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,Lecture week 1: Introduction OB, HRM, and
context
Part 1: Introduction OB and HRM – dr. Martina Buljac
Content of this lecture
• What is OB and HRM?
• HRM approaches
• The relationship between HRM and performance
What is OB and HRM?
Organizational behaviour
• Definition: ‘A field of study that investigates the impact that individuals, groups, and
structure have on behaviour within organizations, for the purpose of applying such
knowledge toward improving an organization’s effectiveness.’
o This definition refers to the impact of the different layers (organization, group,
individual) on organizational behaviour.
o This definition also takes it to the next step: how to improve performance?
Human resource management (HRM)
• HRM is closely related to organizational behaviour.
• It concerns the more practical part, so: how to influence individual behaviour.
• Definition: (Boselie, 2002)
o Human: the employment relationship between the employer and employee.
o Resource: human capital as resource, so the employee as resource to achieve
organizational success through knowledge, skills and competencies.
o Management: activities to let employees act in a desired way in order to achieve
organizational success.
• So: HRM is the management of organizational workforce (of human recourses).
• More practical, it is for example responsible for: the selection and attraction of employees,
training of employees, assessing and rewarding of employees, overseeing organizational
leadership and culture
• ‘The management of work and people towards desired ends.’ (Boxall et al., 2007)
• ‘HRM involves management decisions related to policies and practices that together shape
the employment relationship and are aimed at achieving individual, organizational, and
societal goals.’ (Boselie, 2010)
Examples of strong HRM
• Google recruits talented people and gives them freedom to be creative. It does not register
sick days or vacation days. There are no rules on what time to start or go home.
• ‘Buurtzorg’ (healthcare organization) thinks that highly educated employees are capable of
making decisions on their own. Therefore, the organization does not have a lot of managers.
• Apple claims to be ‘the biggest start-up company’. People are in charge in small teams and
are fully responsible for one aspect of a problem.
• ‘Pluryn’ (healthcare organization) offers people outside of the healthcare system a two-year
education plan in order to train them for a healthcare job at Pluryn. The people were paid
and actively involved in the organization during their education, which led to a significant
contribution to the work pleasure, diversity and satisfaction within the organization.
, • ‘Arkin’ (mental healthcare organization) limited the registration burden for professionals.
Their professionals only needed to register what was necessary for the content of care,
which increased work pleasure.
Strategic HRM
• The abovementioned examples are examples of strategic HRM. They distinguished
themselves from their competitors based on their HRM. HRM was part of their business
strategy, which is called ‘strategic HRM’.
• Definition (Wright & McMahan, 1992):
o ‘Strategic human resource management is defined as the pattern of planned human
resource deployments and activities intended to enable an organization to achieve
its goals. It involves all of the activities that are implemented by an organization to
affect the behaviour of individuals in an effort to implement the strategic needs of a
business.’
Evolution of HRM
• In the last 20-30 years, there has been a shift from personnel management to human
resource management.
o Previously, it was more about managing and controlling people. It was focused more
on the short-term.
o Nowadays, there is a new view: ‘what is good for the employee, is good for the
employer as well’. HRM focuses more on the long-term.
o The role of the line management has become more important. The line management
is the management layer that is close to the work floor.
Major developments in HRM
• Managing talent
• Managing work-life balance
• Managing change and cultural transformation
• Becoming a learning organization
• Improving leadership development
,HRM approaches
Hard HRM vs. soft HRM
• Hard Human Resource Management
o Focuses on economics (the trade between input and output).
o Humans are seen as one of the resources.
o Is more about added value.
• Soft Human Resource Management
o Focuses on fairness and the process, since we spend a lot of our lives at work.
o Humans are not only a resource (not only a means to an end), but are the most
important resource and therefore a goal in itself.
o Is more about moral values (employees as human beings with feelings, emotions and
a personal life).
Michigan model vs. Harvard model
• Michigan model (Fombrun et al., 1984)
o Hard HRM
o This model focuses on organizational strategy, and is based on the incentives for
employees to perform. For example: rewarding employees, pay-per-performance.
