SHORT Summary Strategic Human Resource Management 2e - Strategic Human Resource Management (MAN-BCU008A)
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Radboud Universiteit Nijmegen (RU)
Bachelor of Business Administration
Strategic Human Resource Management
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Summary Strategic Human Resource Management: A
Balanced Approach
Paul Boselie - 2e druk
Inhoudsopgave
H1 – Introduction: SHRM in the Twenty-frst entury..........................................................2
H2 - SHRM and ontext...................................................................................................... 4
H3 - HRM and Performance: Adding Value through People.................................................8
H4 – Human Resource Metrics and Measurement.............................................................10
H5 - Mutual Gains?............................................................................................................ 13
H6 – High-performance Work Systems (HPWS).................................................................16
H7 – Selective Recruitment and Selection.........................................................................18
H8 – Performance Management........................................................................................19
H9 – ompensation........................................................................................................... 22
H10 – Talent Management................................................................................................ 25
H11 - Employee participation............................................................................................ 27
H12 – Human Resource Roles........................................................................................... 29
H13 – International Human Resource Management..........................................................32
H14 – Implementation Strategy........................................................................................33
1
,H1 – Introduction: SHRM in the Twenty-frst Century
Employees are generally considered the organization’s most valuable assets. In times of
crisis the employee emphasis is often downgraded through downsizing and mass layofs.
Employee matter and that the management of employees – HRM – is a potential source
for achieving organizational goals.
SHRM is 25 years old with a importance for organizations operating in a dynamic and
continuous changing environment. hanges afects employees. Successful change highly
depends on changing people in their attitudes, behaviour and cognition. This ask for
flexibility and good people management.
5 I’s Schnabell:
1. Internationalization
2. Individualization
3. Informalization = less hierarchical levels
4. Informatitization = I T / technology
5. Intensifcation
The new economy
In the 1990s there was a shift from a manufacturing and production economy into a
service sector asset-based economy; the new economy. The old economy was
characterized by physical tasks, job design, mass production, low-skills workers and high
degree of unionization. The new economy is dominated by information technology and
fnancial institutions. The assets are embedded in reputation, brands and knowledge of
employees.
Organizational change and competitive advantage
ompetitive advantage tells us something about how well the organization is doing in
comparison to others in the same branch or industry. ompetitive advantage might be
reflected in better fnancial performance (bigger sales, higher proft) and non-fnancial
performance, including the organization’s reputation in relation to customers and
potential employees.
The changing role of work in modern organizations.
In the new economy the computer become an essential tool and technology created
alternative work designs (work at home). The ageing population also afecting work in
modern organizations.
MHRM, IHRM and SHRM
SHRM can be a key success in the process of organizational change. HRM involves
management decisions related to policies and practices that together shape the
employment relationship and are aimed at achieving individual, organization and societal
goals (diferent stakeholders and the goals linked to them). Three sub-felds:
1. MRHM: micro HRM, covers the sub-functions of HR policy and practices. Focus on
the impact of single HR practices on employee attitudes and behaviours.
Organizational behaviour and psychology.
2. IHRM: international HRM, is concerned with HRM in multinationals and across
borders. Focus on issues as the transferability of HR practices across borders,
management of expatriates and impact of diferent country contexts.
3. SHRM: strategic HRM, focuses on issues linking HRM to the business strategy,
design HPWS and adding value through good people management in an attempt
to gain sustained competitive advantage.
SHRM is focuses on institutionalized contexts using EU cases to show that HRM is
embedded in diferent institutional contexts, that efective people management includes
2
,managing multiple stakeholder and that unique HR approaches can be developed by
means of balanced perspective. Stakeholders:
Internal: employees, line managers, top management and employee
representatives (works council)
External: shareholders, fnanciers, trade unions, government and other interests
groups.
Three perspectives
The multidimensional strategic HR model in this book includes the following perspectives:
1. Multi-actor perspective: multiple stakeholders (including employees, management,
trade unions, government, shareholders etc.)
2. Broad societal view: with an emphasis on diferent institutional contexts (level of
branches, industry, regions and countries)
3. Multi-level perspective: including individual employee and the strategic
organizational perspective.
The multidimensional strategic HRM model is inspired by the EU approach to HRM and
industrial relations(IR).
Paauwe argues that:
HR are something more than just resources
HRM is not concerned solely with fnancial performance
HRM focuses on the exchange relationship between employee and organization
The shaping of the employment relationship takes place in an era of continuous
tension between the added value and moral values.
HRM focuses on the exchange relationship between the employee and the organization,
with regard to eforts of the worker and rewards given by the employer. The employment
relationship contains diferent contract types:
1. Legal contract: written down in the contract and describes the rights and
obligations of both the employee and employer.
2. Economic or transactional contract: the employee and the employer determine
how much efort the employee puts into the job reflected in the number of working
days and how much the employee will pay.
3. Psychological contract: all things that are not written down but are expected form
both actors (promotions).
4. Sociological contract: related to the relationships and networks employees have
within the organization (relationships between employees or in the team).
