Armstrong'S Handbook Of: Human Resource Management
Armstrong'S Handbook Of: Human Resource Management
ARMSTRONG’S
HANDBOOK OF
HUMAN RESOURCE
MANAGEMENT
PRACTICE
ii
ALSO AVAILABLE BY
MICHAEL ARMSTRONG
www.koganpage.com
13TH EDITION
MICHAEL ARMSTRONG AND iii
STEPHEN TAYLOR
ARMSTRONG’S
HANDBOOK OF
HUMAN RESOURCE
MANAGEMENT
PRACTICE
iv
Publisher’s note Every possible effort has been made to ensure that the information contained in this book is
accurate at the time of going to press, and the publishers and authors cannot accept respon sibility for any errors or
omissions, however caused. No responsibility for loss or damage occasioned to any person acting, or refraining from
action, as a result of the material in this publication can be accepted by the editor, the publisher or any of the
authors.
First edition published in 1977 as A Handbook of Personnel Management Practice by Kogan Page Limited Seventh edition
published in 1999 as A Handbook of Human Resource Management Practice Eleventh edition published in 2009 as
Armstrong’s Handbook of Human Resource Management Practice Twelfth edition 2012 Thirteenth edition 2014
Apart from any fair dealing for the purposes of research or private study, or criticism or review, as permitted under the
Copyright, Designs and Patents Act 1988, this publication may only be repro duced, stored or transmitted, in any form or by
any means, with the prior permission in writing of the publishers, or in the case of reprographic reproduction in accordance
with the terms and licences issued by the CLA. Enquiries concerning reproduction outside these terms should be sent to the
publishers at the undermentioned addresses:
4737/23 Ansari Road Daryaganj New Delhi
2nd Floor, 45 Gee Street London EC1V 3RS 110002 India
United Kingdom www.koganpage.com 4737/23 Ansari Road Daryaganj New Delhi
Street, Suite 1100 Philadelphia PA 110002 India
© Michael Armstrong, 1977, 1984, 1988, 1991, 1995, 1996, 1999, 2001, 2003, 2006, 2009, 2012, 2014
The right of Michael Armstrong to be identified as the author of this work has been asserted by him in accordance with the
Copyright, Designs and Patents Act 1988.
A CIP record for this book is available from the British Library.
CONTENTS IN BRIEf
13 Motivation 169
14 Commitment 185
13 Motivation 169
Introduction 169 The meaning of motivation 170 Types of
motivation 1 70 Motivation theory 171 Motivation and job
satisfaction 1 77 Motivation and money 1 80 Motivation
strategies 180
14 Commitment 185
Introduction 185 The meaning of organizational commitment 185 The
importance of commitment 186 Commitment and engagement 187 Critical
evaluation of the concept of commitment 1 87 Factors affecting commitment
188 Developing a commitment strategy 1 89
40 HR policies 509
Introduction 509 Why have HR policies? 509 Overall
HR policy 5 10 Specific HR policies 510 Formulating
HR policies 5 15 Implementing HR policies 5 15
Contents xix
41 HR procedures 517
What are HR procedures? 517 Capability procedure
518 Disciplinary procedure 519 Grievance procedure
520 Redundancy procedure 5 21
LIST Of fIGuRES
Figure 25.3a Performance management form (part 1) 343 Figure 25.3b Performance management form
(part 2) 344 Figure 25.4 Introducing performance management: dos and don’ts 349 Figure 26.1 A
reward system 364 Figure 26.2 The elements of total rewards 365 Figure 26.3 Model of total rewards:
Towers Perrin 3 66 Figure 27.1 A model of the interrelationships between the components of
evidence-based reward management 383 Figure 27.2 A pay matrix 385 Figure 30.1
Dimensions of the employment relationship 414 Figure 33.1 Stages of employee voice 434
Figure 38.1 International performance management system –
Standard Chartered Bank 485 Figure 42.1 Introducing an HRIS 5 28 Figure 49.1 Examples of charts 584
Figure 49.2 A scattergram with regression (trend) line 585 Figure 50.1 Example of an interview rating form 598
Figure 51.1 Example of job description 608 Figure 51.2 Example of a role profile 610 Figure 51.3 Example of a
generic role profile 611 Figure 55.1 John Adair’s model of leadership 643 Figure 60.1 The sequence of strategic
HRM 6 77 Figure 61.1 The process of human capital management 686 Figure 61.2 Programme for introducing
human capital management 6 91 Figure 62.1 O rganization design programme 6 97 Figure 64.1 The engagement
journey 7 09 Figure 64.2 Definitions of engagement 7 10 Figure 65.1 Workforce planning flow chart 7 17 Figure
68.1 The performance management design, development, implementation
and maintenance pathway 748 Figure 68.2 S teps in the design programme 752 Figure 68.3 Implementation
programme 756 Figure 69.1 The reward strategy development framework 761 Figure 70.1 Introducing total rewards
772 Figure 71.1 Analytical matching job evaluation scheme development sequence 786 Figure 72.1 The grade and
pay structure design sequence 7 90 Figure 72.2 Scattergram of evaluations and pay 7 98
xxvii
LIST Of TABLES
Table 3.1 Key HR specialist competency areas 48 Table 4.1 Research on the link between HRM and firm
performance 55 Table 4.2 C
omponents of an HPWS 60 Table 4.3 Examples of high-performance working
ingredients 61 Table 5.1 A summary of human capital measures and their possible uses 72 Table 7.1 I ncidence
of different competency headings 87 Table 7.2 Example of a basic competency framework 89 Table 7.3
Example of competency framework definition with positive and
negative indicators 90 Table 10.1 Schools of organization theory 118 Table 11.1 Vertical job loading (job
enrichment) principles and motivators
involved 137 Table 11.2 Mechanistic and organic design 143 Table 12.1 Organization development activities 162
Table 13.1 Summary of motivation theories 1 78 Table 13.2 Factors affecting motivation strategies and the HR
contribution 1 81 Table 15.1 Employee engagement management competency framework 1 99 Table 18.1 Summary
of sources of candidates 2 33 Table 19.1 A survival rate analysis 2 51 Table 22.1 The practical implications of
learning theory and concepts 2 95 Table 27.1 Summary description of different grade and pay structures 3 75 Table
27.2 Grade and pay structures: criteria for choice 3 76 Table 27.3 Summary of individual merit pay schemes 3 80
Table 28.1 Summary of payment and incentive arrangements for sales staff 3 96 Table 28.2 Comparison of shop
floor payment-by-result schemes 3 99 Table 38.1 Advantages and disadvantages of using PCNs and HCNs 4 80
Table 38.2 Levels of convergence in reward management policy and practice 4 88 Table 43.1 Median awards made
in different types of employment tribunal case
2011–12 538 Table 51.1 Criteria for a fully rigorous competency definition 614 Table 53.1 Commercial and
industrial relations negotiations compared 626
xxviii
LIST Of ExHIBITS
exhibiT 60.1 Analysis of internal environment 678 exhibiT 60.2 Analysis of external environment 679 exhibiT
60.3 HR implications of business strategy and business drivers 679 exhibiT 60.4 Human resource management
attitude survey 680 exhibiT 60.5 Analysis of the effectiveness of existing HR strategies 681 exhibiT 60.6
Strategic HRM gap analysis 682 exhibiT 60.7 Diagnostic framework 683 exhibiT 61.1 The case for human
capital management 6 87 exhibiT 61.2 What use are we going to make of HCM? 6 88 exhibiT 61.3 Making the
business case for HCM 6 89 exhibiT 61.4 Considerations when introducing HCM 6 90 exhibiT 61.5 HCM goals
692 exhibiT 61.6 HCM priorities 6 93 exhibiT 61.7 Analysis of measures requirements – people data and
processes 6 94 exhibiT 62.1 Analysis of overall aims and purpose 6 98 exhibiT 62.2 Activities and structure
analysis 6 99 exhibiT 62.3 Role analysis 7 00 exhibiT 63.1 Organizational effectiveness – diagnostic checklist 7 01
exhibiT 63.2 Culture analysis 7 02 exhibiT 63.3 Values analysis 7 03 exhibiT 63.4 Norms analysis 7 04 exhibiT 63.5
Artefacts analysis 7 05 exhibiT 63.6 Management style analysis 7 05 exhibiT 63.7 Teamwork analysis 7 06 exhibiT
63.8 Organizational development action plan 7 07 exhibiT 63.9 Choice of organization development activities
707 exhibiT 64.1 Drivers of employee engagement 7 11 exhibiT 64.2 Engagement survey 7 12 exhibiT 64.3
Engagement gap analysis 7 13 exhibiT 64.4 Engagement diagnostic framework 7 14 exhibiT 65.1 Internal factors
affecting demand and supply of people 7 18 exhibiT 65.2 Scenario planning 7 19 exhibiT 65.3 Forecasting
activity levels 7 20 exhibiT 65.4 Workforce implications of the business plan 7 20 exhibiT 65.5 Demand
forecasting methods 7 21 exhibiT 65.6 Demand forecast schedule 7 22 exhibiT 65.7 Workforce analysis 7 23
xxix
xxx List of Exhibits
exhibiT 65.8 Measuring employee turnover 724 exhibiT 65.9 Forecasting the supply of people 725 exhibiT 65.10
Balancing demand and supply 726 exhibiT 65.11 Action planning 727 exhibiT 66.1 Rating framework for talent
management strategy goals 730 exhibiT 66.2 Talent management policy checklist 731 exhibiT 66.3 Talent
planning checklist 7 31 exhibiT 66.4 Talent audit checklist 7 32 exhibiT 66.5 Analysis of effectiveness of
resourcing practices 7 33 exhibiT 66.6 Talent development checklist 7 34 exhibiT 66.7 Overall analysis and
assessment of talent management practice 7 35 exhibiT 67.1 Establishing learning needs 7 38 exhibiT 67.2
Planning learning events checklist 7 40 exhibiT 67.3 Event arrangements checklist 7 42 exhibiT 67.4 Learning
event evaluation form 7 43 exhibiT 67.5 Evaluation levels and return on expectations assessment 7 44 exhibiT
