StrategicHRMLectureDrAndrewJenkinsProgramme1.Introduction2.TowhatextentcanHRMbestrategic?3.ApproachestoStrategicHRM(SHRM)4.InternationalSHRM5.QuestionsandAnswersIntroductionThefollowingextractistakenfromanarticleintheTimes,“Fivestepstoaddedvalue”,datedOctober19th2000.(byPhilipWhiteley)“ItisnearlyacenturysinceHenryFordsaid“Youcandestroymyfactoriesandoffices,butgivemepeopleandIwillbuildthebusinessrightbackupagain”.Soitisoddthatpeoplemanagementhastakensolongtomoveupthemanagementagenda.Butafewbusinesstheoristsarebeginningtoarguethatmanagingpeoplewellcanaddmoretothebottomlinethananythingelse-especiallyasskillrequirementsincreaseIntroduction“Asmanyofthetraditionalsourcesofcompetitiveadvantage-technology,economiesofscale,patentsandsoon-havediminishedinvalue,theroleofaskilled,motivatedandflexibleworkforcehasbecomemoreprominent”MarkHuselid,RutgersUniversity,NewJersey(2000),quotedinTimesarticle(19thOctober)IntroductionStrategichumanresourcemanagement(SHRM)theoryispredicatedontheassumptionthateffectivehumanresourcemanagement(HRM)processeshavethecapacitytocontributesignificantlytoorganizationaleffectiveness,expressedintermsofproductivity,flexibility,effectiveness,efficiency,returnoninvestment,competitiveness,andultimately,profitability.(Nankervis,2011).IntroductionAlthoughSHRMhasbecomeincreasingpopularinmanagementandacademiccircles,itisexceptionallydifficulttodefine(Salaman,StoreyandBillsberry,2005).SHRMrelatestostrategicchoicesconcerningtheuseoflabourinthefirmandhowsomefirmsmanagelabourmoreeffectivelythanothers(BoxallandPurcell,2003).

IntroductionThecharacteristicsofastrategicapproachtoHRMinclude:1.along-termfocus2.recognisingtheimpactoftheenvironmentoutsidethefirm3.recognisingthedynamicsofthelabourmarketandtheimpactofcompetition,focusingonallemployees,egratingHRMwithfunctionalandcorporatestrategy(Source:Anthony,KachmarandPerewe,2002).Introduction“Atthestrategiclevel,HRdepartmentsgetinvolvedinbroaderdecisions-thosethatprovideoveralldirectionandvisionfortheorganisation”(SchulerandJackson,1996)OneofthemostinfluentialmodelsinthefieldofSHRMisSchuleretal’s(1993)integrativeframeworkofInternationalHRMwhichlinksHRMwithorganisationalstrategyCriticismsofthemodel:-Itishighlycomplex-Itishighlyprescriptive-ItisprimarilyconcernedwithseniormanagementIntroductionAsurveyconductedbyHoque(1999),comparinghotels(n=230)tomanufacturing(n=314),revealedthefollowing:HRpolicywasdeliberatelyintegratedwithbusinessstrategyin77%ofhotelscomparedto57%ofmanufacturingfirmsHRstrategywasformallyendorsedandactivelysupportedbytopmanagementin77%ofhotelscomparedto52%ofmanufacturingfirmsTherefore,inrelationtoHoque’ssurvey,hotels(largeworkplaceswithanaverageof125employees)wereadoptingastrategicapproachtoitshumanresourcesIntroductionOneofthemajorissuesfacingthefieldofSHRMdealswithexternalvalidityandthegeneralizabilityoftheory.Brewster(1999),forexample,haslongarguedthattheoriesofSHRMdevelopedintheUSdonotgeneralizetoEuropebecauseofthesignificantlydifferentcontextsurroundingHRintheEuropeanUnion.Similarly,ZupanandKa?e(2005),questiontheextenttowhichtheoriesdevelopedbyscholarsindevelopedcountriesapplytocountriesthatareintransition,andparticularlytotheeasternEuropeanTransitionEconomies(ETEs).CanHRMbeStrategic?AccordingtoUlrich(1996),thetraditionalformsofcompetitivenessarenowlittlemorethan“tablestakes”.Thesecanbeconsideredasmere“thresholdcompetencies”.ItisinthissensethatHRMbecomestrulyStrategic.Thenotionof“StrategicHRM”iscontingentonanorganisationhavingaformalplanningsystem.CanHRMbeStrategic?WhereHRMstrategieshave“emerged”ratherthanformulated(Mintzberg,1987),thedangeristhatHRMbecomes“reactive”and“adhoc”.Itrespondstochangesintheenvironmentratherthananticipatingthechanges.Itthereforebecomesthemid-level,administrativelyfocusedfunctionofPersonnelManagement(Guest,1987).CanHRMbeStrategic?Thompson(1997)believesthateffectivehumanresourcestrategyisaffectedbyfourfactors:1.Theinternaldevelopmentofnewcompetencies2.Thechangingcompetitiverequirementsofadynamic,turbulentenvironment3.Stabilityincompetitiverequirements4.Relianceonexternalsourcingfornewcompetencies.ApproachestoStrategicHRM1.NormativeIllustrationsofStrategicHRMKarenLegge(1995)statesthatthemostpopularwaysofintegratingstrategywithHRMistouseanormativeapproach.Thisrelatestothe“fit”betweentheHRMpoliciesandeitherthecompany’sstageofdevelopmentorthecompany’sstrategicorientation(e.g.survivalvs.growth).Thisinvolvesselectingtherightpeopleforthebusinessinordertobridgethe“skillsgap”(Ulrich,1996).ApproachestoStrategicHRMAccordingtoArmstrong(1992),integratingpeopleandbusinessobjectiveswillaimtomatchavailablehumanresourcestotheeverchangingrequirementsoftheorganisation.Thiswillincludetheestablishmentofcompetenciesrequiredatalllevelsintheorganisationand,inimplementingbusinessstrategies,HRDinitiativeswillbeneededtorealisethecompetencies.ApproachestoStrategicHRM2.LifestyleApproach.AccordingtoLegge(1995),differentconfigurationsofHRMpolicieswillberequireddependingonanorganisation’sstageofdevelopment.LeggeusesKochanandBarocci’s(1985)modeltoillustratethepoint.Basically,asanorganisationmovesthroughthelifecycle,theroleofrecruitmentandselectionwillchange.Notreallyastrategicapproachsincelifecyclesimplieslittlechangereenvironment.ApproachestoStrategicHRM3.StrategicOrientation.BasedonSchulerandJackson’s(1987)strategicorientationtypology,basedonPorter’s1985genericstrategiesforcompetitiveadvantage.SchulerandJacksonsuggestthateachofthePorterianbusinessstrategies(innovation,qualityenhancementandcostreduction)requireadifferentsetofroleoremployeebehaviours.ApproachestoStrategicHRMThesewouldsuggestdifferentHRMpoliciesinrelationtojobdesign,employeeappraisal,development,reward,participationetcetera.Butthesecanbeconsideredasmore“tactical”innaturethan“strategic”.Moreover,whatSchulerandJacksonfailtoaddressiswhoactuallydecidesiftheorganisationisfollowinga“innovativestrategy”ora“costminimisationstrategy”.

