Articles SHRL
Dundon & Rafferty
Abstract
This article seeks to provoke that human resource management (HRM), both as an academic field of
study and as a form of professional practice, is at risk of impoverishment. The main reasoning for this
is because of ideological individualism and marketisation with an attendant neglect on wider
organisational, employee, and societal concerns. Following a review of the context of financialised
capitalism, three contemporary developments in HRM are used to illustrate the argument: reward
strategies, talent management, and high performance work systems. Implications for the practice of
HRM and the way the subject area is taught in mainstream business schools are considered.
Introduction
The first wave of provocations in this journal suggest the subject of human resource management
(HRM) is in a state of unrest: it has been plagued with conceptual problems, theory is mostly
inadequate to fully explain the links to performance, and the intellectual space may have been
colonised by uncritical positivistic psychology. Kochan (2007) warns of a crisis of legitimacy for the
profession, having failed to establish authority among higher executives. Marchington (2015) argues
that the human resource (HR) function has been “too busy looking up” (to the boardroom) by
focusing on short term performance metrics to the neglect of long standing values and concerns of
other stakeholders. We advance the argument that HRM is at risk of intellectual and professional
impoverishment because of a pro market ontology rather than a more inclusive pro business
orientation. By pro business, we mean a focus on longer term sustainability of both organisations
and people. The argument is that the pro market ontology to the way HRM is conceptualised and
taught, and in turn practiced, means the subject area is at risk of demise. We trace this potential
demise to an “immiseration effect in the disciplinary field.
Context: investor capitalism and hyper-individualism
Epstein defines the financialisation of the world economy as the increasing role of financial motives,
financial markets, financial actors, and financial institutions in the operation of both domestic and
international economies. One consequence of financialisation is that it has resulted in a shift in
power away from managers to owners, or investors representing the interests of owners. Khurana
(2007) talks of a movement away from post Second World War managerialism to the investor
capitalism of today. An implication is that fewer owners want or indeed need to have a cooperative
relationship with their workforce, suppliers, or supply chain networks.
The pressures on HRM from investor capitalism are wide and varied. On the one hand, there are
exemplar Multinational Corporations that consciously seek to address societal challenges such as
poverty and inequality. On the other hand, such companies are often the exception rather than the
norm and, where profit margins are lower than competitors who take a less socially enlightened
approach, they can be succeptible to hostile take overs or corporate raiding. It may be argued that
under such a predatorary regime of financialised capitalism, the role of HR becomes poised not as a
“strategic business partner” or “employee champion” but as a “handmaiden of efficiency” required
to push through coercive measures to extract greater shareholder value.
Financialisation has driven the imperative to extract value by squeezing labour costs and revenues,
heightening the drive towards managerial command and control through a proliferation of
performance metrics, both in the private and public sectors. The function of HR may some- times
,become little more than an “administration minder” for investors when minimising labour costs by
implementing wage cuts, reducing employee pensions and benefits, or facilitating hostile takeovers
and workforce restructuring.
In terms of practical application, the ethical rationale for increased individualism of HRM is played
out through Adam Smith's notion that the pursuit of economic self interest leads to the promotion of
a greater collective good. The extent of market exclusivity pervading management thinking is
epitomised in the Friedmanite doctrine that the only social responsibility of a business is to (legally)
make profit.
The marketisation of HRM in practice
Reward systems
Reward strategies in many organisations legitimise the size of gaps in pay across the corporate ladder
and reinforce a “winners versus losers” mentality. The concern here is not just about the distribution
and allocation of resources but the sheer “magnitude” of inequality. Since the late 1970s, the rise of
hyper individualism saw income inequality burgeon significantly. In the United States, UK, and
elsewhere executive pay skyrocketed in the 1990s. Discussions of poverty tend to be viewed as the
remit of public or government policy, with a focus on the role of state institutions and welfare policy.
The implications of HRM contributing to income and wealth distribution, or more recently in work
poverty, receive little attention. The role of HRM in shaping narratives about how economic value is
created within organisations, such as through practices of “performance,” “talent,” and “leadership”
affects equality and inequality in wider society, partly through redefining the discursive categories by
which value is rewarded and remuneration apportioned across organizational hierarchies. Although
such issues are not restricted to upper organisational echelons, hyper individualism has also
provided an ideological justification for rewarding so called “super managers”. In this sense, the
reward strategies of organisational HR systems and discursive practices are connected to social and
economic inequality through valorising the contribution of executives within firms. There are at least
two views that can be taken on super managers' executive compensation. On the one hand is the
individualistic assumption of free market principles that suggests high income earners receive the
market value for their labour skill and contribution. On the other hand, a less politically and socially
naive account may highlight how managerial power means that, in the presence of weak or
unregulated corporate governance regimes, managers are able to extract rents due to their
entrenched position of authority within an organisational or broader corporate world hierarchy,
leading to higher levels of self justified compensation. The argument about executive compensation
highlights a fundamental problem that has broader implications for HRM: that is, the difficulty in
objectively attributing value to labour, particularly in higher discretion roles where standard job
evaluation tools are often too blunt as job performance criteria.
