Human Resource Management – Minor Social and Organisational Psychology
Pre-recorded lecture 1 (week 2): Introduction to (strategic) HRM
What is (strategic) HRM?
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”
Employment relationship = relationship between an employee and their organization.
All policies and practices that shape this relation, and the decisions that are related to these
policies and practices is referred to when speaking of HRM. Think of policies and practices
around recruitment, rewarding people, how to evaluate people, how do you let people go
when their contract ends.
Individual goal: reach certain level in organization, have certain income, do certain
valuable/rewarding work.
Organizational goal: effectiveness, efficiency, delivering certain products/services.
Societal goals: for example, VU serving societal goal of developing the new work for in NL
and beyond.
Dimensions of employment relationship:
1. Legal contract
- This is tied to the law and legally binding. This legal contract has to do with all the
legal rights and obligations that employees and organizations have towards each
other. For instance: number of holiday days, terms of notice that an organization has
to maintain when they want to let an employee go – and reversed: an employee that
wants to leave the organization, this typically has term of notice as well. Also:
confidentiality issues.
2. Economic/transactional contract
- Agreement that employees and their organization gave about the effort that the
employee puts in towards the organization and the reward that they get from the
organization for that effort. Arrangements around the effort that an employee puts
in: number of hours they work or deliverables that thy have to achieve (for a
professor that will be the number of courses they teach, or the number of papers
they publish in an academic journal. The reward typically is the number of pay an
employee receives from the organization.
3. Psychological contract
- All mutual expectations between employee and their organization that have not
been formally written down (in legally binding or other type of contract). Beyond
what is written down both employee and organizations have expectations. Example:
professor at VU has expectation to be promoted within certain amount of time. Vu
expects professor not only to expect number of articles that professor is required to
publish, but to do so in a really nice journal, or to treat students with respect (this is
not formally written down).
,4. Sociological contract
- Relationships and networks that employees have within an organization
(relationship with colleagues, being a member of certain networks within an
organization).
Strategic HRM
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”
→ SHRM: “in addition pays extra attention to the organizational context”, i.e. the alignment
of HRM (policies and practices) with different elements of the context:
1. Business strategy
- What an organization is trying to achieve in short/long term.
2. External context
- External context in which an organization operates, so the market, legal context and
norms and values of society in which an organization operates.
3. Business systems
- How things are operated, systems that an organization uses to run.
4. Each other
- How these policies and practices work together and are aligned with each other.
MHRM: Micro HRM
- This has to do with individual policies and practices that an organization is trying to use
or develop or make decisions about, rather than the whole of all the different policies
and practices that they are involved in.
IHRM: International HRM
Illustrating these differences: think about an organization that wants to become more
diverse, from…
- HRM perspective: the organization may try to design policies and practices and make
decisions about that within the organization.
- SHRM perspective: focus especially on the context; how does that fit to the strategy,
what are competitors doing, what are expectations of people outside the organization
about this, think about systems that are in place and how policies and practices will fit
with that.
- MHRM perspective: focus on individual HRM practice, such as training or recruitment to
help diversity within an organization. Diversity training to make people less biased
towards certain job candidates → specific practice. Specific practice is example of
MHRM.
- IHRM perspective: involves question such as how do we do this across different
countries in which our organization operates.
Types of fit
Alignment between different practices and organization context is often referred to as fit.
So, fit between practices and some elements of the context.
,1. Strategic (vertical) fit: fit between HR (policies and practices) & strategy (of
organization)
2. Internal (horizontal) fit: fit between HR policies and practices & other HR policies and
practices
- The fit of policies and practices that an organization has with each other. For
instance: policies and practices around recruitment, how do they fit with policies and
practices around rewards.
3. Organizational fit: fit between HR & other organizational systems (IT or procedural
systems)
4. Environmental or institutional fit: fit (policies and practices) HR with legislation, norms
and management fashions (part of institutional context of organization)
Best practice versus best fit
→→
1. Best practice approach:
The extent that you identify the best practices that are out there/are possible (best way to
recruit, reward, motivate or evaluate people) and bring this into your organization.
- Pfeffer’s seven best practices
- High performance work systems (3rd lecture)
2. Best fit approach:
Tailor the practices and policies that you use to fit as well as possible to the context in which
you operate within and outside your organization.
- The strategy scan (today + 2nd lecture)
HR Strategy Scan
, At the highest level the HR strategy scan is a systematic way to evaluate the fit between HR
policies and practices and the HR context. To do such as systematic evaluation of this fit
requires to take a number of different steps (elements).
HR strategy and Practices
- HR strategy refers to what the goals are and how they are trying to achieve them.
- Practices refers to practices they have in place to run HR. Practices around selection and
recruitment that are tied to the HR strategy that an organization has, that ties into how
they do their selection and recruitment. So, everything that has to do with a policy or
practice that an organization have in place and the relation that that has to the strategy
(what they try to achieve in terms of HR and how).
External market context (upper two)
External to the organization itself. Has to do with the market in which it operates.
The market has to do with all sorts of economic aspects of the external environment of the
organization. External market is divided in two parts:
→
The external general market context:
All sort of economic factors about the context of a general level, such as country level, level
of multiple countries. Important market conditions to understand.
The macroeconomic situation, local labor market conditions. These are economic aspects of
the environment but are very general to different industries within the broader context of
for instance a country.
The external population market context
Smaller context in which an organization operates (you can think of this as the industry
level). This is a group of organization that are meaningfully related to each other. For
instance: the VU > population context is the education industry in NL or abroad. Population
context typically includes competition (other organizations that are doing similar things),
customers, suppliers – that are part of the same industry and are affected by similar things
that are happening in the market (economic changes or influences).
Market conditions that are specific to a set of organizations or an industry: competition
between organizations will typically be specific to an industry. Maturity of market is specific
to a certain product or service. New developments will typically not have general effects,
but effects at populational level.
Understand relationship between general and population as well as relationship with HR
strategy and practices of each of these contexts.
External institutional context
This has to do with anything else which is not of an economic nature that can be going on in
this environment.