• Harvard model (Beer et al., 1984)
o Soft HRM
o This model sees people as assets instead of costs. It is more focused on the
development that will encourage people to perform at their best.
o It includes different aspects of performance; not only organizational effectiveness or
productivity, but also the well-being of employees is seen as a performance measure.
o The Harvard model takes the context and the situation of factors into account.
In search for synthesis
• It could look like the hard and soft side of HRM are contradictive and that organizations have
to choose one of the sides. However, they are two sides of the same coin.
• The most preferrable way of HRM is to combine hard HRM with soft HRM.
• Blending the added value with the moral value, creates an unique approach that is custom-
made to a specific organization and therefore leads to a sustainable and competitive
advantage.
,Example: Tony Chocolonely
• The goal of Tony Chocolonely is to produce 100% slavery-free chocolate.
• Therefore, their moral value is high.
• They faced financial growth for several years.
• So: they combined the moral value they have while increasing their economic value.
• This shows that combining the two is possible and could lead to the uniqueness of an
organization, which could create a competitive advantage.
HR practices or systems
• Individual practices
o Examples: recruitment, selection, training, talent management, etc.
• HRM bundles (HRM system/HPWS)
o Bundle of different individual practices that support each other and eventually
increase the organizational performance on multiple performance measures.
o The idea behind HRM bundles is that individual HRM practices are intercorrelated
with each other with the same goal, and should therefore be examined as a bundle.
o Individual HRM practices combined in a bundle is referred to as the ‘internal fit’. This
means that each practice will enhance and support the effectiveness of other
practices.
o An extensive amount of literature has proven the benefits of HRM bundles over
individual practices.
HR bundles/systems
• There are roughly three types of HR bundles, in which different HRM bundles are clustered
around one goal.
• It is possible to combine different HRM practices in order to reach one goal (bundle).
o For example: bundling ‘self-managed or autonomous work groups’ and ‘employee
participation in decision making’ to reach empowerment.
• Types of HRM bundles:
o Empowerment-Enhancing Bundles
▪ Employee involvement in influencing work process/outcomes
▪ Formal grievance procedure and complaint resolution systems
▪ Job enrichment (skill flexibility, job variety, responsibility)
▪ Self-managed or autonomous work groups
▪ Employee participation in decision making
▪ Systems to encourage feedback from employees
o Motivation-Enhancing Bundles
▪ Formal performance appraisal process
▪ Incentive plans (bonuses, profit-sharing, gain-sharing plans)
▪ Linking pay to performance
▪ Opportunities for internal career mobility and promotions
▪ Health care and other employee benefits
o Skill-Enhancing Bundles
▪ Job descriptions/requirements generated through job analysis
▪ Job-based skill training
▪ Recruiting to ensure availability of large applicant pools
▪ Structured and validated tools/procedures for personnel selection
,AMO model
• These three types of
HRM bundles can be
linked to the AMO
model.
• The AMO model gives
a theoretical insight
in how the effective
discretionary effort
can be increased.
o Effective
discretionary
effort is the
extra-role behaviour. It is about taking the extra step, without anybody expecting it
from you. This will lead to better performance.
• According to the AMO model, HRM systems should focus on:
o Abilities/skills of employees
o Enhancing motivation/incentives
o Creating opportunities to participate
• HRM systems that are based on the model should include all of these three elements.
Core vs. peripheral workers
• Looking at their uniqueness and strategic value, not all employees are the same. Some
contribute more to the organization than others.
• Based on this assumption, the HRM system should be different for different groups within
the organization.
• Staff can be divided in four groups based on two characteristics:
o Uniqueness: how rare the employee is and how specialized/firm-specific the staff is.
o Strategic value: the potential of the employee to increase organizational
effectiveness.
• This results in four quadrants/groups:
o Q1: High uniqueness, high strategic value (knowledge-based employment)
▪ A commitment-based HR configuration is needed.
▪ Examples: physicians, specialized nurses
▪ You would want to build the organizational strategy on those knowledge
workers. They are the core employees within an organization. You want to
position your organization around their uniqueness, so that patients come to
your organization for certain specializations/treatments/physicians.
o Q2: Low uniqueness, high strategic value (job-based employment)
▪ A productivity-based HR configuration is needed.