Talent management
Talent management is a newer yet equally dominant lexis in the intellectual and practitioner HRM
space. A concern is not with TM per se but rather the analysis seeking to classify people in relation to
some innate abstracted form (“talent”). Our argument is that TM projects a marketised discourse
that favours capital, is mostly atheoretical, and neglects other legitimate stakeholder interests and
wider societal concerns. There appears a disturbing lack of clarity about how to define TM. It is
generally regarded as a way to “attract, select and develop the best possible employees in more
strategic ways”. An “inclusive” approach to TM may be equitable in seeking to appreciate all
employees for their unique and discrete contributions, although there is no reason to assume that all
employees want to move to more senior leadership or higher talent roles. In contrast is an
,“exclusive” model that advocates a differentiation capacity, where some individuals are deemed as
top talent and selected to be in a talent pool. It may be that the “War for Talent” is less abrasive or
aggressive than when it was first touted by management consultants. The idea of talent competition
echoes an image of warfare between rival firms. In HRM, such a discourse can undermine
constructive competition and collaboration within a workplace, with warfare “between” employees
becoming normalized.
HPWS
The idea that HRM can positively affect firm performance. HPWS = includes a bundle of innovative
HR practices and work processes that are mutually reinforcing, and which correlate to performance
improvements at both the individual employee and organisational levels. Peccei, van De Voorde, and
van Veldhoven (2013) point out that there are various knowledge paradigms to interpreting the
rationale for HPWS. One is labelled the pessimistic (or conflicting) outcome approach, in which HRM
leads to improved firm performance, although in so doing it results in harmful worker outcomes such
as stress and work intensification. In contrast is a mutual gains (or optimistic) paradigm, with HRM
enhancing both firm performance while simultaneously boosting worker well being. Nonetheless,
the advancement of a more positive employment relationship with performance enhancing and
well being outcomes remains a legitimate goal. Guest (2011) suggests that in order to better
understand the HR performance link there is a need to move beyond an exclusive market validation
approach, when he calls for a more inclusive integration of actors with a specific employee interest
agenda. Guest (2017) subsequently presents a framework to prioritise the promotion of better
employment with a concerted focus on well being. The approach is a potential game changer. It
argues, with aplomb, for better employment and better management as a legitimate ethical
standard. It persuasively connects better employment to improved HR management and then firm
performance. In other words, it prioritises the processes of people management ahead of
prescriptive configured HR practices leading to anticipated market based performance gains. Other
approaches differ between well being “in” work and well being “from” work. The well being “from”
work approach has a primary concern on the psychological and economic effects of unemployment.
It captures issues around depression and/or self esteem at community group and individual levels. In
contrast, the well being “in” work approach examines the effects of work reorganisation and change
on employee job satisfaction as a facet of well being as a link to organisational performance.
Notwithstanding good intentions to embrace an employee centric agenda, a potential immiseration
risk is that workforce well being may become associated with labour rights “green washing”; that is,
HPWSs may appear to promote employee well being with a stakeholder friendly or positive ethical
orientation, but only at surface level. Under regimes of austerity and investor capitalism, it is usually
labour that is sacrificed to market imperatives
The immiseration of HRM education?
The legacy is students may be taught in ways that favour the exclusivist market ontology we have
questioned in this provocation. In many programmes of learning, case studies offer great utility to
apply context and issue based sensitivities. However, students are usually encouraged to “step into
the shoes of managers or leaders” rather than consider implications for other legitimate actor
groups, or rarely address broader societal challenges connected to HRM and employer actions.
The implications of the foregoing are numerous for the practice and learning of HRM. One issue of
note is that the potential demise (immiseration risk) of HRM we provoke is not definitive or certain. It
may be that the teaching of HRM has neglected advances in wider and more critical social science
knowledge, or in other ways it may incorporate them. Unless the interests of a particular scholar or
an institutional objective ascribes to certain approaches and values, it may be rare for the typical
, business school student to get to grips with alternatives to hyper individualisation and extreme
forms of marketised governance.