67.6 Overall evaluation of a training event 7 45 exhibiT 68.1 Performance management goals 7 48 exhibiT 68.2
Performance management gap analysis 7 49 exhibiT 68.3 Analysis of performance review practices 7 50 exhibiT
68.4 Diagnostic summary 7 51 exhibiT 68.5 Areas for development 7 53 exhibiT 68.6 Analysis of possible
objectives 7 54 exhibiT 68.7 Analysis of the components of the performance management
system 755 exhibiT 68.8 Pilot test questionnaire for managers 757 exhibiT 68.9 Pilot test questionnaire for
employees 7 57 exhibiT 68.10 Summary of performance management activities over the year 758 exhibiT 68.11
Evaluation of performance management against success criteria 7 59 exhibiT 69.1 Analysis of reward strategy
762 exhibiT 69.2 Analysis of current reward practices 7 62 exhibiT 69.3 Reward attitude survey 7 64 exhibiT 69.4
Implications for reward of business strategy 7 65 exhibiT 69.5 Integration of HR and reward strategies 7 66
exhibiT 69.6 Rating framework for reward strategy goals 7 67 exhibiT 69.7 Review reward options in relation to
reward goals and
practicality 768 exhibiT 69.8 Guidelines for formulating reward strategies 769 exhibiT
69.9 Implementation checklist 769 exhibiT 70.1 Total rewards forced choice questionnaire
773 exhibiT 70.2 Total rewards analysis grid 7 74 exhibiT 70.3 Total reward priorities 7 75
xxxi List of Exhibits
exhibiT 71.1 Analysis of current job evaluation scheme 778 exhibiT 71.2 Choice of approach to job evaluation 779
exhibiT 71.3 Choice of features 780 exhibiT 71.4 Project plan bar chart 780 exhibiT 71.5 Guidelines for selecting
factors 781 exhibiT 71.6 Examples of factor definitions 782 exhibiT 71.7 Guidelines on defining factor levels 783
exhibiT 71.8 Advantages and disadvantages of computer-aided job evaluation 7 85 exhibiT 72.1 Analysis of
present grade and pay structure arrangements 7 91 exhibiT 72.2 Summary description of most common grade and
pay structures 7 92 exhibiT 72.3 Criteria for assessing the extent to which a structure is
appropriate 793 exhibiT 72.4 Example of grade and pay structure guiding principles 794
exhibiT 72.5 Grade and pay structure design options 795 exhibiT 73.1 Advantages and disadvantages of
planning and conducting surveys
in-house or outsourcing 8 02 exhibiT 73.2 Choice of responsibility
for activities 803 exhibiT 73.3 Criteria for selecting an external adviser 804 exhibiT 73.4
Issues checklist 805
xxxii
T he
Resource
13th edition of the
Management
Handbook and engagement have been completely revised. Apart from these
Practice substantial changes, the handbook has been brought up-to-date by
reference to the findings of a number of significant research projects and
other investigations of how HRM operates in practice. The plan HRM of the
literature – a total of 150.
book is illustrated in the ‘route map’ shown in Figure 0.1.
Additional material is provided for lecturers in the shape of 613
The companion website at ww.koganpage.com/
w owerPoint slides with notes covering all the chapters except the
armstrong/HRMPresources provides extensive addi- tionaloolkits. resources
for lecturers and students. These comprise:
A students’ manual consisting of material which can be used to
● A lecturers’ manual containing notes on how teaching could be
einforce the contents of the main book. Summaries of each chapter are
organized by reference to the chapters in the main text and therovided and in addition most of the chapters include supplementary
supplementary material in the manual. Suggestions are made bstracts
on from relevant HRM literature (150 in all). To assist in
various kinds of semesters and guidance is provided on the links
evision, the extra material includes 135 multiple choice questions and
between the handbook text and CIPD programmes. The manual 20 ‘flash’ cards containing questions and answers about key aspects of
includes sections for each of the first 43 general HRM he subject matter. There are also 43 case studies.
chapters containing a summary of the main learning points, an
A glossary of HRM terms (988 entries).
outline of the subject matter, discussion points and questions with
comments on the points to be considered. There are 136 multiple An HRM bibliography (832 entries).
choice questions, 78 case studies and four role playing exercises.
Most of the chapters contain supplementary abstracts from relevant
xxxiv Preface to the 13th Edition
FIgure 0.1 Handbook of Human Resource Management Practice route map
Part Part IV People
VI Performance resourcing
and reward 16 Strategic
25 Performance resourcing
management 17 Workforce
26 Reward planning
management – 18 Recruitment
strategy and and selection
systems 19 Resourcing
27 The practice of practice
reward 20 Talent
management management
28 Managing reward for special groups
Part XI HR skills 44 Strategic HRM skills 45 Business skills 46 Problem-solving skills 47 Analytical and critical skills 48 Research
skills 49 Statistical skills 50 Selection interviewing skills 51 Job, role, competency and skills analysis 52 Learning and development
skills 53 Negotiating skills 54 Leading and facilitating change 55 Leadership skills 56 Influencing skills 57 Handling people problems
58 Managing conflict 59 Political skills
Part XII HRM Toolkits 60 Strategic HRM toolkit 61 Human capital management toolkit 62 Organization design toolkit 63
Organization development toolkit 64 Employee engagement toolkit 65 Workforce planning toolkit 66 Talent management toolkit 67
Planning and delivering learning
events toolkit 68 Performance management toolkit 69 Strategic reward toolkit 70 Total rewards toolkit 71 Job evaluation toolkit 72
Grade and pay structure design toolkit 73 Attitude surveys toolkit
Part I The practice of human
resource management 1 The essence of human resource
management (HRM) 2 Strategic HRM 3 Delivering HRM – systems and roles 4 HRM and performance 5 Human capital
management 6 Knowledge management 7 Competency-based HRM 8 The ethical dimension of HRM 9 Corporate social
responsibility
Part II People and organizations 10 Organizational behaviour 11 Work, organization and job
design 12 Organization development
Part VIII Employee well-being 35 The practice of
employee well-being 36 Health and safety
Part V Learning and development (L&D) 21 Strategic L&D 22 The process of L&D 23 The practice of L&D 24 Leadership and
management development
Part IX International HRM 37 The international
HRM framework 38 The practice of
international HRM 39 Managing
expatriates
Part III Factors affecting employee behaviour 13 Motivation 14 Commitment 15 Employee engagement
Part X HRM policy and practice 40 HR policies 41 HR procedures 42 HR information
systems 43 Employment law
Part VII Employee relations 29 Strategic
employee relations 30 The employment
relationship 31 The psychological
contract 32 The practice of
industrial relations 33 Employee voice 34 Employee
communications
1
practice management of
human Part I Contents
06 Knowledge management
07 Competency-based HRM
References
Keegan, A and Francis, H (2010) Practitioner talk: the changing textscape of HRM and emergence of HR business partnership,
The International Journal of Human Resource Management, 21 (6), pp 873–98
Schneider, B (1987) The people make the place, Personnel Psychology, 40 (3), pp 437–53
01The essence of
human resource
management (HRM)
Key ConCePts and terms
pendence theory Soft HRM Strategic
Added value Agency theory AMO theory
ategic human resource management
Commitment Contextual model of HRM
Contingency theory European model of HRM 5-P (SHRM)
model of HRM Hard HRM Harvard framework HR osts theory Unitarist
philosophy Human capital theory Human relations
Human resource management (HRM)
umanism Institutional theory Matching model of
LearnIng outComes
RM Motivation Organizational behaviour theory
rganizational capability Resource-based theory
On completing this chapter you should be able to define these key concepts. You should also know about:
● The fundamental concept of HRM and how it developed ns made about HRM
it emphasized the notion that people should be regarded as assets rather than variable costs.
HRM defined
Human resource management can be defined as a strategic, integrated and coherent approach to the employment, development and well-being
of the people working in organizations. It was defined by Boxall and Purcell (2003: 1) as ‘all those activities associated with the management
of employment relationships in the firm’. A later comprehensive definition was offered by Watson (2010: 919):
HRM is the managerial utilisation of the efforts, knowledge, capabilities and committed behaviours which people contribute to an authoritatively
co-ordinated human enterprise as part of an employment exchange (or more temporary contractual arrangement) to carry out work tasks in a way
which enables the enterprise to continue into the future.
● supportthe organization in achieving its objectives by developing and implementing human resource (HR) strategies that are
integrated with the business strategy (strategic HRM);
● contribute to the development of a high-performance culture;
● ensure that the organization has the talented, skilled and engaged people it needs;
● create a positive employment relationship between management and employees and a climate of mutual trust;
Part 6 1 The Practice of Human Resource Management ● encourage the application of an ethical
approach to people management.
