaction and well being is
motivation. Motivation occurs when the psychological contract is fulfilled by
both sides. The employee agrees to work well and the organisation rewards or
provides satisfaction to the em
ployee.
In Rollinson (2008) motivation is defined as an individuals perception to
pursue a particular course of action in order to achieve a specific outcome
and to choose to pursue this outcome with a degree of vigour and
persistence.
Motivation in as described by Rollinson is used to explain why a individual
acts in a certain way. There are three components of behaviour that have an
impact on performance. Direction of behaviour which is influenced by what an
individual wants to do. Intensity which is how hard the individual will strive to
go in that direction and persistence which is the individuals willingness to stay
with the direction when obstacles are encountered.
Rollinson cited Mitchell (1982) and his argument that motivation is based on a
number of assumptions. Individual phenomenon - peoples uniqueness which
reflects there behaviour, Intentional which is the choice of the individual to
behave in this mannor and a multifaceted concept which involves, factors that
arouse people to action, choice of behaviour and their persistence and
intensity of their behaviour.
9.0

Line Managers IN HRM

As organisations identify that successful Strategies must include an alignment

with HRM. Tasks which once were the responsibility of the HR managers can
be reallocated to manager outside the HR section. Line managers can take
ownership of the HR activities this enables the HR specialist to act as a coach
and strategic partner and ultimately will allow HR to deal with strategic matters
rather than the operational issues day to day. In Torrington et al (2008) the
advantage of this devolution of HR management identifies that integrated
approach will strengthen relationship between the employee and his or her
manager resulting in positive management approach to employee
performance.

DT015/Y1

Les Murphy

HRM Assignment
Torrington cites Hutchinson and Purcell (2004) research which identifies the
importance of the line manager position. The results found in this research
was that Line manager behaviour is the most important factor and can
influence employees job satisfaction, discretion and overall how individuals go
about their jobs.
In Torrington (1998) research into the difficulties of devolving HR activities to
line managers where uncovered, the research found that although the
practices were encouraged within the organisation, the activities would
ultimately revert back to the HR specialist as line managers simulated lack of
interest or skill set to deal with the associated issues that occurred.
Torrington cites Caldwell (2004) research found manager resisted taking
ownership and equally HR specialist wanted to retain control and HR policy.
The HR specialist part of the study identified their concerns about to much
devolution could result in their role being devalued and this could ultimately
effect HR consistence and employees well being.
10.0

Innovations in HRM

Wolfe 2003 cited Damanpour expression of how innovation is not always

acknowledged within an organisation as it depends upon an appreciation of
the attributes of a focal innovation.
Wolfe 2003 reviewed a baseball book titled Money Ball an innovation in
HRM was identified using Sabermetrics.
Wolfe examines the steps for the use of sabermetrics and identifies the
similarities to the approach taken in HRM in any organisation. First the
organisation develops a competitive strategy, which should be consistent over
time and provides a means to differentiate the organisation from its
competitors whiles entailing suitable strategic decisions in response to
industry and local conditions.
Secondly the organisation must hire personnel to execute their strategy. The
hiring decisions entails identifying relevant knowledges, skills, and abilities
(KSAs) and the developing measures that validly assess those characteristics.
Sabermetrics focused on different KSAs than were normally considered and
provided a means on assessing these characteristics. It was these common
features which attracted attention from the HRM community. This method of
analyzing the information, gave organisations the ability to further examining
different aspects of its personnel, this in turn would provide a means to
develop human capital strategies that would result in competitive advantage.
11.0

Conclusion.

As the competitive advantage once achieved through technology has been

attained across the business world, there are fewer areas where organisations

DT015/Y1

Les Murphy

HRM Assignment
can create a sustained competitive advantage outside their human capital.
But selection of the correct personnel has constantly added risk to the human
capital acquisition and turner over of staff, added to the expense of the
organisation. Therefore HRM must be aligned with the organisation strategic
policy in areas of human capital acquisition, employee retention, motivation
and satisfaction, job security, salaries and benefits and training development
scheme if a competitive advantage is to be created through HRM.
As with any sector of an organisation if the appropriate leverage is not seen to
accompany guiding principle set out no change will be forthcoming. In order
for HRM to succeed and in doing so, achieve a competitive advantage. HRM
must be at the core of the work force management and the personnel
employed within the HR sector should have the appropriate skills and
education levels and armed with the appropriate autonomy to fulfill their
objectives.
On review of the Literature it is evident that the reputation of HRM part of
organisations has inherited negative perception at management level. Key to
a sustained competitive advantage is that the correct personnel are retained
or hired. With downturn comes the opportunity for acquiring exceptional
personnel with the necessary levels of experience, qualifications and skills set
to position an organisation to benefit when market growth returns.
Essential to any organisation is the commitment of its human capital. In order
to develop individuals it is critical that an organisation can provide a culture
which will aid individuals to perform at the highest level and will drive and
encourage this level of sustained performance. It is the authors option with the
correct HRM procedures in place an organisation will as the title suggests
become a source of competitive advantage.
Word Count 3489

DT015/Y1

Les Murphy

HRM Assignment
12.0

Bibliography

Books
Armstong, M. (2009). Armstrong's handbook of human resource management.
Beard Well Julie & Claydon Tim Human resource management: a
contemporary approach
Greer Charles R. 2003. Strategic Human Resource Management Second
Edition
Rollinson Derek 2008 Organisational Behaviour and Analysis: An Integrated
Approach
Torrington Derek, Hall Laura and Taylor Stephen. 2008 Human Resource
Management. Seventh edition
Sparrow, P.R. (ed.) (2009). Handbook of International Human resource
Management:
Journals
ODonnell Orla & Boyle Richard 2008 Understanding and Managing
Organisational Culture. CPMR Discussion Paper 40.
Rahim K. Jassim 2002 Competitive Advantage Through the Employees.
Schuler Randall S. and MacMillan Ian C. Gaining Competitive Advantage
through Human Resource Management Practices
Wolfe Richard,. Wright Patrick M, And Smart Dennis L. Radical 2003 HRM
Innovation And Competitive Advantage: The Moneyball Story
Stroh Linda K. And Caligiuri Paula M. Strategic Human Resources: A New
Source
For Competitive Advantage In The Global Arena.

DT015/Y1

Les Murphy