Strategic Human Resource Management summary

SHRM book and slides summary
Chapter 1: SHRM in the 21st century
Theory of HRM:

 Employees are considered as the organizations most valuable assets  higher productivity,
service quality, sales an profits can be reached when managing working according to HRM
principles

HRM is considered as a potential source for achieving organizational goals

HRM is becoming more and more important, when organizations become bigger and changes within
these companies have more impact  so implementing changes successfully depends on changing
people in their attitudes, behaviour and cognition

The new economy = the shift from a manufacturing an production economy to a service sector
economy (90’s)

Difference old and new economy:

 Old:
o Physical tasks
o Mass production jobs
o Low-skilled workers
o Still exist is developing countries
 New:
o New emerging branches  IT sector, telecommunications, financial advise
o Use of technology in business
o Value is less tangible and are embedded in reputation, brands and human resources
o High knowledge workers
o Outsourcing an offshoring business activities to developing countries
o Organizational change has major implications for employees and has become
common

Competitive advantage = Indicates that an organization is doing better than its competitors looking at
profits and not at losses

 Position of an organization in comparison to the competitors
 Important for organizational survival
 Optimal coping with change
 Partly manageable by HRM

Changing role of work in the new economy:

 Computer becomes an essential tool
 Alternative work design are created by technology  e. g. employees can work at home
 Many baby boomers leaving organizations can cause outflow of knowledge an experience, so
new workers should be trained well to avoid issues in the future

Three major sub field identified in HRM:

,  (MicroHRM, InternationalHRM & StrategicHRM):
o Strategic  fit between business strategy and HR strategy
o International  crosscultural comparisons
o Micro  employee interests

Stakeholders = all groups inside and outside an organization that can affect its strategy and goals

 Internal stakeholders
 External stakeholders

Perspectives on HRM the book deals with (multidimensional SHM model):

 Multi actor perspective = view from all different stakeholders
 Broad societal view = emphasis on different institutional contexts
 Multi-level perspective = focussing on individual employee perspective and strategic
organizational perspective

This model is in line with Pauwe’s (2004: 3) view on HRM:

 HRM are more than resources
o People want satisfaction, personal development, respect
o Behaviour is not solely determined by economic rationality
 HRM is not concerned solely with financial performance
o But also involves the administration related to legislation and relationship with
crucial social partners (like work councils and trade unions)
 HRM focusses on the relationship between employee and organization
o The relationship between the efforts of the worker between the rewards given by
the employer  employment relationship:
 Contains different elements:
1. Legal contract  written down in a contract (vacation days)
2. Economic contract  economic aspects (salary, how much working
days)
3. Psychological contract  expected things from both actors that are
not written down
4. Sociological aspects  social aspects (the bond with colleagues in a
team)
 Shaping of employment relationships takes place in an era of continunous tensions between
the added value and moral values

HRM operates in an area of continuous tension between added value and moral value:

 Added value/hard HRM = role of HRM in creating economic value and increasing financial
performance
o Dominates HRM in both theory and practice (but balancing these two is a major
challenge in the field)
 Moral value/soft HRM = notion of employees as human beings with feelings

Boxall and Purcell’s (2008) statements on SHRM:

 HRM covers all workforce groups
o The tendency is to focus HRM only on the core managers, but it is needed to pay
attention to the total workforce

,  HRM involves line and specialist managers and is not solely aimed at employees
 HRM is about managing work and people collectively and individually
o At all levels of managing, HRM is needed
 HRM is embedded in industries and societies
o Every industry or country have different legislation, so HRM has to adapt to this
differences

Traditional distinction between HRM models:

 Anglo-Saxon/Anglo-American models = focus on crating shareholder value
o Can result in bad people management
 Rhineland models = focus on multiple stakeholder groups
o Reason  institutional contexts, legislation, dealing with different councils and
unions is more deeply embedded in Europa than in the US
o Mostly results in good people management

Balanced HRM approach  organizational success can only be achieved when financial and social
performance are above average and balanced with each other

 Only having a above average financial performance could lead to serious social issues (e.g.
environmental pollution, labour intensification of employees
 And only having social performance is not good enough to simply survive
 Also individual goals are important to keep employees satisfied

Frames = mental models that people apply consciously but mostly unconsciously

4 different frames/perspectives for studying organizations by Bolman and Deal (2008):

 Structural frame = about gaining understanding of the structural parts of organizations
 HR frame = about the employment relationship and focussed on needs, skills and
relationships of those involved
 Political frame = about the power distribution between different parties related to
organizations
 Symbolic frame = about meaning, identity and culture of an organization

First two frames are often used in studying HRM, but the last two are also necessary to approach
HRM on a balanced way

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CHRO = member of the top management level of organisations

PE fit = person environment fit

Tasks for human resource management professionals in organisations:

 Helping employees when they have for example a bad PE fit

SHRM in the 21st century:

 Impact of organizational change
o 5 I’s of Schnabel on the 21 century (see internet):
 Informatisation
 Internationalisation

,  Informalisation
 Informatosation
 Intensification
o Concrete changes:
 Acquisitions
 Mergers
 Reorganizations
 Strategic alliances
 Private equity interventions
 Global crisis
 Financial crisis
 Ageing population
o All these changes have impact on organisations and also on employees
 Stakeholder perspective  dealing with Unions etc.
 Balanced approach  protecting the sustainability of human resources

Management paradox  businesses don’t want to invest in human capital but it is actually important

I deal = deal between employer and employee to make circumstances for the employee better
without losing human resources for the organization

Chapter 2: SHRM and context
Business model = the way an organization does business

Use of HRM should fit with its organizational environment  misfits cost money and reduce
individual and social well-being  because strikes cost organizations much money

2 schools (different ideologies) on the issue of fit:

 Best-fit school:
o HRM should be aligned with its internal and external context to be the most effective
 Best-practice school:
o More universalistic perspective (one size fits all)  organizations will be better off if
they identify and adapt best practice in the way they manage people (putting
employees first)
o Pfeffers (1998) seven best practices model is representative for this school:
 About building profits by putting people first for success for all companies:
 Selective recruitment and selection=
 Extensive training
 Performance-related pay
 Teamworking
 Information sharing and communication
 Reduction of status differences
 Employment security




Internal context = history, structure and culture of the organisation