An earlier list of HR goals was made by Dyer and Holder (1988: 22–28) who analysed them under the headings of
contribution (what kind of em- ployee behaviour is expected?), composition (what headcount, staffing ratio and skill
mix?), com- petence (what general level of ability is desired?) and commitment (what level of employee attachment and
identification?). Guest (1987) suggested that the four goals of HRM were strategic integration, high commitment, high
quality and flexibility. And Boxall (2007: 63) proposed that ‘the mission of HRM is to support the viability of the firm
through stabilizing a cost-effective and socially legitimate system of labour management’.
Motivation
Institutional theory
Motivation theory explains the factors that affect goal-directed behaviour and therefore influences the approaches used in HRM to enhance
engage- ment (the situation in which people are committed to their work and the organization and are moti- vated to achieve high levels of
performance).
Contingency theory
Contingency theory states that HRM practices are dependent on the organization’s environment and circumstances. This means that, as
Paauwe (2004: 36) explained: ‘The relationship between the rele- vant independent variables (eg HRM policies and practices) and the
dependent variable (perform- ance) will vary according to the influences such as company size, age and technology, capital intensity, degree
of unionization, industry/sector ownership and location.’
Contingency theory is associated with the notion of fit – the need to achieve congruence between an organization’s HR strategies,
policies and practices and its business strategies within the context of its external and internal environment. This is a key concept in strategic
HRM.
Organizations conform to internal and external environmental pressures in order to gain legitimacy and acceptance.
AMO theory
The ‘AMO’ formula as set out by Boxall and Purcell (2003) states that performance is a function of Ability + Motivation + Opportunity to
Participate. HRM practices therefore impact on individual performance if they encourage discretionary effort, develop skills and provide
people with the oppor- tunity to perform. The formula provides the basis for developing HR systems that attend to employees’ interests,
namely their skill requirements, motiva- tions and the quality of their job.
These concerns merit attention, but the more im- portant messages conveyed by the original notion of HRM such as the need for strategic
integration, the treatment of employees as assets rather than costs, the desirability of gaining commitment, the virtues of partnership and
participation and the key role of line managers are still valid and are now generally accepted, and the underpinning theories are as relevant
today as they ever were.
And it should be remembered that these objec- tions, with the exception of the last one, mainly apply to the original concept of HRM.
But today, as explained in the final section of this chapter, HRM in action does not necessarily conform to this con- cept as a whole. The
practice of HRM is diverse. Dyer and Holder (1988) pointed out that HRM goals vary according to competitive choices, tech- nologies,
characteristics of employees (eg could be different for managers) and the state of the labour market. Boxall (2007: 48) referred to ‘the
profound diversity’ of HRM and observed that: ‘Human re- source management covers a vast array of activities and shows a huge range of
variations across occu- pations, organizational levels, business units, firms, industries and societies.’ There are in fact a number of different
models of HRM as described below.
Models of HRM
The most familiar models defining what HRM is and how it operates are as follows.
The matching model of HRM
Fombrun et al ( 1984) proposed the ‘matching model’, which indicated that HR systems and the organization structure should be managed in a
way that is congruent with organizational strategy. This point was made in their classic statement that: ‘The critical management task is to
align the formal structure and human resource systems so that they drive the strategic objectives of the organization’ (ibid: 37). Thus they
took the first steps towards the concept of strategic HRM.
Beer et al (1984) produced what has become known as the ‘Harvard framework’. They started with the
1 HR philosophy – a statement of how the
organization regards its human resources,
Part 10
1 The Practice of Human Resource Management the role they play in the overall success of the business, and how
they should be treated and managed. 2 HR policies – these provide guidelines for
action on people-related business issues and for the development of HR programmes and practices based on strategic
needs. 3 HR programmes – these are shaped by HR
policies and consist of coordinated HR efforts intended to initiate and manage organizational change efforts prompted by
strategic business needs. 4 HR practices – these are the activities
carried out in implementing HR policies and programmes. They include resourcing, learning and development,
performance and reward management, employee relations and administration. 5 HR processes – these are the formal
procedures and methods used to put HR strategic plans and policies into effect.
European model of HRM
Brewster (1993) described a European model of HRM as follows:
● environment – established legal framework;
● objectives – organizational objectives and social concern – people as a key resource;
cost/benefits analysis, also environment;
● focus –
● relationship with employees – union and non-union;
● relationship with line managers – specialist/ line liaison;
● role of HR specialist – specialist managers – ambiguity, tolerance, flexibility.
The main distinction between this model and what Brewster referred to as ‘the prescribed model’ was that the latter
involves deregulation (no legal frame- work), no trade unions and a focus on organizational objectives but not on social
concern.
As set out by Mabey et al ( 1998: 107) the char- acteristics of the European model are:
● dialogue between social partners;
● emphasis on social responsibility;
● multicultural organizations;
● participation in decision-making;
● continuous learning.
HRM today
As a description of people management activities in organizations the term HRM is here to stay,
Chapter 1 The Essence of HRM 11
even if it is applied diversely or only used as a label to describe traditional personnel management practices. Emphasis is
now placed on the need for HR to be strategic and businesslike and to add value, ie to generate extra value (benefit to the
busi- ness) by the expenditure of effort, time and money on HRM activities. There have been plenty of new interests,
concepts and developments, including human capital management, engagement, talent management, competency-based
HRM, e-HRM, high performance work systems, and performance and reward management. But these have not been
introduced under the banner of the HRM concept as originally defined.
HRM has largely become something that organ- izations do rather than an aspiration or a philoso- phy and the term is
generally in use as a way of describing the process of managing people. A con- vincing summary of what HRM means
today, which focuses on what HRM is rather than on its philoso- phy, was provided by Peter Boxall, John Purcell and
Patrick Wright (2007), representing the new genera- tion of commentators.
Key learning points: The essence of human resource management
HRM defined
management and employees and a climate of mutual trust; Human resource management (HRM) is concerned with
all aspects of how people are employed and managed in organizations.
● encourage the application of an ethical approach to people management.
Goals of HRM
Philosophy of HRM
The goals of HRM are to:
The beliefs of HRM included the assumptions that it is the human resource that gives competitive
● support the organization in achieving its
edge, that the aim should be to enhance employee objectives by developing and implementing
commitment, that HR decisions are of strategic human resource (HR) strategies that are
importance and that therefore HR policies should be integrated with the business strategy
integrated into the business strategy (Storey, 2001: 7). (strategic HRM);
● contribute to the development of a high-
heavily on theories of commitment and motivation skilled and engaged people it needs; create
and other ideas derived from the field of a positive employment relationship between
organizational behaviour’ (Guest, 1987: 505).
Source review
The meaning of HRM – Boxall et al (2007: 1)
Human resource management (HRM), the management of work and people towards desired ends, is a fundamental
activity in any organization in which human beings are employed. It is not something whose existence needs to be
radically justified: HRM is an inevitable consequence of starting and growing an organization. While there are a
myriad of variations in the ideologies, styles, and managerial resources engaged, HRM happens in some form or
other. It is one thing to question the relative performance of particular models of HRM in particular contexts... It is
quite another thing to question the necessity of the HRM process itself, as if organizations cannot survive or grow
without making a reasonable attempt at organizing work and managing people.
Part 1 The Practice of Human Resource Management 1 2
The diversity of HRM
Many HRM models exist, and practices within different organizations are diverse, often only corresponding to the
conceptual version of HRM in a few respects.
Reservations about HRM
On the face of it, the concept of HRM has much to offer, at least to management. But reservations have
been expressed about it. There may be something in these criticisms, but the fact remains that as a description of
people management activities in organizations HRM is here to stay, even if it is applied diversely or only used as a
label to describe traditional personnel management practices.
Questions
1 What is HRM?
6 What is the essence of the philosophy of 2 What was the main message of the Harvard
HRM? framework?
7 What is resource-based theory? 3 What was the main message of the matching
8 What is the significance of contingency theory? model?
9 What are the key reservations made by 4 What are the goals of HRM?
commentators about the early version of 5 What is the difference between hard and soft
HRM? HRM?
10 What is the position of HRM today?
References
Armstrong, M (1977) A Handbook of Personnel
Management Practice, 1st edn, London, Kogan Page Armstrong, M (1987) Human resource management: a case of the
emperor’s new clothes, Personnel Management, August, pp 30–35 Armstrong, M (2000) The name has changed but has
the game remained the same? Employee Relations, 22 (6), pp 576–89 Bakke, E W (1966) Bonds of Organization:
An appraisal of corporate human relations, Archon, Hamden Beer, M, Spector, B, Lawrence, P, Quinn Mills, D
and Walton, R (1984) Managing Human Assets, New York, The Free Press Boxall, P F (2007) The goals of HRM, in (eds) P
Boxall, J Purcell and P Wright, Oxford Handbook of Human Resource Management, Oxford, Oxford University Press, pp 48–67
Boxall, P F and Purcell, J (2003) Strategy and Human
Resource Management, Basingstoke, Palgrave Macmillan
Boxall, P F, Purcell, J and Wright, P (2007) Human
resource management: scope, analysis and significance, in (eds) P Boxall, J Purcell and P Wright, Oxford Handbook of Human
Resource Management, Oxford, Oxford University Press, pp 1–16 Brewster, C (1993) Developing a ‘European’ model of human
resource management, The International Journal of Human Resource Management, 4 (4), pp 765–84 Chartered Institute of
Personnel and Development
(2013) HR Profession Map, http://www.cipd.co.uk/ hr-profession-map-download.aspx [accessed 25 January 2013] Delbridge, R
and Keenoy, T (2010) Beyond
managerialism? The International Journal of Human Resource Management, 21 (6), pp 799–817 Dyer, L and Holder, G W
(1988) Strategic human resource management and planning, in (ed) L Dyer, Human Resource Management: Evolving roles and
responsibilities, Washington DC, Bureau of National Affairs, pp 1–46
Chapter 1 The Essence of HRM 1 3
Fombrun, C J, Tichy, N M and Devanna, M A (1984) Strategic Human Resource Management, New York, Wiley Fowler, A (1987) When chief
executives discover
HRM, Personnel Management, January, p 3 Guest, D E (1987) Human resource management and
industrial relations, Journal of Management Studies, 24 (5), pp 503–21 Guest, D E (1991) Personnel management: the end of orthodoxy, British
Journal of Industrial Relations, 29 (2), pp 149–76 Hendry, C and Pettigrew, A (1990) Human resource
management: an agenda for the 1990s, International Journal of Human Resource Management, 1 (1), pp 17–44 Keegan, A and Francis, H (2010)
Practitioner talk: the changing textscape of HRM and emergence of HR business partnership, The International Journal of Human Resource
Management, 21 (6), pp 873–98 Keenoy, T (1997) HRMism and the images of
re-presentation. Journal of Management Studies, 34 (5), pp 825–41 Labour Research Department (1989) HRM – human resource manipulation?