▪ Examples: social workers, dieticians
▪ You want to hire those employees to perform a certain task. Similar to
quadrant 1, the value of employees provides an incentive to the organization
to employ these workers internally. At the same time, these employee skills
are not particularly unique for the organization, and therefore will not lead
to a competitive advantage. HR practices should therefore focus more on
recruitment, selection and pay-per-performance instead of a focus on
development.
o Q3: Low uniqueness, low value (contractual work)
▪ A compliance-based HR configuration is needed.
▪ Examples: hairdresser and pedicure in nursing homes
, ▪ You do not want to create HRM for them, but you would want to provide
them with a contract. HR practices are not applicable, but you want to make
use of their services. This can for example be done through a hiring agency.
o Q4: High uniqueness, low strategic value (alliances/partnerships)
▪ A collaborative-based HR configuration is needed.
▪ Example: relationship with a legal firm
▪ Because of their low strategic value, these employees are not employed
internally. However, they do have specialized knowledge. Therefore, you
would want an ongoing mutual partnership. HR practices would in this case
focus on a long-term relationship, for example building incentives for
teamwork or teambuilding to keep the relationships good.
o These quadrants are a simplistic version of real life.
▪ In practice, not every group can be put in one specific quadrant.
▪ However, the idea behind the quadrants is relevant: it is not possible to have
one HR policy for the whole organization, especially not for the more
complex organizations in healthcare.
,The relationship between HRM and performance
• HRM is considered important for organizational performance, is the idea that HRM will lead
to performance.
• In the HR literature, an important question is (how) will HRM lead to performance.
The black box
• There is a general agreement that HRM can and will have a positive impact on performance.
• However, we do not know exactly how this happens, since it is really complex.
• Therefore, it is often referred to as ‘the black box’.
• So: we believe the relationship is valid, but have difficulties explaining it in detail.
• Multiple theories/explanations for this relationship will be discussed in this part of the
lecture.
HRM-Performance relationship
• The basic idea of this model is that HRM activities will lead to HRM outcomes. HRM
outcomes will then lead to performance.
This is a consolidated version of the model of HRM-Performance relationship. More extensively, the
model looks like the following.
,The model consists of:
• HRM activities
o The individual/employee level in the relationship between HRM and performance.
o Examples: autonomy, training, etc.
o HRM activities lead to HRM outcomes.
• HRM outcomes
o Are caused by HRM activities.
o Examples: improved attitude, motivation, satisfaction, etc.
o HRM outcomes will lead to more aggregated HR outcomes at organizational level,
such as the social climate between workers and management.
o The individual and aggregated HR outcomes lead to firm performance.
, • Firm performance
o Is caused by HRM outcomes.
o Examples: productivity, customer satisfaction, etc.
• The relationships between these three parts of the model are influenced by contingencies,
that can be at organizational level and individual level:
o Organizational level: age, size, technology, etc.
o Individual level: age, gender, education level, etc.
• There is also a reverse causality in the relationship between HRM activities and performance.
o If organizations perform well, it is likely that they have more money for extra HRM
activities to attract more talented people, which will lead to even better
performances.
Bathtub model
• The bathtub model makes the different levels of the relationship between HRM and
performance more clear.
• For example: the decision to introduce self-managing teams.
o This decision is often at organizational level.
o The result (better organizational performance) is at organizational level as well.
o However, the decision has an influence at individual level as well.
o Individuals will act according to their attitudes towards self-managing teams. It is
hoped that they will be more motivated, take the extra step and will be more
committed.
o Their perception and attitude leads to more productive/efficient employees and
teams.
o More efficient/productive teams will eventually lead to better organizational
performance.
Context/society
• The level of context/society is an additional level in the bathtub model.
• It is important to take the context in which an organization operates into account when
trying to unravel the relation between HRM and performance.
• The first part of prof. dr. Jaap Paauwe (part 3 of this lecture) will elaborate more on that.
• With the context/society level, the bathtub model looks like the following.
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