The goals of HRM

Lecture on chapter 1 of Boxall and Purcell (2008) Strategy and Human Resource Management. Palgrave Macmillan

Lecture outline
Goal: to establish fundamental definitions associated with HRM and examine the underpinning motives or general goals of HRM.
Content:

What do we mean by an analytical approach to HRM? How do we define human resource management? What are the goals of HRM? What strategic tensions and problems do these goals imply?
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What do we mean by an analytical approach to HRM?

An analytical approach to HRM places priority, first and foremost, on research and theory that tries to describe what managers do in practice and which helps us to understand why and how they do it.
Only on this basis should we enter into discussion of what we think they ought to do (i.e. descriptive research should precede any form of prescription for change).

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Defining HRM
1. HRM is an inevitable process in organisations 2. HRM is about managing work and people, including both individual and collective dimensions 3. HRM is as an aspect of all management jobs
Question: What kind of organisations have HR specialists and what accounts for the growth of HR specialist jobs and consultancies?

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Defining HRM
4. HRM can usefully be understood as a set of activities aimed at building individual and organisational performance
On the individual level, HRM consists of managerial attempts to influence individual ability (A), motivation (M), and the opportunity to perform (O). P= f(A, M, O) On the group or collective level, HRM plays an important role in building workforce organisation and capabilities and the general climate of employee attitudes.
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HRM: work and employment policies and practices

Related management investments and policy choices

Individual: Ability Motivation Opportunity to perform

Individual performance outcomes

Boxall and Purcell chapter one

HRM: work and employment policies and practices

Related management investments and policy choices

Workforce: Organisation Capabilities Attitudes (e.g. trust and commitment levels)

Organisational performance outcomes

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Defining HRM
5. HRM incorporates a variety of management styles and ideologies
Question: This is true across firms but why is it also true within most firms?

6. HRM is embedded in industries and societies

Question: What major industry differences can you identify in HRM? Question: What major societal differences in HRM can you point to?

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What are the goals of HRM?

1. Cost-effectiveness
This is the fundamental economic goal in HRM. Managers try to stabilise an effective production system at a cost that is competitive in their industry.
There are big differences in what this means across different industries, including the difference between capital-intensive, hightech and knowledge-intensive contexts, on the one hand, and labour-intensive manufacturing and low-skill services, on the other.

Question: Why is it important not to confuse cost minimisation with cost-effectiveness? In what situations, however, are they broadly equivalent?
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Goals of HRM
2. Organisational flexibility
But nothing lasts forever. Some element of flexibility is important in an organisations HRM if it is to cope with change.
Question: What is meant by: numerical flexibility? financial flexibility? functional flexibility?

Question: what is the difference between short-run responsiveness and long-run agility in HRM? Why is the latter so hard to achieve?

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Goals of HRM
3. Sustained competitive advantage This is a higher-order economic goal which involves achieving sustained, superior profitability despite the efforts of competitors. (What this means, and the conditions under which firms pursue it through HRM, will come into chapters 2, 4 and 9.) Question: What is the distinction between labour-cost advantage and labour-differentiation advantage? Which is likely to be more sustainable and how does the Dyson case illustrate this?

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Goals of HRM
3. Social legitimacy
Social legitimacy is the fundamental socio-political goal in HRM. It covers compliance with legal requirements and adaptation to important social norms.
In practice, the legitimacy goals of employers vary: from noncompliance, through compliance, through to employer of choice objectives. Question: How do US employment systems differ from those in Rhineland countries and what does this mean for subsidiaries of US firms operating in one of these countries?

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Goals of HRM
4. Managerial autonomy or power
Management also has an underpinning motive to enhance its power. Much of this is a natural and necessary impulse but it carries the potential to undermine employee motivation and it may set managers at odds with the interests of other stakeholders.
Question: What criticisms have there been of management power and reward-seeking behaviour in the factors that led to the international banking crisis of 2008-9? How should governments respond to this issue?

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Strategic tensions and problems in HRM

1. The problem of labour scarcity
Firms compete not simply in product markets but in labour markets. In the extreme, labour scarcity can cause a capability crisis for the firm.

2. The problem of labour motivation

Motivation is a fragile variable which is always problematic because employer and employee interests are mixed motive: partly congruent, partly conflictual.

Question: If we cant we fully define the wage-effort bargain at the outset of an employment relationship, what does this imply about the role of trust between the parties?
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Strategic tensions and problems in HRM

3. Change tensions in labour management
Question: What dilemma does change bring within business strategy? And what trade-off does it bring with employee interests?

4. Legitimacy challenges in wider society

Like it or not, firms are embedded in a social context and societies generate expectations: legal and customary.

Question: Why is offshoring production to low-cost (and more lightly regulated) developing countries often controversial?

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Strategic tensions and problems in HRM

5. Complexity and politics in management
A lot of HR issues involve complexity and political compromises.
Question: Why is this particularly so in large organizations?

6. Variations in institutional supports and societal resources

Managers in firms are not the sole masters of HRM. They are always working in societal contexts, which both enable and constrain them.

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Lecture conclusions
1. HRM is concerned with managing work and people in organisations. In an analytical approach to HRM, we try to understand what happens in practice before making any prescriptions for change. 2. Business strategies vary, and so do approaches to HRM, within and across organisations, industries, cultures, and societies. 3. The motives or goals that underpin HRM are both economic and socio-political. Firms are economic entities embedded in societies.

4. Pursuing these goals inevitably involves grappling with strategic problems and tensions. How these are handled is consequential for the firms survival and its relative performance.
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