Labour Research, August, pp 8–9 Legge, K (1989) Human resource management:
a critical analysis, in (ed) J Storey, New Perspectives in Human Resource Management, London, Routledge, pp 19–40 Legge, K (1998) The morality
of HRM, in (eds)
C Mabey, D Skinner and T Clark, Experiencing Human Resource Management, Sage, London, pp 14–32 Legge, K (2005) Human Resource
Management –
Rhetorics and realities, Macmillan, Basingstoke Likert, R (1961) New Patterns of Management, New
York, Harper & Row Mabey, C, Salaman, G and Storey, J (1998) Human
resource management: A strategic introduction, 2nd edition, Oxford, Blackwell Martin-Alcázar, F, Romero-Fernandez, P M and
Sánchez-Gardey, G (2005) Strategic human resource management: integrating the universalistic, contingent, configurational and contextual
perspectives, International Journal of Human Resource Management, 16 (5), pp 633–59 Mayo, E (1933) The Human Problems of an
Noon, M (1992) HRM: a map, model or theory? in
(eds) P Blyton and P Turnbull, Reassessing Human Resource Management, London, Sage, pp 16–32 Osterby, B and Coster, C (1992) Human
resource development – a sticky label, Training and Development, April, pp 31–32 Paauwe, J (2004) HRM and Performance: Achieving long term
viability, Oxford, Oxford University Press Ramsay, H, Scholarios, D and Harley, B (2000)
Employees and high-performance work systems: testing inside the black box, British Journal of Industrial Relations, 38 (4), pp 501–31 Schuler, R
S (1992) Strategic HRM: linking people
with the needs of the business, Organizational Dynamics, 21, pp 19–32 Schuler, R S and Jackson, S E (2000) Strategic Human
Resource Management, Oxford, Blackwell Storey, J (1989) From personnel management to
human resource management, in (ed) J Storey, New Perspectives on Human Resource Management, London, Routledge, pp 1–18 Storey, J (1995)
Human resource management: still
marching on or marching out? in (ed) J Storey, Human Resource Management: A critical text, 1st edn, London, Routledge Storey, J (2001) Human
resource management today:
an assessment, in (ed) J Storey, Human Resource Management: A critical text, 2nd edn, London, Thompson Learning, pp 3–20 Storey, J (2007)
What is human resource
management? in (ed), J Storey, Human Resource Management: A critical text, 3rd edn, London, Thompson Learning, pp 3–19 Truss, C, Gratton, L,
Hope-Hailey, V, McGovern, P and Stiles, P (1997) Soft and hard models of human resource management: a re-appraisal, Journal of Management
Studies, 34 (1), pp 53–73 Walton, R E (1985) From control to commitment in the workplace, Harvard Business Review, March–April, pp 77–84
Watson, T J (2010) Critical social science, pragmatism
and the realities of HRM, The International Journal of Human Resource Management, 21 (6), pp 915–31 Willmott, H (1993) Strength is ignorance,
slavery
Industrial Civilisation, London, Macmillan McGregor, D (1960) The Human Side of Enterprise,
New York, McGraw-Hill
is freedom: managing culture in modern organizations, Journal of Management Studies, 30 (4), pp 515–52
14
02Strategic HRM
Key ConCePts and terms
ance management
Best fit Best practice Bundling Business
ance work system Human
model Business model innovation
antage Life cycle model
Competency framework Competitive
sed view Resource dependence
advantage Configuration Contingent
gic configuration Strategic fit
determinism High-commitment management
M Strategic management
High-involvement management
LearnIng outComes
On completing this chapter you should be able to define these key concepts. You should also understand:
● The conceptual basis of strategic HRM
● The fundamental characteristics of strategy
● How strategy is formulated
● The aims of strategic HRM
● The resource-based view and its implications
● The meaning of strategic fit
● The three HRM ‘perspectives’ of Delery and Doty
● The significance of bundling
● The significance of the concepts of ‘best practice’ and ‘best fit’
● The significant features of strategic HRM
● The content and formulation of HR strategies
15
Aims of SHRM
The fundamental aim of strategic HRM is to gener- ate organizational capability by ensuring that the organization has the
skilled, engaged, committed and well-motivated employees it needs to achieve sustained competitive advantage. Alvesson
(2009: 52) wrote that strategic HRM is about ‘how the employment relationships for all employees can be managed in
such a way as to contribute optimally to the organization’s goal achievement’.
SHRM has three main objectives: first to achieve integration – the vertical alignment of HR strategies with business
strategies and the horizontal integra- tion of HR strategies. The second objective is to provide a sense of direction in an
often turbulent environment so that the business needs of the organization and the individual and the collective needs of its
employees can be met by the develop- ment and implementation of coherent and practical HR policies and programmes.
The third objective
Chapter 2 Strategic HRM 19
is to contribute to the formulation of business strategy by drawing attention to ways in which the business can capitalize on the advantages
provided by the strengths of its human resources.
The complexity of the strategy formulation process
Critical evaluation of the concept of SHRM
The whole concept of SHRM is predicated on the belief that HR strategies should be integrated with corporate or business strategies. Vertical
integration (strategic fit between business and HR strategies) may be desirable but it is not easy to achieve for the following reasons.
Strategic choice
Strategic analysis
Strategic HRM
Part 201 The Practice of Human Resource Management issues that are likely to be relevant. Hendry and Pettigrew
(1990) suggest that there are limits to the extent to which rational HR strategies can be drawn up if the process of business
strategic planning is itself irrational.
The absence of articulated business strategies
If, because of its evolutionary nature, the business strategy has not been clearly articulated, this would add to the problems
of clarifying the business stra- tegic issues that human resource strategies should address.
The qualitative nature of HR issues
Business strategies tend, or at least aim, to be expressed in the common currency of figures and hard data on portfolio
management, growth, com- petitive position, market share, profitability, etc. HR strategies may deal with quantifiable
issues such as resourcing and skill acquisition but are equally likely to refer to qualitative factors such as engage- ment,
commitment, motivation, good employee relations and high employment standards. The rela- tionship between the pursuit
of policies in these areas and individual and organizational performance may be difficult to establish.
Integration with what?
The concept of SHRM implies that HR strategies must be totally integrated with corporate/business strategies in the sense
that they both flow from and contribute to such strategies. But as Brewster (2004) argued, HR strategy will be subjected to
considerable external pressure; for example, in Europe, legislation about involvement. These may mean that HR strat-
egies cannot be entirely governed by the corporate/ business strategy.
The question: ‘To what extent should HR strat- egy take into account the interests of all the stake- holders in the
organization, employees in general as well as owners and management?’ also needs to be answered.
Conclusions
The difficulties mentioned above are real, but they are frequently glossed over in rhetorical statements about the need for
integration. Too often the out- come is a platitudinous statement such as: ‘Our HR strategy is to develop a performance
culture’ or: ‘Our HR strategy is to ensure that the organization has the talented people it needs’. These are perfectly
laudable broad objectives but they need to be more specific about how the aims will be achieved and how they will support
the achievement of business goals.Matching HR and business strategies is a prob- lematic
process but this doesn’t mean
that the attempt to do so should be abandoned. HR strategists must make every effort to understand the business model of
their organization (ie a picture of an organization that explains how it achieves competitive advantage and makes money)
and the plans for business model innovation (the process followed by an organization to develop a new business model or
change an existing one). They have to take into account the difficulties mentioned above but they need to overcome these
by persistent efforts designed to obtain insight into the real issues facing the organ- ization, leading to plans for practical
interventions that address those issues.
resource- based
view
The resource-based view has had considerable influence on thinking about human resource man- agement. It provides a
justification for attaching importance to resourcing activities, especially those concerned with talent management. It can
also be used to enhance the value of the HR contribution in achieving competitive advantage. But it has the following
limitations:
● it may be difficult to find resources that satisfy all the criteria;
● external factors such as product market pressures are ignored;
● it provides only generalized guidance on what resources are suitable;
● different resource configurations can provide the same value for firms;
● as Priem and Butler (2001) pointed out, the theory is tautological because valuable resources and competitive advantage
are defined in the same terms.
