An introduction to human resource management: strategy, style or outcome
To outline the development of HRM as an area of practice and analysis in terms of:
To debate the nature of the HRM phenomenon and the different perspectives from which it is viewed:
as a restatement of existing personnel practice
as a new managerial discipline
as a resource-based model
as a strategic and international function.
To review and evaluate the main models of HRM, and to assess current developments.
The fourth edition of this book provides an opportunity to reflect on the extent of the debate about human resource management, the changing nature of the employment relationship, and the consequences for how organisations and individuals are managed. It is now over a decade since the idea for a comprehensive treatment of HRM was conceived by the authors, and a great deal of the prevailing analysis and data that was available at that time was derived from such sources as the 1984 WIRS 2, the 1988 Company Level Survey and MacInnes’ Thatcherism at Work (MacInnes, 1987). The story was roadly one of change, but not so much that a radical reshaping of the employment relationship had occurred.
Rather, the effects of deflation and recession in the early and late 1980s had wrought greater damage to the infrastructure of employment than any legally enforced reform, while the move to privatisation, and a stronger role for market-based models of economic activity, had shifted the primary scope of industrial relations away from job regulation and collective bargaining towards coping with outsourcing and downsizing. Despite all these shifts, however, a large part of the analysis and discussion that constitutes the HRM debate today had yet to reveal itself. Some initial studies of non-unionism were only just beginning to see the light of day (McLoughlin and Gourlay,1994), while the role of HRM in transforming and adding value to organisational performance (Pfeffer, 1994, 1998), therelationship between HRM ‘bundles’ and business performance (McDuffie, 1995; Huselid, 1995), the role of the psychological contract in gaining employee assent (Guest and Conway, 1997) and wider changes in the infrastructure of the employment relationship (Cully et al., 1999) would come later in the decade.
The situation is now one of a rich and complex diversity of analyses, in which UK-based research and analysis is playing as significant a contribution as that of the USA – even if some of the policy and research initiatives still derive, prima facie, from a US agenda. What is striking about the HRM debate of the past decade is that two common themes have persisted, and yet neither has turned out to be the determining feature of the way the employment relationship is managed. The first theme is that of HRM’s replacement of the older traditions of personnel management and industrial relations. The approach of what might be termed the ‘Desperately Seeking HRM’ school of analysis seeks to explore the incidence, volume and influence of HRM-based approaches and practices, and to assess whether they are supplanting the historical patterns of UK employee management (Sisson, 1993).
The second theme is concerned to examine the specific impact of focused types of HRM – such as high-commitment management – in order to assess their superiority over both more generalised HRM interventions and traditional methods. While there are obvious limitations in seeking to assess the total impact of HRM, whether by large-scale survey material or by case analysis, there are similar limitations to measuring discrete choices of ‘tools’ with the aim of achieving ‘best practice’, as Purcell (1999) has noted. Thus we have entered the new millennium without a universal model of HRM on the one hand, but, on the other, with a range of HRM activities that are under sustained examination in order to assess their efficacy in achieving superior organisational performance. What is clear is that the HRM agenda still continues to develop and provide opportunities for analysis and prescription.
For some commentators HRM seems to have hit its high water mark and is now on the ebb (Bach and Sisson, 2000), while for others (such as Guest, 1997) there is fragmentary but clear evidence that ‘HRM works’, but we need to put flesh on the bones to consolidate that assertion.
A framework for HRM analysis: strategy, style and outcome
How can we attempt to construct a framework to encompass these divergent views about the relative strength and vitality of HRM? As the subtitle of this chapter suggests, there are at least three approaches to looking at the phenomenon that might help to explain different groups of arguments, based on whether the analysis focuses on the role of strategy, style or outcomes in the conduct of HRM.
HRM as strategy
The strategic emphasis has by far the longest pedigree in the HRM debate; indeed, it is probably the strategic aspirations of the US models that were the defining feature of HRM as it emerged in the 1980s (see also Chapter 2). As we shall see later in the chapter, strategy has been seen as one of the touchstones of HRM’s viability. The extent to which HRM has come to play a role in the direction and planning of organisations has been a persistent theme not simply in the academic literature but in practitioner activity too.
For example, the HRM Initiative in the UK National Health Service stresses the key role that HR practitioners will play at both national and regional levels in achieving nationally determined and nationally assessed goals for health care delivery. A key part of this initiative is the integration of HRM with the strategic goals of the NHS. Within strategic approaches two further strands might be noted. The first remains centred around macro-strategic issues and the general location of HRM within organizational structures overall – perhaps best summed up by the debate over whether HRM has a seat on the Board.
