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Human resource management for IBA summary
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This is the complete summary for HR iba Tilburg University. I summarised the lectures and the textbook.
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Human Resource Management (HRM) SummarySession 1: The history of research on people in workplaces
An employment relationship is a reciprocal relationship between those who perform work
or services (employees, as well as those self-employed), and those who offer employment
(employers) in the aim of realizing organizational goals.
The Origins and Science of Today´s HRM
From early industrialization to the digital era, and the role of scientific research. An
example: Philips
• Philips began in 1891, when Mr. Philips started making lightbulbs in Eindhoven
• After its foundation in 1891, things went well for Philips. The company
diversified from lightbulbs to all kinds of electronics, like household equipment,
radio and television, and later on video and DVD players
• At its peak, the multinational organization employed over 400,000 employees
over the entire world
• Its original development in Eindhoven was important for the development of
Brabant
• Philips currently focuses mostly on healthcare technology, employing around
70,000 people across the world
Modern workplaces developed more than 100 years ago. Before, people worked in small
workplaces with a boss and only a few workers. Due to industrialization, mass production
led to larger and larger organizations.
• Due to this, people moved from the country to the city (which cities weren’t
prepared for)
• There was no social security
• And there was a lot of work uncertainty
• As a consequence, working conditions were sometimes dangerous and living
conditions were miserable
In the early 20th century, more attention was paid to the effects of industrialization on
large groups of employees, as some people cared about how the poor were living etc.
Philips Village in Eindhoven: a community to improve the health and well-being of
workers. The community wasn’t only housing, it also included social clubs, sport clubs,
bath house and shops. This led to loyalty
• Oldest pension funds
In other industries, employers cared less about employee well-being due to fierce
competition, like the Dutch railroads. To reduce the overall railroad costs, they decreased
the employee wages, which resulted in harsh working conditions (free time scarce,
workers had off one Sunday every two months).
• Fines were used to discipline workers, like if a train was late for example
In 1903, Unions developed and came out of secrecy. Before, they were only allowed to
operate in secret because unions were NOT allowed. So, a very big railroad strike broke
out in the Netherlands, and employers all over panicked and decided to meet the
,employees demands and accept unions. This led to the rise of industrial relations, which
is the power, negotiations and organizations of workers, employers and the government.
Industrial relations are still one of the key tasks today.
Scientific management was the beginning of the conveyer belts in factories.
• Focus was on optimizing production processes
• Elton Mayo carried out experiments to optimize production processes, like to see
the optimal rest time etc.
• What they found: the people in the experimental group always outperformed the
control group, as they really tried to do their best for the company. Socially
employees perform better than when an economic incentive is in play à
Hawthorne experiments
• Human relations school opened: focus on job satisfaction, because happy workers
are more productive workers
• 1970´s, the growth curve of the economy flattened, and after the oil crash, many
companies started to offshore their business into countries in the world that were
cheaper
Personnel function was then said to be a “cost center”, rather than a profit center. So,
personnel function (HRM) developed itself to management positions for the people-
factor. It was about the added value associated with focusing on people. Like learning
how to motivate employees etc. The name Human Resources was designed.
Breakthrough: Huselid (1995)
INVESTING IN PEOPLE MEANS MAKING MONEY!
• Organizations that apply HRM practices performed better financially
• And, organizations that applied the whole list of HRM practices, they gained 20%
more stock value. (There´s no difference between applying 20% or 60% of the
HRM list, but there is a difference if you apply the WHOLE list).
This Led to Research about “Why do MORE HR practices lead to Better
Performance of Organizations?
,** Applying whole HR list = more productive organization
Meta-Analysis: is a desk research project in which researchers collect all the published
and unpublished research on one research question, and then calculate the average result.
• A statistical procedure for examining the overall strength of findings over a
number of studies
BUT, only few organizations use the full list of HR practices. So why? Why don’t all
organizations use all those effective HR practices???
• It is not so simple to copy the list of best practices
• For example, small organizations cannot bear the cost of the HR practices
• Also, findings show that the HR practices work best in industrial organizations,
rather than service organizations
• So, depending on the type of organization, it depends how effective the HR
practices will be
You need to understand the organization before you can implement HR practices.
SECOND Problem: HRM is a social phenomenon with many stakeholders who value
different outcomes
• Some stakeholders may oppose to some HR practices as they are legally not
allowed or not accepted in some cultures
HRM is a social phenomenon, as well as a business/economic phenomenon.
Stakeholders:
• Shareholders: have a financial interest
• Government
• Labor unions
• Environmental
To sum up why Organizations don’t ALL use ALL those effective HR practices
• Because each organization has its own characteristics, needs and possibilities
• Because different stakeholders have different interests in HRM
• Because some practices are unethical
• And last problem: The Research-Practice Gap (the knowledge of the HRM
practices doesn’t reach all organizations, as reading publications is not a fun read)
Rather than knowing it all, it is more effective to just search for evidence when you need
it: EVIDENCE BASED HRM
EBHRM: A decision-making method for practitioners to find effective interventions to
manage ‘human resources’ by taking the best research evidence into account together
with understanding the needs and requirements of stakeholders while upholding ethical
standards for employees
, Equifinality
Not one solution fits all; but equally effective solutions that lead to the same outcome in
different ways
Session 2: Evidence-Based HRM
Bounded Rationality
Why managing people in workplaces is difficult?
Bounded rationality is a human decision-making process in which we attempt to satisfice,
rather than optimize. In other words, we seek a decision that will be good enough, rather
than the best possible decision.
• Bounded rationality: lack of complete insight in a problem and its causes
• Bounded rationality hinders decision making, because you have to make decisions
without having all of the ingredients
• Bounded rationality in organizations is a fact, but there are strategies to add more
rationality to decision making
• Unfortunately, decision makers neglect these strategies or are unaware of them
The Problem of a Quick Fix
Quick fix = Immediate action on a problem, often driven by the need to be seen to be
doing something. It is NOT based on an assessment of a problem.
• Influenced by fads and fashion, limited understanding of the problem, or
inaccurate knowledge (outdated knowledge)
• Motivated by organizational politics and self-interest.
• Quick fixes are not carefully planned and not evaluated for their effectiveness,
they are often followed by another quick fix, as results don´t come as fast as
hoped, so they need another quick fix to solve the first quick fix.
• Quick fixes harm organizations and employees!
• Quick fixes become subject to organizational amnesia as they are not evaluated,
so in a few years nobody remembers what has been done before. SO, someone
else can make the same bad decision again
A SLOWER Fix using Evidence in Decision-Making
• Evidence-Based Medicine à for example: patients expect that doctors use the
latest knowledge to help them treat their illness, and that they do not use old
knowledge
• However, same as managers, the medical staff often have little time to keep up
with the latest research
• Even if they would keep up with the research, chances are that they will be
overwhelmed with the amount of information produced in labs.
• Slower fix = more sustainable solution
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