Strategic fit
The concept of strategic fit stresses that when devel- oping HR strategies it is necessary to achieve congruence between
them and the organization’s business strategies within the context of its external and internal environment. This notion is
funda- mental to SHRM, as was stressed by Wright and Snell (1998: 758) who wrote: ‘The primary role of strategic HRM
should be to promote a fit with the demands of the competitive environment.’ In more detail, Schuler (1992: 18) stated
that:
Strategic human resource management is largely about integration and adaptation. Its concern is to ensure that: (1) human
resources (HR) management is fully integrated with the strategy and strategic needs of the firm (vertical fit); (2) HR policies
cohere both across policy areas and across hierarchies (horizontal fit); and (3) HR practices are adjusted, accepted and used by
line managers and employees as part of their everyday work.
Perspectives on SHRM
Taking into account the concepts of the resource- based view and strategic fit, Delery and Doty (1996: 802) contended that
‘organizations adopting a par- ticular strategy require HR practices that are different from those required by organizations
adopting dif- ferent strategies’ and that organizations with ‘greater congruence between their HR strategies and their
(business) strategies should enjoy superior per- formance’ (ibid: 803). They identified three HRM perspectives:
1 The universalistic perspective – some HR practices are better than others and all organizations should adopt these best
practices. There is a universal relationship between individual ‘best’ practices and firm performance. 2 The contingency
perspective – to be effective
an organization’s HR policies must be consistent with other aspects of the organization. The primary contingency factor is
the organization’s strategy. This
can be described as ‘vertical fit’. 3 The configurational perspective – this is a holistic approach that emphasizes the
importance of the pattern of HR practices and is concerned with how this pattern of independent variables is related to the
dependent variable of organizational performance.
This typology provided the basis for what has be- come the most commonly used classification of ap- proaches, which is
to adopt the terms ‘best practice’ and ‘best fit’ for the universalistic and contingency perspectives, and ‘bundling’ as the
third approach (Richardson and Thompson, 1999). This followed the classification made by Guest (1997) of fit as an ideal
set of practices, fit as con tingency and fit as bundles.
The best practice model
This model is based on the assumption that there is a set of best HRM practices that are universal in the sense that they are
best in any situation, and that adopting them will lead to superior organ- izational performance.
Chapter 2 Strategic HRM 23
A number of lists of ‘best practices’ have been produced, the most quoted being by Pfeffer (1998): ● employment security;
● selectivehiring;
1 Innovation – being the unique producer. 2 Quality – delivering high-quality goods and
services to customers. 3 Cost leadership – the planned result of
policies aimed at ‘managing away’ expense.
● self-managed teams;
● high compensation contingent on performance;
● training to provide a skilled and motivated workforce;
● reduction of status differentials;
● sharing information.
Human resource management’s effectiveness depends on its fit with the organization’s stage of development. As the organization grows and
develops, human resource management programmes, practices and procedures must change to meet its needs. Consistent with growth and
development models it can be suggested that human resource management develops through a series of stages as the organization becomes more
complex.
Best fit and competitive strategies Three strategies aimed at achieving competitive advantage were identified by Porter
(1985):
It was argued by Schuler and Jackson (1987) that to achieve the maximum effect it is necessary to match the role characteristics of people in
an organization with the preferred strategy.
Strategic configuration
Another approach to best fit is the proposition that organizations will be more effective if they adopt a policy of strategic configuration
(Delery and Doty, 1996). This means matching their strat- egy to one of the ideal types defined by theories such as those produced by Miles
and Snow (1978). They identified the following four types of organ- izations, classifying the first three types as ‘ideal’ organizations:
For example, the meta-analysis carried out by Schmidt and Hunter (1998) established conclu- sively that when selecting people, the best
levels of predictive validity are achieved by a combination of structured interviews and intelligence tests. But a decision on what sort of
structured interview should be adopted and whether or not to use intel- ligence tests would depend on the situation in which the decision was
made.
Bundling
‘Bundling’ is the development and implementation of several HR practices together so that they are interrelated and therefore complement
and rein- force each other. This is the process of horizontal integration, which is also referred to as the use of ‘complementarities’.
Richardson and Thompson (1999) suggested that a strategy’s success turns on combining vertical or external fit and horizontal or internal fit.
They concluded that a firm with bundles of associated HR practices should have a higher level of performance, provided it also achieves high
levels of fit with its competitive strategy.
Dyer and Reeves (1995: 656–57) noted that: ‘The logic in favour of bundling is straightforward... Since employee performance is a
function of both ability and motivation, it makes sense to have prac- tices aimed at enhancing both.’ Thus there are several ways in which
employees can acquire needed skills (such as careful selection and training) and multiple incentives to enhance motivation (different forms of
financial and non-financial rewards). Their study of various models listing HR practices that create a link between HRM and business
performance found that the activities appearing in most of the models were involvement, careful selection, exten- sive training and contingent
compensation.
The process of bundling HR strategies is an important aspect of the concept of strategic HRM. In a sense, SHRM is holistic: it is
concerned with the organization as a total system or entity and addresses what needs to be done across the organization as a whole. It is not
interested in isolated programmes and techniques, or in the ad hoc development of HR strategies and practices.
Bundling can take place in a number of ways. Competency frameworks (a set of definitions of the competencies that describe the types
of behaviour required for the successful performance of a role)
can be devised that have a variety of uses, for ex- ample to specify recruitment standards, provide a framework for structured interviews,
identify learning and development needs and indicate the standards of behaviour or performance required. Job evaluation can also be used to
clarify and define levels in an organization. Grade structures can define career ladders in terms of competency requirements (career family
structures) and thus provide the basis for learning and development programmes. Total reward approaches ‘bundle’ financial and
non-financial rewards together. High-performance systems are in effect based on the principle of bun- dling because they group a number of
HR practices together to produce synergy and thus increase their impact.
Critical evaluation of bundling Bundling sounds like a good idea. The research by MacDuffie (1995) and others has shown that
bun- dling can improve performance. But there are a number of inhibiting factors, namely:
● deciding which bundles are likely to be best – there is no evidence that one bundle is generally better than another;
● actually linking practices together – it is always easier to deal with one practice at a time;
● managing the interdependencies between different parts of a bundle;
● convincing top management and line managers that bundling will benefit the organization and them.
These can be overcome by dedicated HR profes- sionals, but it is hard work. What can be done, with difficulty, is to find ways in which
different HR practices can support one another, as in the examples given above.
HR strategies
HR strategies indicate what the organization wants to do about its human resource management policies and practices and how they should be
integrated with the business strategy and each other. They set out aspirations that are expressed as intentions,
Part 261 The Practice of Human Resource Management which are then converted into actions. As suggested by
Chesters (2011: 32), they should be regarded as a statement of the organization’s collective endeav- our. They are not just
a laundry list of everything that the organization would like to do.
HR strategies were described by Dyer and Reeves (1995: 656) as ‘internally consistent bundles of human resource
practices’. Richardson and Thompson (1999: 3) observed that:
A strategy, whether it is an HR strategy or any other kind of management strategy must have two key elements: there must be
strategic objectives (ie things the strategy is supposed to achieve), and there must be a plan of action (ie the means by which it is
proposed that the objectives will be met).
Purcell (2001: 72) made the point that: ‘Strategy in HR, like in other areas, is about continuity and change, about
appropriateness in the circumstances, but anticipating when the circumstances change. It is about taking strategic
decisions.’
The purpose of HR strategies is to articulate what an organization intends to do about its HRM policies and practices now
and in the longer term to ensure that they contribute to the achievement of business objectives. However, it is necessary to
bear in mind the dictum of Fombrun et al (1984) that business and managers should perform well in the present to succeed
in the future.
HR strategies may be defined formally as part of a strategic HRM process that leads to the devel- opment of overall or
specific strategies for imple- mentation by HR and, vitally, line managers. But an organization that has developed an HR
strategy will not be practising SHRM unless that HR strategy has strategic relevance to the organization’s success. As
Wright and McMahan (1999: 52) indicated, HRM can only be considered to be strategic if ‘it enables an organization to
achieve its goals’.
Pettigrew and Whipp (1991: 30) emphasized that strategy, ‘far from being a straightforward, rational phenomenon, is in
fact interpreted by managers according to their own frame of refer- ence, their particular motivations and information’.
They were writing about business strategy, but the same applies to HR strategy, which can appear through an emergent,
evolutionary and possibly unarticulated process influenced by the business strategy as it develops and changes in the
internal and external environment. But there are still strong
arguments for a systematic approach to identifying strategic directions that can provide a framework for decision-making
and action. The main argument for articulating HR strategies is that unless you know where you are going, you will not
know how to get there or when you have arrived.
Because all organizations are different, all HR strategies are different. There is no such thing as a standard strategy.
Research into HR strategy conducted by Armstrong and Long (1994) and Armstrong and Baron (2002) revealed many
vari- ations. Some strategies are simply very general declarations of intent. Others go into much more detail. The two
types of HR strategies are: 1) gen- eral strategies such as high-performance working; 2) specific strategies relating to the
different aspects of HRM such as learning and development and reward.
General HR strategies
General strategies describe the overall system or bundle of complementary HR practices that the organization proposes to
adopt or puts into effect in order to improve organizational performance. The three main approaches are summarized
below.
High-performance management High-performance management aims, through high- performance work
systems (bundles of practices that enhance employee performance and facilitate their engagement, motivation and skill
enhance- ment), to make an impact on the performance of the organization in such areas as productivity, quality, levels of
customer service, growth and profits. High- performance working practices include rigorous recruitment and selection
procedures, extensive and relevant training and management development activities, incentive pay systems and
performance management processes.