The second strand has been more concerned with the formal inputs that HRM can provide – such as better recruitment and selection procedures or better alignment of reward systems with activity – as a way of providing linkages that are demonstrable and robust. In the NHS, for example, a major factor in stimulating these closer linkages is the realisation that variability of treatment rates between different hospitals may be as much to do with the management of the clinical personnel as with their access to medical technology. Thus the health service provides an excellent example of the strategic positioning of HRM and the linkage of its inputs.
This brings together their respective relationships in the debate over the role of HRM in the health service overall. A contemporary explanation for HRM’s strategic positioning has emerged in the use of the term business focus. This has become a popular and widely used phrase to describe a wide range of organisational activity into which HRM is expected to link. However, it has an ambiguity and a potential for use across not only strategy, but also style and outcomes. If it has a meaning, it is probably best viewed as a general description of the territory that HRM now inhabits, rather than the technically defined and narrower role of personnel management of a quarter of a century ago.
HRM as style
The second approach, based around styles of HRM, has also had an active life, and one that has attracted much discussion within the UK. Some of the antecedents to this can be traced back through the analysis of personnel as a function and personnel managers as actors within organisational settings. Thus Watson’s (1977) analysis of the professional role of personnel managers and Legge’s (1978) analysis of their political location within organisational roles can be seen as important precursors of this approach, while Tyson and Fell (1986) further refined the styles of personnel managers within their tasks.
Other antecedents can be traced back to the industrial relations tradition, with the ‘unitarist–pluralist’ analysis of Fox (1966) and the ‘traditionalist/sophisticated paternalist/sophisticated modern/standard modern’ formulation of Purcell and Sisson (1983). The idea that style of personnel management or industrial relations can materially affect the operation of the function is deeply rooted in UK analysis, and suggests too that it has proved difficult to change over time, except through profound disturbance or acute threat. In these contexts the reason why UK management has not demonstrated a greater interest in, or success with, strategic approaches to HRM (in contrast to the USA) is largely attachment to a style that is the product of history and institutions over time, each of which is now an embedded feature of the British business system.
The analysis of HRM in terms of style has also revolved around whether it can be regarded as hard or soft (Legge, 1995) in its intent. Hard HRM is sometimes defined in terms of the particular policies that stress a cost-minimisation strategy with an emphasis on leanness in production, the use of labour as a resource, and what Legge calls a ‘utilitarian instrumentalism’ in the employment relationship; at other times hard HRM is defined in terms of the tightness of fit between organisational goals and strategic objectives on the one hand and HRM policies on the other. Soft HRM, by contrast, is sometimes viewed as ‘developmental humanism’ (Legge, 1995) in which the individual is integrated into a work process that values trust, commitment and communication.
What is probably more at issue than either of these two characterisations is the question of whether they are equally routes to work intensification and greater demands on the employment relationship by the organisation at the expense of the employee. As Legge points out, it is quite feasible that hard HRM variants can contain elements of soft practice, while the criticism that can be made of soft variants is that they can be held to deliver hard outcomes in terms of the tightness of the fit with business strategy that is sought. Indeed, just as with the broad definition and usage of the term ‘business focus’, noted earlier, so with the meaning and use of the term ‘fit’. Each of the three descriptions of HRM discussed here – strategy, style and outcome – is concerned with fit and the extent to which each achieves it, with the result that ‘fit’ has itself become an infinitely flexible term, and one that becomes increasingly difficult to apply to HRM as a single concept.
A more recent approach to the question of style can be found in the work of Ulrich (1998). The tradition that sought to present practitioner roles in terms of the organizational location of their work provides a good background to Ulrich’s model of the HRM profession and its contribution to the business. For Ulrich, there are four possible styles or routes that HRM can take. The first is in what he terms work organisation, which involves the practitioner servicing the needs of the organisation in as efficient a manner as possible, but no more than that. In this mode, the style of HRM is as a support function ‘doing the job right’ but with little opportunity to add value or contribute to organisational performance. It might be that minimal HRM mistakes will be made, but conducting HRM in this manner will not provide any particular competitive advantage for any one organisation.
The second style is to become the employee champion. In this mode the HR practitioner takes on the role of ‘voice’ for employees, seeking to reduce the frictional differences between the organisation and its staff and ensuring that senior management are aware of the concerns of employees. While this might be a different role from the maintenance function of work organisation, it still places the practitioner in a servicing role and does not necessarily create a role with added value; the emphasis is still on reducing dysfunctions. In the third mode, that of agent for change, the practitioner becomes the protagonist in active change management that has the capacity for added value, while in the fourth mode of business partner the practitioner becomes a fully contributing member of the management team, who is able to participate in the corporate planning process and bring the expertise of HRM into the equation with the responsibility to demonstrate how HRM can add value and give competitive advantage.