ApproachestoStrategicHRMAnotherargumentagainstusingsuchapproachesisthattheyareprescriptive(Trompenaars,1996).Inanattempttosimplifythecomplexnatureoftheenvironment,HRMandhumaninteraction,suchrationalapproachesdonotalwaysexplainwhathappensinreality.Itisalsopossiblethatinattemptingtosimplifytheinteraction(oftheenvironmentandHRM),andtoprovidegeneralisationsaboutthephenomenon,theapproachmayactuallystifleinnovation(Ulrich,1996)

ApproachestoStrategicHRM4.PhilosophicalApproach.Ulrich(1996)providesaphilosophicalapproachtoHRMinhisbook“HumanResourceChampions”.Ulrich’smainargumentisthatthestructureofthecompanyneedstofititsstrategy.ItisherethatHRMplaysanimportantrolebecausetheco-alignmentofstrategyandstructureinvolvesallthecoretenantsofHRM.Thefocusislongtermratherthanshortterm.Infittingstructuretostrategy,anumberof“ValueChains”willbecreated.

ApproachestoStrategicHRMIntoday’scompetitiveenvironment,thefocusofHRMisonresponsivenessandthiscomesfromaligningcustomers,employeesandsuppliers.ThestrategicfunctionofHRMmustalsobeawareofhowdecisionswillaffecttherelationshipbetweenactivitiesintheValueChain.StrategicHRMisvitaltotheprofitabilityoforganisations.Inthelongterm,Profitabilitywillbedrivenbygrowth.ApproachestoStrategicHRM

ThewayinwhichgrowthisachievedwillaffectHRM.Inrelationtothis,Ulrich(1996)posesanumberofquestions:Howcanexecutivescreateacommitmenttorapidgrowthandtheculturethatsupportsitwhilesimultaneouslycontrollingcosts?Howcanexecutiveshirepeoplewhocanhelptheorganisationgrowwhilstreducinglabourcosts?Howcanexecutivescreateanorganisationalstructurethatprovidesboththeautonomyneededforgrowthandthedisciplineneededtocontrolcosts?ApproachestoStrategicHRMWhataretheHumanResourceimplicationsofenteringnewbusinessesofleveragingcoretechnologiesthatleadintounfamiliarbusinessesandofbuildingtheintimatecustomerrelationshipsthatbringanever-increasingpercentageofcustomers’purchasesintothesameprovider?ThechallengesthatUlrichoutlinesgiveexamplesofhowHRMcanbestrategic.UnliketheNormativemodels,thereisnoonecorrect“cookbook”method.Rather,thereareanumberofquestionswhichneedtobeasked/answered.InternationalSHRM Thestrategyprocessvariesbycountry Itmayworkindifferentwaysthroughdifferentsystems ManagementdecisionsintheNetherlandsandGermanywillbesubjecttothescrutinyofpowerfulWorksCouncils(Harris,BrewsterandSparrow,2004) HRmaybestrategicwhereanHRpersonisamemberoftheBoardofDirectors ThelikelyhoodofanHRdirectorbeingamemberoftheboardvariesaccordingtothecountryInternationalSHRMIntheUKthisisabout50%comparedtoalmost90%inFrance(Cranet,2000)However,becauseanHRdirectorisamemberoftheBoardofDirectorsdoesnotnecessarilymeanthathe/sheinfluencesCorporateStrategyReadingforNextWeekBoxall,P.andPurcell,J.(20