TECHNICAL | IORG
Handle with care Alan Marsden The science of human resource management is not nearly as straightforward as it might first appear
uman resource management (HRM) accounts for almost one-third of the Organisational Management syllabus, so it is crucial that you familiarise yourself with the subject, which covers the key activities concerning the management of people. These include human resource planning, recruitment and selection, training and development, reward and motivation, career and succession planning, induction, performance appraisal, dismissal, retirement and redundancy. The fact that you will have first-hand experience of many of these activities might give you the impression that HRM is a relatively easy part of the syllabus. Virtually everyone has gone through the processes of recruitment and selection, has experienced some training and is familiar with the idea of motivating people with reward systems. This is a good thing in many ways, because the subject matter is something to which we can all relate. But there are hidden dangers,
H
because we can be lulled into a false sense of security – a feeling that we don’t need to work hard on the subject since we already know something about it. The term HRM is really about people, but the word “resource” is potentially confusing. It suggests that human resources are similar to other resources, such as plant, equipment and buildings, and should be managed accordingly. While it’s true that labour (in the form of people) is required in the production process, it’s also clear that people are not like any other resource. It’s stating the obvious, but we need to remind ourselves that the human resources in any organisation consist of individuals like ourselves. They can be motivated or demotivated; they can co-operate with the management or resist it; and they can think, create, imagine, plan, learn, feel emotion and perform a huge number of activities. The second reason for the complexity of HRM is the extent to which its activities
relate both to each other and to the organisation more generally. Before considering these relationships in more detail, it is useful to review the overall purpose of HRM. This can be derived from the definition offered in the CIMA core text, Human Resource Management, Theory and Practice, by John Bratton and Jeffrey Gold (1999). It argues that HRM is “that part of the management process that specialises in the management of people in work organisations. HRM emphasises that employees are critical to achieving sustainable competitive advantage, that human resources practices need to be integrated with the corporate strategy, and that human resource specialists help organisational controllers to meet both efficiency and equity objectives.” As well as stressing the importance of human resources for the achievement of competitive advantage, this definition also emphasises the relationship between human resource practices and the organisation’s
Figure 1 The Guest model of HRM HRM strategy
HRM practices
HRM outcomes
Behavioural outcomes
Performance outcomes
Financial outcomes
Differentiation (innovation)
Selection
Commitment
Effort/motivation
Greater quality, productivity and innovation
Profits
Quality
Co-operation and involvement
Return on investment
Flexibility
“Organisational citizenship”
Reduced absenteeism, labour turnover and conflict, and fewer customer complaints
Training Focus (quality)
Appraisal Reward
Cost (cost reduction)
Job design Involvement Status and security
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CIMA Insider July/August 2002
TECHNICAL | IORG
Figure 2 The human resource cycle
Rewards
Selection
Performance
Appraisal
Development
strategy. This relationship has been the centre of attention for many HRM researchers in recent years. Several attempts have been made to clarify it by developing explanatory models. One model that shows the relationship between HRM activities and organisational strategy more clearly than most was developed in 1997 by David Guest, professor of organisational psychology and HRM at King’s College, London (see figure 1, opposite page). The central idea of his model is that HRM practices should be designed to produce high-quality employees who are flexible and committed to their organisation. Guest sees employee commitment as a vital HRM outcome that is concerned with binding employees to the organisation and obtaining the behavioural outcomes of increased effort, co-operation, involvement and what he calls organisational citizenship. “High-quality employees” refers to issues of workplace learning and the need for the organisation to have an able, qualified and skilful workforce to produce high-quality services and products. The right-hand side of the model focuses on the link between HRM and performance. According to the model, only when all three HRM outcomes – quality, commitment and flexibility – are achieved can we expect improved behavioural and performance outcomes. Guest argues that “only when a coherent strategy – directed towards these policy goals, fully integrated into business strategy and fully sponsored by line management at all levels – is applied will the high productivity and related outcomes sought by industry be achieved”. While the Guest model is useful for suggesting relationships between HRM practices and organisational strategy, a model developed in 1984 by Mary Anne Devanna,
Charles Fombrun and Noel Tichy emphasises the interrelated nature of HRM activities. The strength of this model is that it shows the coherence of internal HRM policies and the importance of matching internal policies and practices to the organisation’s external business strategies. It is also a simple model that serves as a useful framework to explain the significance of key HRM practices. It is important to note that the overall performance of the organisation depends on the effective operation of each of the components and their co-ordination with the business’s strategy. Useful though both of these models are in explaining the relationships between different HRM practices, they are limited because they do not take account of factors external to the organisation or even all internal factors. External factors include industry characteristics such as the type of business, the level of union organisation, the nature of the competition, the extent of change and regional characteristics such as economic conditions, legal requirements and the socio-cultural environment. Internal factors include organisational structure, the competitive strategy employed and the organisation’s culture. Some of the more complicated models, such as the Harvard model and the Warwick model described in Human Resource Management, Theory and Practice, do take these factors into account. A third reason why HRM is complicated is that HRM specialists and their line management counterparts often have different approaches to it. These have been labelled hard and soft. The hard version stresses the word “resource” and takes a rational approach to managing people – ie, aligning business strategy with HR strategy and viewing people as a cost to be controlled.
The soft approach, on the other hand, emphasises the term “human” and advocates investment in training and the adoption of “commitment strategies” to ensure that skilled, loyal employees give the organisation a competitive advantage. It also stresses the importance of learning and enlightened leadership. Most soft HRM models assert that human resources are assets, not a variable cost. Assumptions about the nature of human potential and the ability to tap it are based on organisational behaviour theories developed by psychologists such as Abraham Maslow. The fourth reason why HRM is often more complicated than is seems is because of national and regional differences. HRM approaches can be seen as characteristic for each nation as a result of specific historical traditions and the cultural, economic and legal environment. A major factor is the degree of state interference. In eastern Europe, HRM is largely determined by law, leaving little to be decided by individual organisations. In western Europe, state interference is also considerable and the European welfare and education systems strongly influence the labour market. In Japan and the US, state interference is relatively low, but the impact of this on HRM differs in the two countries. In Japan, this lack of a legal structure is partly substituted by cultural factors, especially collectivism. This issue leads to another major factor affecting HRM in different nations: the degree of collectivism versus individualism. As Geert Hofstede noted in Culture’s Consequences (1980), while the Asian nations and the socialist countries in eastern Europe can be characterised by a high degree of collectivism, HRM in the US by contrast is individualistic. Western European nations lie somewhere in between. In such a brief article it is difficult to cover the many factors that affect the conduct of HRM in a particular organisation in a particular country, but I hope that it gives some idea of the complexity involved. n Alan Marsden is the examiner for IORG and author of the CIMA Study System Organisational Management. The Study Systems are core texts on the recommended reading list and are available from CIMA Publishing. Telephone: +44 (0)20 8849 2229/ 2277, or e-mail publishing.sales@ cimaglobal.com July/August 2002 CIMA Insider
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