High-commitment management One of the defining characteristics of HRM is its emphasis on the
importance of enhancing mutual commitment (Walton, 1985). High-commitment management has been described by
Wood (1996) as: ‘A form of management which is aimed at eliciting a commitment so that behaviour is primarily self-
regulated rather than controlled by sanctions and
Chapter 2 Strategic HRM 27
pressures external to the individual, and relations within the organization are based on high levels of trust.’
High-involvement management As defined by Benson et al (2006: 519): ‘High- involvement work practices are a specific set
of human resource practices that focus on employee decision-making, power, access to information, training and incentives.’ Camps and
Luna-Arocas (2009: 1057) observed that: ‘High-involvement work practices aim to provide employees with the opportunity, skills and
motivation to contribute to organizational success in environments demanding greater levels of commitment and involvement.’ The term
‘high-involvement’ was used by Lawler (1986) to describe management systems based on commit- ment and involvement, as opposed to the
old bureaucratic model based on control.
Specific HR strategies
Specific HR strategies set out what the organization intends to do in areas such as:
capital management – obtaining, analysing and reporting on data that informs the direction of value-adding, people
● Human
management, strategic, investment and operational decisions.
● Knowledge management – creating, acquiring, capturing, sharing and using knowledge to enhance learning and performance.
● Alocal authority: as expressed by the chief executive of this borough council, its HR strategy is about ‘having a very strong focus on
the overall effectiveness of the organization, its direction and how it’s performing; there is commitment to, and belief in, and respect for
individuals, and I think that these are very important factors.’
● A
public utility: ‘The only HR strategy you really need is the tangible expression of values and the implementation of values... unless
you get the human resource values right you can forget all the rest’ (managing director).
● A
manufacturing company: ‘The HR strategy is to stimulate changes on a broad front aimed ultimately at achieving competitive
advantage through the efforts of our people. In an industry of fast followers, those who learn quickest will be the winners’ (HR director).
● Aretail stores group: ‘The biggest challenge will be to maintain [our] competitive advantage and to do that we need to maintain and
continue to attract very high calibre people. The key differentiator on anything any company does is fundamentally
● Corporate social responsibility – a commitment to managing the business ethically in order to make a positive impact on society and
the environment.
● Engagement – the development and implementation of policies designed to increase the level of employees’ engagement with their
work and the organization.
● Organizationdevelopment – the planning and implementation of programmes designed to enhance the effectiveness with which an
organization functions and responds to change.
● Resourcing – attracting and retaining high-quality people.
● Talent management – how the organization ensures that it has the talented people it needs to achieve success.
● Learning and development – providing an environment in which employees are encouraged to learn and develop.
● Reward – defining what the organization wants to do in the longer term to develop and implement reward policies, practices and
processes that will further the achievement of its business goals and meet the needs of its stakeholders.
Part 28 1 The Practice of Human Resource Management ● Employee relations –
defining the intentions
of the organization about what needs to be done and what needs to be changed in the ways in which the organization
manages its relationships with employees and their trade unions.
● Employee well-being – meeting the needs of employees for a healthy, safe and supportive work environment.
The following are some examples of specific HR strategies.
The Children’s Society
● Implement the rewards strategy of the society to support the corporate plan and secure the recruitment, retention and
motivation of staff to deliver its business objectives.
● Manage the development of the human resources information system to secure productivity improvements in
administrative processes.
● Introduce improved performance management processes for managers and staff of the society.
● Implement training and development that supports the business objectives of the society and improves the quality of
work with children and young people.
Diageo There are three broad strands to the Organization and People Strategy:
1 Reward and recognition: use recognition and reward programmes to stimulate outstanding team and individual
performance contributions. 2 Talent management: drive the attraction,
retention and professional growth of a deep pool of diverse, talented employees. 3 Organizational effectiveness: ensure
that the business adapts its organization to maximize employee contribution and deliver performance goals.
The strategy provides direction to the company’s talent, operational effectiveness and performance and reward agendas.
The company’s underlying thinking is that the people strategy is not for the human resource function to own but is the
respon- sibility of the whole organization, hence the title ‘Organization and People Strategy’.
A government agency The key components of the HR strategy are:
● Investing in people – improving the level of intellectual capital.
● Performance management – integrating the values contained in the HR strategy into performance management processes
and ensuring that reviews concentrate on how well people are performing those values.
● Job design – a key component concerned with how jobs are designed and how they relate to the whole business.
● The reward system – in developing reward strategies, taking into account that this is a very hard-driven business.
A local authority The focus is on the organization of excellence. The strategy is broken down into eight sections:
employee relations, recruitment and retention, train- ing, performance management, pay and benefits, health and safety,
absence management and equal opportunities.
Criteria for an effective HR strategy
An effective HR strategy is one that works in the sense that it achieves what it sets out to achieve. Its criteria are that it:
● will satisfy business needs;
● is founded on detailed analysis and study and is evidence-based – it is not just wishful thinking;
● can be turned into actionable programmes that anticipate implementation requirements and problems;
Chapter 2 Strategic HRM 29
● is coherent and integrated, being composed of components that fit with and support each other;
● takes account of the needs of line managers and employees generally as well as those of the organization and its other stakeholders.
Formulating HR strategy
Research conducted by Wright et al (2004) identi- fied two approaches that can be adopted by HR to strategy formulation: 1) the inside-out
approach begins with the status quo HR function (in terms of skills, processes, technologies, etc) and then attempts (with varying degrees of
success) to identify link- ages to the business (usually through focusing on ‘people issues’), making minor adjustments to HR activities along
the way; 2) the outside-in approach in which the starting point is the business and the customer, competitor and business issues it faces. The
HR strategy then derives directly from these challenges to add real value.
Wright et al commented that HR strategies are more likely to flow from business strategies domi- nated by product/market and
financial consider- ations. But there is still room for HR to make an essential contribution at the stage when business strategies are conceived,
for example by focusing on resource issues. This contribution may be more significant when strategy formulation is an emer- gent or
evolutionary process – HR strategic issues will then be dealt with as they arise during the course of formulating and implementing the corpo-
rate strategy.
Implementing HR strategy
As Gratton (2000: 30) commented: ‘There is no great strategy, only great execution.’ Strategies cannot be left as generalized aspirations or
abstractions. But getting strategies into action is not easy: intent does not always lead to action. Too often, strategists act like Charles
Dickens’s character Mr Pecksmith, who was compared by Dickens (Martin Chuzzlewit, Penguin Classics, 2004: 23) to ‘a direction-post
which is always telling the way to a place and never goes there.’ It is necessary to avoid saying, in effect: ‘We need to get from here to there
but we don’t care how.’ If, in Kanter’s (1984) phrase, HR strategies are to be action vehicles, they must be translated into HR policies that
provide guidelines on decision- making and HR practices that enable the strategy to work. These can be the basis for implementation
programmes with clearly stated objectives and deliverables.
To a large extent, HR strategies are implemented by line managers. As Purcell et al (2003: x) stressed, it is front-line managers
who ‘bring policies to life’. They pointed out that:
Implementing and enacting policies is the task of line managers. It is necessary first to involve line managers in the development of HR strategy
– bearing in mind that things done with l ine managers are much more likely to work than things done to l ine managers. Second, ensure that the
HR policies they are expected to put into practice are manageable with the resources available. Third, provide managers with the training,
supporting processes and on the spot guidance they need.
Part 1 The Practice of Human Resource Management 3 0
Key learning points: Strategic HRM
The conceptual basis of strategic HRM
Implications of the concept of strategic fit
Strategic HRM is the ‘interface between HRM and
The concept of strategic fit means developing HR strategic management’. It takes the notion of HRM as
strategies that are integrated with the business a strategic, integrated and coherent approach and
strategy and support its achievement (vertical develops that in line with the concept of strategic
integration or fit), and the use of an integrated management (Boxall, 1996).
approach to the development of HR practices.
The fundamental characteristics of
Best practice strategy
There is a set of best HRM practices that are universal
● Forward looking.
adopting them will lead to superior organizational performance. The notion of best practice incorrectly assumes that
there are universally effective HR
● Strategic fit – the need when developing
practices that can readily be transferred. HR strategies to achieve congruence between them and the organization’s
business strategies
Best fit within the context of its external and internal environment.
HR strategies should be congruent with the context and circumstances of the organization. More How strategy is
formulated
realistic than best practice, but there is a danger of mechanistically matching HR policies and practices An emergent
and flexible process of developing
with strategy. a sense of direction, making the best use of resources and ensuring strategic fit.
The significance of bundling
The aim of SHRM
The process of bundling HR strategies is an important aspect of the concept of SHRM, which is To generate
organizational capability by ensuring
concerned with the organization as a total system or that the organization has the skilled, engaged,
entity and addresses what needs to be done across committed and well-motivated employees it needs
the organ ization as a whole. to achieve sustained competitive advantage.
Implications of the resource-based view
HR strategies
(RBV)
HR strategies set out what the organization intends to do about its HRM policies and practices and how The RBV
emphasizes the importance of creating
they should be integrated with the business strategy firms that are ‘more intelligent and flexible than
and each other. The two types of HR strategies are: their competitors’ (Boxall, 1996) by hiring and
1) general strategies such as high-performance working; developing more talented staff and by extending
2) specific strategies relating to the different aspects the skills base.
of HRM such as learning and development and reward.
