1 HUMAN RESOURCE MANAGEMENT

Contents
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HRM defined Features of HRM Goals of HRM Versions of HRM HRM activities The development of the HRM concept The matching model of HRM The Harvard framework The UK contribution to the HRM concept The impact of HRM: research findings The David Guest model of the link between HRM and performance How HR can make an impact on organizational performance Role of the HR function

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Activities of HR professionals Roles of HR professionals HRM models: Tyson and Fell HRM models: Storey HRM models: Reilly HRM models: Caldwell The Ulrich/Brockbank 2005 model of HR roles Competency framework for HR specialists Key competency areas for HR professionals The professional standards of the CIPD Evaluating the HR function Ten ways of ensuring that the HR function innovates effectively

HUMAN RESOURCE MANAGEMENT DEFINED

Human resource management (HRM) is a strategic and coherent approach to the management of an organizations most valued assets the people working there, who individually and collectively contribute to the achievement of its objectives.

FEATURES OF HRM

Strategic:
Integrate business and HR strategy

Coherent:
Integrated and mutually supporting HR policies and practices

Commitment:
Emphasis on gaining commitment to the organizations mission and values

People treated as assets:

Focus on developing human capital

Unitarist approach:
Management and employees share the same interests

Line managers deliver HRM:

Belief that HRM is essentially the responsibility of line managers

GOALS OF HRM
Achieve high performance through people Enhance motivation, commitment and job engagement

Achieve human capital advantage

Improve knowledge sharing

Attract and retain the skilled, committed and motivated people required

Increase capabilities and potential

Value people according to their contribution

Develop a cooperative and productive employee relations climate

VERSIONS OF HRM

Hard
Treating employees rationally as as a key resource from which competitive advantage can be obtained

Soft
Emphasis on the need to develop a highcommitment, high-trust organization focus on mutuality, communication and involvement

Hard/soft
Using a mix of hard and soft approaches

HRM ACTIVITIES
Human capital management

Human resource management

Organization

Resourcing

Human resource development

Organizational learning

Reward management

Employee relations

Design

Human resource planning

Job evaluation and market surveys

Industrial relations

Development

Recruitment and selection

Individual learning

Grade and pay structures

Employee voice

Job design

Talent management

Management development

Contingent pay

Communications

HR services

Health and safety and welfare

Knowledge management

Performance management

Employee benefits

THE DEVELOPMENT OF THE HRM CONCEPT

The concept of HRM was first developed in 1982. The common use of HR or HRM as an alternative term to personnel management took place in the second half of the 1990s. Those who dislike the term HRM often refer to people management. The main developments in the US have been described by Boxall (1992) as the matching model and the Harvard framework and these are illustrated in the following models. Since the pioneering US efforts, a number of British commentators have developed the notion of HRM in the UK as summarized later.

THE MATCHING MODEL OF HRM

The matching model of HRM as developed by Fombrun, Titchy and Devanna (1984) is illustrated below.

Rewards

Selection

Performance management

Performance

Development

Adapted from Fombrun et al (1984) Strategic Human Resource Management, Wiley

THE HARVARD FRAMEWORK

The main contention of the Harvard School of Michael Beer and his colleagues was that: Today, many pressures are demanding a broader, more comprehensive and more strategic perspective with regard to the organizations human resources (this involves) the consideration of people as potential assets rather than variable costs. Their framework is modelled below.

Stakeholder interests: shareholders management employees government unions

Situational factors: work force characteristics business strategy and conditions management philosophy labour market unions task technology laws and social values

HRM policy choices: employee influence human resource flow reward systems work systems

HR outcomes: commitment congruence cost-effectiveness

Long-term consequences: individual wellbeing organizational effectiveness societal well-being

Source: Beer, M et al (1984) Managing Human Assets, The Free Press

THE UK CONTRIBUTION TO THE HRM CONCEPT

David Guest (1987) The four policy goals of HRM are: 1. strategic integration 2. high commitment 3. high quality 4. flexibility. Karen Legge (1989) The common HRM themes are that: human resource policies should be integrated with business planning and reinforce or change the organizational culture human resources are valuable and a source of competitive advantage mutually consistent policies are developed to promote commitment and encourage employees to act flexibly in the interests of the organization. Keith Sisson (1990) The four main features of HRM are: 1. Integration of personnel policies with one another and business plans. 2. The responsibility for personnel management no longer resides with specialist managers. 3. The focus shifts from managertrade union relations to managementemployee relations, from collectivism to individualism. 4. There is a stress on commitment and the exercise of initiative. John Storey (1993) Four features comprise the meaningful version of HRM: 1. A particular constellation of beliefs and assumptions. 2. A strategic thrust informing people management decisions. 3. The central involvement of line managers. 4. Reliance on a set of levers to shape the employment relationship.