Tensions
HRM operates in an area of continuous tension between added value (economic side) and
moral values (feelings, norms and values of employees). Legge discuss the distinction
between:
Hard HRM: focuses on the economics
Soft HRM: focus on the human side of organizing
Boxall and Purcell’s comments on SHRM are:
HRM covers all workforce groups: core employees, peripheral and contingent
workers
HRM involves line and specialist managers, and is not solely aimed at employees
HRM is all about managing work and people, collectively and individually
HRM is embedded in industries and societies(countries and continents)
A distinction is made between the Anglo-Saxon or Anglo-American models and the
Rhineland models. The Anglo-Saxon approaches in IR and HRM (USA) focus on creating
shareholder value in terms of profts with no attention to other stakeholders. The
Rhineland models (EU) acknowledge multiple stakeholders and their interests explicitly
taking into account employee interests in terms of well-being and societal interests.
Polder model = the Netherlands, discuss about everything, communication with all
stakeholders.
3
,The balanced approach
In the strategic balance model, organizational success can only be achieved when
fnancial performance and societal performance (ofer employment security) of an
organization are above average in the particular population in which the organization is
operating.
The balanced approach in HRM includes the goals of individual employees, organizational
goals and society goals.
Framing HRM
Bolman and Deal presents four diferent perspectives for studying organizations:
1. Structural frame: rules, roles, goals, policies, technology and environment
2. HR frame: focus upon the employment relationship (needs, skills and
relationships)
3. Political frame: issues of power.
4. Symbolic frame: builds on meaning and identity (culture).
Management & employability paradox = employers scared to invest in employees,
because they are more attractive for competitors. But invest in employees means on the
other side that they are loyal to the company.
HR practices can ft together and HRM can ft with other factors including the strategy
and the production system. A misft represents two thing that oppose each other. The
more HR ft the better.
Enactment = Scanning & analysing the context of the organization.
Best practice versus best ft
The debate linked to issue of ft is known for its two competing schools:
The best ft school: argues that HRM is more efective when it is aligned with its
internal and external context.
The best practice school: advocates a universalistic perspective: it argues that all
frms will be better of if they identify and adopt best practices in the way the
manage people. Example is Pfefer’s seven HR practices for building profts by
putting people frst (apply all these practices claims success for all companies):
1. Selective recruitment and selection: select the best person for the job and
organization
2. Extensive training
3. Performance-related pay (PRP): linked to the profts of an organization, linked
to individual and team performance and the use of yearly bonuses for the best-
performing employees.
4. Teamworking
5. Information sharing and communication
6. Reduction of status diferences: avoiding status symbols linked to hierarchical
positions.
7. Employment security: insurance for unemployment
The best-practice proposition (one site fts all HRM) is criticized for its lack of attention to
contextual factors, including national diferences with regard to labour legislation, sector
diferences, nature of the business, size of the frm and diferent employee groups. It is a
simplicity and clarity model.
The best-ft proposition (HRM’s success depends on the alignment of it with of
organizational context) success can be achieved through the ft between HRM and its
context. ontext includes the:
4
, Internal context: organization’s unique history, the administrative heritage and
organization culture.
External context: the outside mechanism (market and institutional mechanism)
that afect the organization or even interact with it. It puts pressure on an
organization and forces it to adapt its strategy and decision making.
o Market mechanisms: include the degree of competition between
organizations in terms of products, services, technology and people. PMT:
product, markets and technology.
o Institutional mechanisms: represents several pressures that stem form
legislation, protocols and procedures, routines, habits, norms and values
and social-cultural issues. S L: social, cultural and legal.
Page 25, fgure 2.2: coercive (law & legislation), normative (norms)
and mimetic (trends)
General environment (all market and institutional mechanism that
afect all organizations in a country) and population environment
(same business activities and headquarters based in same
country/continent)
The business model and strategy
The business model is the way an organization manages its business to make money. An
optimal ft between HRM and the context can positively afect the business model and the
organization’s success. A better ft can be achieved through strategic decision making.
Strategy is generally defned by an organization’s intention to achieve certain goals
through planned alignment (or ft) between the organization and its environment. An
optimal strategy includes a ft between HRM and the context. Alignment and ft refer to
the principle of matching elements, which in this case is the organization and its context.
Vision mission goals strategy
SHRM is focused on the alignment or ft between the strategy of an organization and the
HR strategy of that organization. The overall strategy is also called the business strategy,
which covering the various functional silos of the business: marketing, operations, fnance
and HR. Business strategy is the system of the frm’s important choices, a system that
could be well integrated around common concerns or which might have various links and
foul-ups.
Four types of ft:
1. Strategic ft (vertical ft)
Refers to that part of the best-ft school that assumes a necessary alignment between the
overall business strategy and the HR strategy. Strategic fts has diferent faces between
strategy and HRM:
Administrative linkage: lowest level of integration. No linkage between business
and HR strategy.
One-way linkage: where the HR strategy is derived from the overall business
strategy.
Two-way linkage: represents a potential model in which HR experts determine
certain external development that are put on the table of the board of directors.
Integrative linkage: represents full alignment of HRM an strategy. HR director has
a seat at the high table.
2. Internal ft (horizontal ft)
Reflects the link between individual HR practices and is thought to be crucial for gaining
success as well as the strategic ft. An HR system is defned as a coherent and consistent
set of HR practices that combined together results in higher organizational performance
than the sum of the efects of using each HR practices separately.
3. Organizational ft
Refers to the necessary ft between the HR strategy, policies and practices on the one
hand and organizational systems on the other. The organizational systems include the
5
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