Summary of the Human Resource Management course in the second year in the fifth block of the study International Business Administration at the Erasmus University in Rotterdam.
Human Resource Management (HRM) Summary – Block 5
Chapter 1: Introducing Human Resource Management
HRM: activities business engages in to manage relationship with employees
- Employer: need successful, profitable business
- Manager: need right people in right place doing right thing to meet business target
- Employee: need job feel capable of in fair & safe environment, paying appropriately
HR philosophy: principles guiding how the organization leads, manages, involves, treats & views all
employees, so it can successfully achieve its business strategy
Evolution of HRM as an organizational function:
- Industrial welfare link between employee welfare & productivity
- Scientific management Taylorist: factory management system to increase efficiency by
breaking down production into specialized repetitive tasks
o Lean manufacturing & continuous improvement
o Trade unions: organized group of workers, representing members’ interests in
improving conditions by acting collectively to challenge employer power
o Industrial relations: relationship between employers & employees, focus on
employers dealing with employee representatives rather than individuals
- Behavioural science Hawthorne Effect: observed employee performance under range of
different working conditions
- HRM Today: employee as an asset rather than a cost
o Knowledge worker: employee whose job involves developing & using knowledge
rather than producing goods/services
o Barney’s VRIO model (1991): employee valuable, rare, inimitable, organized
Strategic HRM: where HR is coordinated & consistent with the overall business objectives, goals &
strategy in order to increase business performance
HRM & the business context
- Distinctiveness created by many factors internal to the organization:
o Size & structure of the organization
o Sector the organization operates in
o Organizational lifecycle
o Financial health of the organization
o Values & ideology of senior management
o Organizational culture
o Workforce characteristics
o Established ‘custom and practice’
- External context comprises many different factors:
o Competition, technology, labour market, legislation & regulation, ethics
4 critical features that characterize contemporary HRM (John Storey 1989)
1. HRM is explicitly linked with corporate strategy
2. HRM focuses on commitment rather than compliance of employees
3. Employee commitment is obtained through an integrated approach to HR policies in the
areas of rewards, selection, training & appraisal
4. HRM isn’t just the domain of specialists in the HR function; rather HRM is owned by line
managers as a means of fostering integration
- Strategic approach to management of people: link between HRM & business strategy
, - Unitarist frame of reference: managers & employees have common purpose & organization
is integrated & harmonious
- Soft HRM approach: employee treated as valued assets & source of competitive advantage
- HR policies & practices are integrated & consistent with the organizational culture
o Vertical integration: matching HRM policies & practices with business strategy
o Horizontal integration: interconnection between HRM policies & practices internally
- Line managers work in partnership with HR
- Evidence-based approach: HR guided by business info, scientific evidence, critical thinking…
High-performance work system (HPWS): HRM practices integrated & mutually reinforcing in order to
produce an effective outcome at an organizational level
Is HR about serving the business or the employees?
Ways HR strategy can be linked to business strategy:
- Seperation model: no connection between the 2
- Fit model: organizational strategy precedes & influences the HR strategy
- Dialogue model: HR strategy has opportunity to influence business strategy
- Holistic model: they are developed in tandem
- HR-driven model: HR strategy drives the development of the business strategy bottom up
HR practitioners have an impact across 4 different dimensions:
1. Individual level building effective relationships & good reputations across the business
2. Organizational level design/deliver appropriate HR practices reaching across the org.
3. Contextual level internal & external environment vital in developing HR strategy
4. Strategic level adding value & enabling to deliver on the business strategy
Competencies needed in the mix of the HRM function:
- Credible activists trusted by the business
- Capability builders identify & deliver core processes/capabilities
- Change champions enable the organization to respond to the external pressures
- Innovators & integrators use scientific evidence/business insight to develop HR practices
- Technology proponents leverage tech facilitating effective/efficient delivery of HR
Line manager: have employees directly reporting to them & have higher level of responsibility
- Fast decision-making & more in tune with business needs
- Employee selection, discipline & performance management
- Being included in design & development at an early stage more successful & sustainable
implementation & interpretation of HR practices
The Michigan Model of HRM (fit/contingency model & ‘hard’ approach)
- Stresses the importance of that ‘fit’ between: HR strategy & business strategy (Vertical
integration) & HR practices themselves (Horizontal integration)
- 5 key areas on which HRM should focus:
o Selection of most suitable individuals to meet the needs of the business
o Managing performance to achieve corporate objectives
o Appraising performance and providing feedback
o Providing rewards for appropriate performance that achieve specific goals
o Developing employees to meet the needs of the business
, - Critics: low involvement model assumes all employees are the same
- Forms the basis of the ‘best fit’ approach to HRM
‘Universal’ approach to HRM (‘soft’ approach)
- Recognizes the influence that various stakeholders & situational factors have on the
development of HR policies & practices
o Stakeholders have a financial interest in the organization
o Situational factors include aspects of the economic climate
- Critics: complex & high-involvement approach
Guest model of HRM
- Considered the benefits of both the low-involvement & high-involvement models
- 4 key principles that would combine to increase organizational effectiveness:
o Strategic integration: HR policies aligned to the business strategy & various aspects
of HRM must be consistent & mutually supportive
o High commitment: employees identify closely with the interest of the organization
o Flexibility: ability & willingness of employees to demonstrate flexibility &
adaptability to change as business demands change
o High quality: important in achieving high performance
- These outcomes could best be achieved through appropriate HRM practices in the areas:
o Organizational & job design
o Change management
o Recruitment & selection
o Appraisal, training & development
o HR movement through, up & out of the organization
o Reward & communication systems
3 different perspectives, in SHRM theory, how design/development of practices can be approached:
1. Strategic HRM Contingency approach (best fit approach)
a. Organizational context provides direction to which HR practices should be chosen
b. Choice is contingent to context of the organization & its business strategy
c. Most effective in service environments
2. Strategic HRM Universalist approach
a. one set of HRM ‘best practices’
b. 7 practices:
i. Recruiting the right people
ii. High wages clearly linked to organizational performance
iii. Employment security
iv. Information sharing
v. Investment in training & skill development
vi. Self-managed teams & decentralized decision-making
vii. Reduced status differentials
Referred to as high involvement & high commitment
viii. High involvement: encourages high levels of employee participation
ix. High commitment: create right conditions to involve employees
x. Low involvement: employee identified core/peripheral in achieving goal
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