THE IMPACT OF HRM: RESEARCH FINDINGS

Researcher(s)
Arthur (1990, 1992, 1994) Huselid (1995) Huselid and Becker (1995) Patterson, West, Lawthom and Nickell (1997)

Findings
Firms with a high commitment strategy had significantly higher levels of both productivity and quality than those with a control strategy. Productivity is influenced by employee motivation; financial performance is influenced by employee skills, motivation and organizational structures. Firms with high performance work practices had economically and statistically higher levels of performance. HR practices explained significant variations in profitability and productivity (19% and 18% respectively). Two HR practices were particularly significant: (1) the acquisition and development of employee skills and (2) job design including flexibility, responsibility, variety and the use of formal teams.

Thompson (1998)
Guest et al, (2000) The Future of Work Survey. Purcell et al (2003)

The number of HR practices and the proportion of the workforce covered appeared to be the key differentiating factor between more and less successful firms.
A greater use of HR practices is associated with higher levels of employee commitment and contribution and is in turn linked to higher levels of productivity and quality of services. The most successful companies had what the researchers called the big idea. They had a clear vision and a set of values that were embedded, enduring, collective, measured and managed. They were concerned with sustaining performance and flexibility. Clear evidence existed between positive attitudes to HR policies and practices, levels of satisfaction, motivation and commitment, and operational performance. Policy and practice implementation (not the number of personnel practices adopted) is the vital ingredient in linking people management to business performance and this is primarily the task of line managers.

THE DAVID GUEST MODEL OF THE LINK BETWEEN HRM AND PERFORMANCE

HR effectiveness

Business strategy HR outcomes: employee competence, commitment and flexibility

Quality of goods and services

HR practices

Financial performance
Productivity

HR strategy

Source: David Guest et al (2000) Effective People Management, CIPD

HOW HR CAN MAKE AN IMPACT ON ORGANIZATIONAL PERFORMANCE

Develop and successfully implement high performance work practices, particularly those concerned with job and work design, flexible working, resourcing, employee development, reward and giving employees a voice.
Formulate a clear vision and set of values (the big idea) and ensure that it is embedded, enduring, collective, measured and managed. Develop a positive psychological contract and means of increasing the motivation and commitment of employees. Formulate and implement policies that meet the needs of individuals and create a great place to work. Provide support and advice to line managers on their role in implementing HR policies.

Manage change effectively.

Source: John Purcell et al (2003) Inside the Box: How people management impacts on organizational performance, CIPD

ROLE OF THE HR FUNCTION

The role of the HR function is to enable the organization to achieve its objectives by taking initiatives and providing guidance and support on all matters relating to its employees. The basic aim is to ensure that management deals effectively with everything concerning the employment and development of people and the relationships that exist between management and the workforce. A further key role for the HR function is to play a major part in the creation of an environment that enables people to make the best use of their capacities and to realize their potential to the benefit of both the organization and themselves.

ACTIVITIES OF HR PROFESSIONALS

Service provision providing services to internal customers on all aspects of HRM. Guidance to management and line managers on strategies, policies and people management issues.

Advice to management and line managers on the development and implementation of HR policies and practices.

ROLES OF HR PROFESSIONALS

Business partner sharing responsibility with their line management colleagues for the success of the enterprise. Strategist addressing major long-term issues affecting the management and development of people and the employment relationship.

Interventionist/innovator developing new approaches to people management.

Internal consultant analysing and diagnosing problems and proposing solutions. Monitor ensuring that the organizations HR policies are implemented properly and consistently.

HRM MODELS: TYSON AND FELL

HR activities are largely routine employment and day-to-day administration. Policies are short-term and ad hoc. The HR department will use fairly sophisticated systems. The HR manager is likely to be a professional or very experienced in industrial relations but will not be on the board and will act mainly in an interpretative, not a creative or innovative, role. HR policies exist as part of the corporate strategy. Human resource planning and development are important concepts and a long-term view is taken. The head of HR is probably on the board with power derived from professionalism and contribution to the business.