Chapter 2 Strategic HRM 3 1
Questions
1 What is strategic HRM? 2 What is strategic management? 3 What is strategy? 4 What is the resource-based view? 5 What is the
meaning and significance of
strategic fit?
6 What is the best practice model and to what
extent is it valid? 7 What is the best fit model and to what extent
is it valid? 8 What is bundling? 9 What are HR strategies? 10 What are the criteria for an effective
HR strategy?
References
Resource Management, Oxford, Oxford University Press, pp 48–67
Abell, D F (1993) Managing with Dual Strategies: all, P F and Purcell, J (2003) Strategy and Human
Mastering the present, pre-empting the future, New York, Free Pressurce Management, Basingstoke, Palgrave Macmillan Brewster, C
Alvesson, M (2009) Critical perspectives on strategic HRM, in (eds)4)J European
Storey, perspectives of human
P M Wright and D Ulrich, The Routledge Companion to Strategic Humanource management, Human Resource Management Review, 14
Resource Management, Abingdon, Routledge, pp 52–67 Armstrong, M and (4), pp 365–82 Camps, J and Luna-Arocas, R (2009) High-
Baron, A (2002) Strategic HRM: The route to improved business vement work practices and firm performance, International Journal of
performance, London, CIPD Armstrong, M and Long, P (1994) Thean Reality
Resource Management, 20 (5), pp 1056–77 Cappelli, P and
of ker-Hefter, A (1996) Distinctive human resources are firms’ core
Strategic HRM, London, IPM Baird, L and Meshoulam, I (1988)
petencies, Organizational Dynamics, Winter, pp 7–22 Chandler, A D
Managing two fits 2) Strategy and Structure, Boston,
of strategic human resource management, Academy of Management MA, MIT Press Chesters, J (2011) Creating strategic impact: it’s
Review, 13 (1), pp 116–28 Barney, J B (1991) Firm resources and not what, People Management, August, pp 32–35 Delery, J E and Doty, H
sustained 996) Modes of theorizing
competitive advantage, Journal of Management Studies, 17 (1), pp 99–120
ategic human resource management: tests of universality, contingency
Barney, J B (1995) Looking inside for competitive configurational performance predictions, Academy of Management
nal, 39
advantage, Academy of Management Executive, 9 (4), pp 49–61 Becker, B (4), pp 802–35 Dickens, C (1843) Martin Chuzzlewit, London,
E and Gerhart, S (1996) The impact of Chapman & Hall (Penguin Classics, 2004) Digman, L A
human resource management on organizational performance: progress 0) Sand
trategic Management –
prospects, Academy of Management Journal, 39 (4), pp 779–801 Benson, G
cepts, decisions, cases, Georgetown, Ontario, Irwin Dyer, L and Holder, G
S, Young, S M and Lawler, E E (2006) 988) Strategic human resource management and planning, in (ed) L Dyer,
an Resource Management: Evolving roles and responsibilities,
High involvement work practices and analysts’ forecasts of corporate
hington,
performance, Human Resource Management, 45 (4), pp 519–27 Boxall, P FDC, Bureau of National Affairs Dyer, L and Reeves, T (1995)
(1996) The strategic HRM debate and the an resource
rategies
resource-based view of the firm, Human Resource Management Journal , 6 and firm performance: what do we know and where do we need
(3), pp 59–75 Boxall, P F (2007) The goals of HRM, in (eds) go?, The International Journal of Human Resource Management, 6 (3),
p 656–70
P Boxall, J Purcell and P Wright, The Oxford Handbook of Human
Part 321 The Practice of Human Resource Management Faulkner, D and Johnson, G (1992) The Challenge of
Strategic Management, London, Kogan Page Fombrun, C J, Tichy, N M and Devanna, M A (1984) Strategic Human Resource
Management, New York, Wiley Grant, R M (1991) The resource-based theory of
competitive advantage: implications for strategy formulation, California Management Review, 33 (3), pp 114–35 Gratton, L A
(2000) Real step change, People
Management, 16 March, pp 27–30 Guest, D E (1991) Personnel management: the end of orthodoxy, British Journal of Industrial
Relations, 29 (2), pp 149–76 Guest, D E (1997) Human resource management
and performance; a review of the research agenda, The International Journal of Human Resource Management, 8 (3), pp 263–76
Heller, R (1972) The Naked Manager, London,
Barrie & Jenkins Hendry, C and Pettigrew, A (1990) Human resource
management: an agenda for the 1990s, International Journal of Human Resource Management, 1 (1), pp 17–44 Hunt, S (1991)
The resource-advantage theory of competition, Journal of Management Inquiry, 4 (4), pp 317–22 Johnson, G, Scholes, K and
Whittington, R (2005)
Explaining Corporate Strategy, 7th edn, Harlow, FT Prentice Hall Kanter, R M (1984) The Change Masters, London,
Allen & Unwin Lawler, E E (1986) High Involvement Management,
San Francisco, CA, Jossey-Bass Mabey, C, Salaman, G and Storey, J (1998) Human Resource Management: A strategic
introduction, 2nd edn, Oxford, Blackwell MacDuffie, J P (1995) Human resource bundles and manufacturing performance,
Industrial Relations Review, 48 (2), pp 199–221 Miles, R E and Snow, C C (1978) Organizational Strategy: Structure and
process, New York, McGraw-Hill Mintzberg, H (1987) Crafting strategy, Harvard
Business Review, July–August, pp 66–74 Paauwe, J (2004) HRM and Performance: Achieving
long-term viability, Oxford, Oxford University Press Penrose, E (1959) The Theory of the Growth of the
Firm, Oxford, Blackwell Pettigrew, A and Whipp, R (1991) Managing Change
for Strategic Success, Oxford, Blackwell Pfeffer, J (1998) The Human Equation, Boston, MA,
Harvard Business School Press
Pfeffer, J and Davis-Blake, A (1992) Understanding
organizational wage structures: a resource dependence approach, Academy of Management Journal, 30, pp 437–55 Porter, M E
(1985) Competitive Advantage: Creating
and sustaining superior performance, New York, The Free Press Priem, R L and Butler, J E (2001) Is the resource- based theory
a useful perspective for strategic management research?, Academy of Management Review, 26 (1), pp 22–40 Purcell, J (1999)
Best practice or best fit: chimera or
cul-de-sac, Human Resource Management Journal, 9 (3), pp 26–41 Purcell, J (2001) The meaning of strategy in human
resource management, in (ed) J Storey, Human Resource Management: A critical text, 2nd edn, London, Thompson Learning, pp
59–77 Purcell, J, Kinnie, K, Hutchinson, R, Rayton, B and
Swart, J (2003) People and Performance: How people management impacts on organizational performance, London, CIPD
Quinn, J B (1980) Strategies for Change: Logical
incrementalism, Georgetown, Ontario, Irwin Richardson, R and Thompson, M (1999) The
Impact of People Management Practices on Business Performance: A literature review, London, IPD Schmidt, F L and Hunter, J
E (1998) The validity and
utility of selection methods in personnel psychology: practical and theoretical implications of 85 years of research findings,
Psychological Bulletin, 124 (2), pp 262–74 Schuler, R S (1992) Strategic human resource
management: linking people with the strategic needs of the business, Organizational Dynamics, 21 (1), pp 18–32 Schuler, R S
and Jackson, S E (1987) Linking
competitive strategies with human resource management practices, Academy of Management Executive, 9 (3), pp 207–19
Schuler, R S and Jackson, S E (2007) Strategic Human
Resource Management, 2nd edn, Oxford, Blackwell Sparrow, P, Hesketh, A, Hird, M and Cooper, C
(2010) Introduction: Performance-led HR, in (eds) P Sparrow, A Hesketh, M Hird and C Cooper, Leading HR, Basingstoke,
Palgrave Macmillan, pp 1–22 Stavrou, E T, Brewster, C and Charalambousa, C
(2010) Human resource management and firm performance in Europe through the lens of business systems: best fit, best practice
or both?,
Chapter 2 Strategic HRM 3 3
The International Journal of Human Resource Management, 21 (7), pp 933–62 Thompson, A A and Strickland, A J (1996) Strategic
Management, Concepts and Cases, 9th edn, Chicago, IL, Irwin Truss, C (1999) Soft and hard models of HRM, in
(eds) L Gratton, V H Hailey, P Stiles and C Truss, Strategic Human Resource Management, Oxford, Oxford University Press Tyson, S (1997)
Human resource strategy: a process
for managing the contribution of HRM to organizational performance, International Journal of Human Resource Management, 8 (3), pp 277–90
Ulrich, D (1998) A new mandate for human
resources, Harvard Business Review, January–February, pp 124–34 Walton, R E (1985) From control to commitment in the workplace, Harvard
Business Review, March–April, pp 77–84 Wernerfelt, B (1984) A resource-based view of the firm, Strategic Management Journal, 5 (2), pp 171–80
Wood, S (1996) High commitment management
and organization in the UK, The International Journal of Human Resource Management, 7 (1), pp 41–58 Wright, P M and McMahan, G C (1992)
Theoretical
perspectives for SHRM, Journal of Management, 18 (2), pp 295–320 Wright, P M and McMahan, G C (1999) Theoretical
perspectives for human resource management, in (eds) R S Schulker and S E Jackson, Strategic Human Resource Management, Blackwell,
Oxford, pp 49–72 Wright, P M and Snell, S A (1998) Towards a
unifying framework for exploring fit and flexibility in strategic human resource management, Academy of Management Review, 23 (4), pp 756–72
Wright, P M, Snell, S A and Jacobsen, H H (2004)
Current approaches to HR strategies: inside-out versus outside-in, Human Resource Planning, 27 (4), pp 36–46
34
03Delivering HRM –
On completing this chapter you should be able to define these key concepts. You should also understand:
● The framework for delivering HRM
● What the concept of HR architecture means
● What an HR system looks like
● The HR role of line managers
● The role and organization of the HR function
● The nature of an HR delivery model
● The role of HR professionals
35
HR architecture
HR architecture consists of the HR systems, proc- esses and structure, and employee behaviours. It is a comprehensive
representation of all that is involved in HRM, not simply the structure of the HR function. As explained by Becker et al
(2001: 12): ‘We use the term HR architecture to broadly describe the continuum from the HR professionals within the HR
function, to the system of HR related policies and practices, through the competencies, motivation and associated
behaviours of the firm’s employees.’