Clerk of works

Contracts manager

Architect

Source: Tyson, S and Fell, A (1986) Evaluating the Personnel Function, Hutchinson

HRM MODELS: STOREY

Strategic CHANGE MAKERS ADVISERS

Interventionary

Non-interventionary

REGULATORS

HANDMAIDENS

Tactical Change makers (interventionary/strategic) close to the HRM model. Advisers (non-interventionary/strategic) who act as internal consultants, leaving much of HR practice to line managers. Regulators (interventionary/tactical) who are managers of discontent concerned with formulating and monitoring employment rules. Handmaidens (non-interventionary/tactical) who merely provide a service to meet the needs of line managers.

Source: Storey, J (1992) New Developments in the Management of Human Resources, Blackwell

HRM MODELS: REILLY

Strategic STRATEGIST/INNOVATOR

CONTRIBUTION ADVISER/CONSULTANT

Tactical Short

ADMINISTRATOR/CONTROLLER

Long TIME ORIENTATION

The changing role of the HR practitioner

Source: Reilly, P (2000) HR Services and the Re-alignment of HRM, Institute for Employment Studies

HRM MODELS: CALDWELL

Caldwell concentrates on the role of HR managers as change agents and has identified four types:

1. Change champions who envision, lead or implement strategic change.

2. Change adapters who act as reactive pragmatists who adapt the vision to the realities of the organization and view organizational change as a slow iterative process.
3. Change consultants who implement a discrete change project or the key stages of an HR change initiative.

4. Change synergists who strategically co-ordinate, integrate and deliver largescale and multiple-change projects across the whole organization.

Source: Caldwell, R (2002) Champions, adapters, consultants and synergists: the new change agents in HRM, Human Resource Management Journal, 11(3)

THE ULRICH/BROCKBANK 2005 MODEL OF HR ROLES

Employee advocate focuses on the needs of todays employees through listening, understanding and empathizing. Human capital developer in the role of managing and developing human capital (individuals and teams), focus on preparing employees to be successful in the future. Functional expert concerned with the HR practices that are central to HR value, acting with insight on the basis of the body of knowledge they possess. Some are delivered through administrative efficiency (such as technology or process design), and others through policies, menus and interventions. Necessary to distinguish between the foundation HR practices recruitment, learning and development, rewards etc and the emerging HR practices such as communications, work process and organization design and executive leadership development. Strategic partner consists of multiple dimensions: business expert, change agent, strategic HR planner, knowledge manager and consultant, combining them to align HR systems to help accomplish the organizations vision and mission, helping managers to get things done, and disseminating learning across the organization. Leader leading the HR function, collaborating with other functions and providing leadership to them, setting and enhancing the standards for strategic thinking and ensuring corporate governance.

Source: Ulrich, D and Brockbank, W (2005) The HR Value Proposition, Harvard Press, Cambridge, Mass

COMPETENCY FRAMEWORK FOR HR SPECIALISTS

Business and cultural awareness Understands: (1) the business environment, the competitive pressures it faces and its critical success factors, (2) the business key activities and processes and how these affect business strategies, (3) the culture (core values and norms) of the business, (4) how HR policies and practices can impact on business performance puts this understanding to good use. (1) Seeks involvement in business strategy formulation and contributes to the development of the strategy, (2) contributes to the development for the business of a clear vision and set of integrated values, (3) develops and implements coherent HR strategies which are integrated with the business strategy and one another, (4) understands the importance of human capital measurement, introduces measurement systems and ensures that good use is made of them. (1) Contributes to the planning and implementation of cultural change and organizational development programmes, (2) helps to develop resource capability by ensuring that the business has the skilled, committed and well-motivated workforce it needs, (3) helps to develop process capability by influencing the design of work systems to make the best use of people, (4) contributes to the development of knowledge management processes. (1) Carries out the analysis and diagnosis of people issues and proposes practical solutions, (2) adopts interventionist style to meet client needs; acts as catalyst, facilitator and expert as required, (3) uses process consultancy approaches to resolve people problems, (4) coaches clients to deal with own problems; transfers skills. (1) Anticipates requirements and sets up appropriate services to meet them, (2) provides efficient and cost-effective services in each HR area, (3) responds promptly and efficiently to requests for HR services, help and advice, (4) promotes the empowerment of line managers to make HR decisions but provides guidance as required. (1) Continually develops professional knowledge and skills, (2) benchmarks good HR practice, (3) keeps in touch with new HR concepts, practices and techniques, (4) demonstrates understanding of relevant HR practices.

Strategic capability

Organizational effectiveness

Internal consultancy

Service delivery

Continuous professional development

KEY COMPETENCY AREAS FOR HR PROFESSIONALS

Competency domain
1. Personal credibility

Components
Lives the firms values, maintains relationships founded on trust, acts with an attitude (a point of view about how the business can win, backing up this view with evidence). Drives change: ability to diagnose problems, builds relationships with clients, articulates a vision, sets a leadership agenda, and implements goals. Acts as keeper of the culture, identifies the culture required to meet the firms business strategy, frames culture in a way that excites employees, translates desired culture into specific behaviours, encourages executives to behave consistently with the desired culture. Expert in speciality, able to deliver state-of-the-art innovative HR practices in such areas as recruitment, employee development, compensation and communications. Understands strategy, organization, competitors, finance, marketing, sales, operations and IT.

2. Ability to manage change 3. Ability to manage culture

4. Delivery of human resource practices 5. Understanding of the business

Source: Brockbank, W, Ulrich, D and Beatty, D (1999) HR professional development: creating the future creators at the University of Michigan Business School, Human Resource Management, 38, Summer, pp 11117

THE PROFESSIONAL STANDARDS OF THE CIPD

Personal drive and effectiveness People management and leadership The existence of a positive, can do mentality, anxious to find ways round obstacles and willing to exploit all the available resources to accomplish objectives. The motivation of others (whether subordinates, seniors or project team members) towards the achievement of shared goals, not through the application of formal authority but rather by personal role modelling, the establishment of professional credibility and the creation of reciprocal trust.

Professional competence
Adding value through people Continuing learning

Possession of the professional skills and technical capability associated with successful achievement in personnel and development.
A desire not only to concentrate on tasks, but rather to select meaningful outputs that will produce added-value outcomes for the organization, or eliminate/reduce performance inhibitors, whilst simultaneously complying with all legal and ethical considerations. Commitment to continuous improvement and change by the application of self-managed learning techniques, supplemented where appropriate by deliberate planned exposure to external learning sources (mentoring, coaching etc). Application of a systematic approach to situational analysis, development of convincing, business-focused action plans and (where appropriate) the employment of intuitive/creative thinking to generate innovative solutions and pro-actively seize opportunities. Concern for the perceptions of personnels customers, including (principally) the central directorate of the organization, a willingness to solicit and act upon customer feedback as one of the foundations for performance improvement. The capacity to achieve a strategic vision for the future, to foresee longer-term developments, to envision options (and their probable consequences), to select sound courses of action, to rise above the day-to-day detail, to challenge the status quo. The ability to transmit information to others, especially in written (report) form, both persuasively and cogently, display of listening, comprehension and understanding skills, plus sensitivity to the emotional, attitudinal and political aspects of corporate life.

Thinking and applied resourcefulness

Customer focus

Strategic capability

Influencing and interpersonal skills

EVALUATING THE HR FUNCTION

General criteria contribution to organizational effectiveness achievement of specified goals specified quantified measures stakeholder perspective (management, line managers and employees) added value per employee added value per of employment costs sales value per employee costs per employee retention and turnover rates absenteeism frequency/severity rates of accidents ratio of grievances to number of employees time lost through disputes number of references to employment tribunals average time to fill vacancies time to respond to applicants cost of advertisements per reply/engagement training hours/days per employee time to respond to and settle grievances cost of induction training per employee cost of benefits per employee

Organizational quantified criteria

Employee behaviour criteria

HR function service-level criteria

TEN WAYS OF ENSURING THAT THE HR FUNCTION INNOVATES EFFECTIVELY

1. 2. Be clear on what has to be achieved and why. Ensure that what you do fits the strategy, culture and circumstances of the organization. 3. Dont follow fashion do your own thing. 4. Keep it simple over-complexity is a common reason for failure. 5. Dont rush it will take longer than you think. 6. Dont try to do too much at once an incremental approach is generally best. 7. Assess resource requirements and costs. 8. Pay close attention to project planning and management. 9. Remember that the success of the innovation rests as much on the effectiveness of the process of implementation (line manager buy-in and skills are crucial) as it does on the quality of the concept, if not more so. 10. Pay close attention to change management communicate, involve and train.