It was noted by Hird et al ( 2010: 25) that: ‘this architecture is seen as a unique combination of the HR function’s structure
and delivery model, the HR practices and system, and the strategic employee behaviours that these create’.
Purcell (1999: 38) suggested that the focus should be on ‘appropriate HR architecture and the processes that contribute to
organizational per- formance’. Becker and Huselid (2006: 899) stated that: ‘It is the fit between the HR architecture and
the strategic capabilities and business processes that implement strategy that is the basis of HR’s con- tribution to
competitive advantage.’
The HR system
The HR system contains the interrelated and jointly supportive HR activities and practices which together enable HRM
goals to be achieved. Becker and Huselid (1998: 95) observed that: ‘The HRM system is first and foremost a vehicle to
implement the firm’s strategy.’ Later (2006) they argued that it is the HR system that is the key HR asset. Boselie et al
(2005: 73) pointed out that in its traditional form HRM can be viewed as ‘a collection of multiple discrete practices with
no explicit or discernible link between them. The more strategically minded system approach views HRM as an integrated
and coherent bundle of mutually reinforcing practices.’
As illustrated in Figure 3.1, an HRM system brings together HR philosophies that describe the overarching values and
guiding principles adopted in managing people. Taking account of the internal and external environments in which the
organiza- tion operates, the system incorporates:
● HR strategies, which define the direction in which HRM intends to take each of its main areas of activity.
● HR policies, which set out what HRM is there to do and provide guidelines defining how specific aspects of HR should
be applied and implemented.
● HR practices, which consist of the HRM activities involved in managing and developing people and in managing the
employment relationship.
Chapter 3 Delivering HRM – Systems and Roles 37
ment development
ment development
nce management
nce management
idual learning
idual learning
Job evaluation/ pay surveys
Development
Job evaluation/ pay surveys
Job evaluation/ pay surveys
Reward management
Reward management
Reward management
Knowledge management
Organization
Job/role design
Design Employee benefits
Employee benefits
Employee benefits
election Merit pay
Merit pay
Merit pay
ment
ety Communication
cing Communication
Communication
Communication
Employment relationship
Employment relationship
Employment relationship
Employment relationship
Employee relations
Employee relations
Employee relations
Employee relations
Employee voice
Employee voice
Employee voice
Employee voice
Industrial relations
Industrial relations
Industrial relations
Industrial relations
Human capital management
External environment
e-HRM
Human Resource Manage
Engagement
HR philosophies
Part 401 The Practice of Human Resource Management Critical evaluation of the three-legged
stool model
Although this model has attracted a great deal of attention, the 2007 CIPD survey found that only 18 per cent of
respondents had implemented all three ‘legs’, although 47 per cent had implemented one or two elements, with business
partners being the most common (29 per cent).
Moreover, there are difficulties with the notion. Gratton (2003: 18) pointed out that: ‘this fragmen- tation of the HR
function is causing all sorts of unintended problems. Senior managers look at the fragments and are not clear how the
function as a whole adds value’. And as Reilly (2007) com- mented, respondents to the CIPD survey mentioned other
problems in introducing the new model. These included difficulties in defining roles and account- abilities, especially
those of business partners, who risk being ‘hung, drawn and quartered by all sides’, according to one HR director. At the
same time, the segmented nature of the structure gives rise to ‘boundary management’ difficulties, for example when it
comes to separating out transactional tasks from the work of centres of expertise. The model can also hamper
communication between those engaged in different HR activities. Other impediments were technological failure,
inadequate resources in HR and skills gaps.
Hird et al ( 2010: 31) drew attention to the fol- lowing issues:
● An ‘off the shelf’ introduction of a new HR structure without careful thought as to how the model fits the organization’s
requirements.
● A lack of care in dealing with the boundary issues between elements of the HR structure which can easily be fragmented.
● A lack of attention to the new skill sets needed by business partners to ensure they can play at the strategic level.
● A lack of understanding on the part of managers as to the value of a new HR structure.
● A lack of skill on the part of line managers to make the required shift to greater responsibility for people issues implied
by the new model.
● What is referred to as the ‘polo’ problem: a lack of provision of the execution of HR services as the business partner
shifts to strategic work, and the centre of expertise to an advisory role.
However, some benefits were reported by respond- ents to the CIPD (2007) survey. Centres of expertise provide higher
quality advice. Business partners exercise better business focus, line managers are more engaged, and the profile of HR is
raised. Also, the introduction of shared services results in im- proved customer service and allows other parts of HR to
spend more time on value-adding activities. It can also cut costs by reducing the number of HR staff required.
Dealing with the issues The following approach incorporating recommen- dations by Holley (2009: 8–9) can
be used to deal with HR structuring issues:
● ensure that top management are behind the changes;
● involve line managers and the whole of HR in planning and implementation;
● work out exactly who will do what in each area – HR and the line – avoid overlaps and ambiguities, taking particular
care in defining the respective responsibilities of business partners and members of shared services centres and centres of
expertise;
● ensure that the right balance is achieved between HR strategic (transformational) activities and HR service delivery
(transactional) activities;
● ensure that the right people are in the right roles (don’t simply switch job titles);
● let everyone know about the changes – why they are taking place, how they will work and any differences in
responsibilities;
● definethe skills required by both HR staff and line managers and help in their development;
● planthe implementation, phasing it as required to avoid any disruption;
● monitor implementation to ensure that it is going according to plan.
Chapter 3 Delivering HRM – Systems and Roles 41
R services are. HR has to be responsive – clear about what it is there
nd what services it offers, and easy to contact.
Evaluating the HR function The IRS 2012 survey of HR roles and responsi- bilities
blished that the main measures used by respondents to assess HR
It is necessary to evaluate the contribution of the HR function totiveness were:
establish
how effective it is at both the strategic level and in terms of service
absence management data – 79 per cent;
delivery and support. The prime criteria for evaluating the work of the
function are its ability to operate strategic- ally and its capacitystaff turnover data – 75 per cent;
to deliver
the levels of services required. exit interview feedback – 66 per cent;
Research conducted by the Institute for Employ- ment Studies
discipline and grievance data – 60 per cent;
(Hirsh, 2008) discovered that the factors that correlated most strongly with
line managers’ and employees’ satisfaction with HR were: results of employee surveys – 60 per cent;
● HR giving good advice to employees; number of tribunal cases – 50 per cent;
● beingwell supported when dealing with difficult people or benchmarking – 47 per cent;
situations; spending against budget – 46 per cent;
● HR getting the basics right.
time-to-fill vacancies data – 34 per cent;
But the results showed that HR could do better in each of these areas. Thehire – 30 per cent.
cost per
conclusions reached were
that HR must find out what its customers need and what their experiences
es. Tyson and Fell (1986: 7) believed that they were ‘specialists
ng the employment relationship’. The competencies required are
ng. The various roles are described below.
The roles of HR professionals
The roles of HR professionals vary widely accord- ing to the extent eneral
to role
which they are generalist (eg HR director, HR manager, HR officer), or
Profession Map (2013: 9) stated that the HR profession is ‘an
specialist (eg head of learning and development, head of talent
usiness discipline with a people and organization specialism’.
management, head of reward), the level at which they work (strategic,
conducted by the CIPD in 2010 emphasized the need for HR
executive or administrative) the needs of the organization, the view of
als to be ‘insight-led’. Sears (2011: 35) reported that the
senior management about their contribution, the context within which they
s ‘found that
work and their own capabilities. They can act as strategists, business
Reorganizing HR in the Greater Manchester Fire Service
on the organizational climate and leadership – a series of
Following major changes in operations, it was decided by senior
s for leaders using organizational climate tools such as
management that the role of the fire service’s HR function was to
ee feedback and the Belbin Team Inventory;
provide high-level, strategic advice from advisers who could work
closely with them, backed up by specialists. In other words, a business
itment process was also modernized by putting together a
partner model. So the brigade began to recruit business partners – building a microsite and developing an applicant
g team,
placing a special emphasis on those with expertise in employee ystem;
rela-
tions – and specialists to cover areas such as occupational health,
nize training;
equality and diversity, reward, pensions and re- cruitment. Finding
candidates with sufficient gravitas to act as top-level strategic advisers
mental competency framework was put in place to ensure
was difficult. There weren’t many true business partners about. A lot of
would be able to move easily within the organization rather
people calling themselves business partners were really HR advisers.
ming bogged down in specialist areas.
When the team was in place the major developments were:
● to introduce a more transparent promotions process;