For Ulrich the danger for HRM lies in its inability to move on from work organization and seize the developmental opportunity of becoming the business partner. The attractions of this approach to style for practitioners are obvious, with its message of hope and a promise of a substantial role at the heart of organisational structures, and Ulrich’s work has become particularly popular in the professional associations for HR managers in both the USA and the UK.
HRM as outcomes
Over the second half of the 1990s, a further turn in the HRM debate saw a move away from attempts to define what its ‘input’ characteristics might be in favour of examining what consequences flowed from applying HRM in fairly tightly defined circumstances. Whereas both strategic and style approaches to HRM analysis had been concerned with its architecture, an ‘output’-based model concerned itself with examining those organizations that not only constructed their HRM in particular configurations but also found that resultant outcomes could give them a competitive advantage. The impetus for this approach was predominantly American, in particular the work of Arthur (1992, 1994), McDuffie (1995) and Huselid (1995), although UK work has also developed in this area, West and Patterson (1997) in particular.
The unifying theme of these studies is that particular combinations of HRM practices, especially where they are refined and modified, can give quantifiable improvements in organisational performance. Arthur’s work studied 54 mini-mills (new technology steel mills using smaller workforces and new working practices) and demonstrated that firms using a ‘commitment’ model of HRM saw higher productivity, lower labour turnover, and lower rates of rejected production. In other words, it took the HRM style element a stage further in order to establish whether there was an output effect that could benefit the firm. McDuffie’s work examined 70 plants in the world car industry, and the use of HR techniques that were regarded as innovative.
His analysis argued that it is when practices are used together, rather than simply in isolation or only for the specific effect of some more than others, that superior performance can be achieved. An important part of this analysis is the extent to which employees gave ‘extra’ in the form of discretionary effort that would otherwise have not been forthcoming without the effect of the chosen practices. Three factors were noted in particular: buffers (the extent to which plants adopted flexibility), work system (the work arrangements that complemented flexibility), and HRM policies (the HRM practices that complemented flexibility). The marked effect on performance was in the combined impact of all three factors working together. This approach moves the impact of HRM from being concerned with strategic choice or style per se to following the output consequences of constructing what have come to be known as ‘bundles’ of HR practice.
Huselid’s study examined the relationships between the HR system (the groups of practices rather than individual practices), outcome measures (such as financial performance as well as HR data on turnover and absence), and the fit between HR and competitive strategy in 986 US-owned firms employing more than 100 employees. Huselid’s results indicated a lowering of labour turnover, higher sales performance, improved profitability and higher share valuations for those firms that performed well on his indices. In the UK the study by West and Patterson (1997) indicated that HR practices could account for 19 percent of the variation between firms in changes in profitability and 18 percent of the variation in changes in productivity.
Once again, the complementarity of HR practices was held to be significant. As a result of these types of analysis a great deal of attention is now being paid to what constitutes a ‘bundle’ of HR practices that will afford firms superior performance. But this is no easy matter to settle conclusively. What is obvious about each of these studies is that they were examining patterns of HR strategies, choices, applications and refinements after their introduction. We have little information about how all these factors came to be in place in some firms and not in others.
For practitioners there is no easy or readily available checklist that can be applied. For each firm contemplating an output model of HRM there has to be a difficult internal process of selecting and testing the bundle that will work in their own circumstances. The mere application of a group of practices, without some assessment of their interconnectedness, is unlikely to have discernible beneficial outcomes. Claims for the contribution of HRM to enhanced organisational performance have been criticised on a number of grounds. Richardson and Thompson (1999) raise several concerns about the research studies. They question the lack of consensus in the measures used to define HRM; the apparent arbitrary selection of items included in HRM ‘bundles’; and the assumption that all HR practices are equally important.
Furthermore, they suggest that many of the studies ignore other measures of managerial effectiveness and thus risk overstating the impact of HRM. Whitfield and Poole (1997) express doubts over attributions of causality; i.e. is it that HRM leads to better organisational performance or is it that better performing organisations are able to invest more time and effort into the management of human resources? Thus the debate over HRM, whether it is pursued by analysts, academics or practitioners, continues to expand and develop. So far from reaching the high-water mark and ebbing, HRM as a phenomenon continues to thrive. Indeed, the fusion of HRM with business focus, noted above, has ensured that many major organisational changes now intimately involve HRM as part of the equation.
These changes provide the background against which human resource management has emerged as the predominant contemporary influence on managing employment relationships. It is now commonplace to describe HRM as a managerially derived and driven set of precepts with both line and HR managers actively involved in its operation. What is distinctive about the debate, and perhaps explains its capacity to renew itself after each wave of analysis has been assessed and absorbed, is the shift from the broad question of whether HRM exists at all to more focused analyses – for example, whether particular combinations of HRM policies produce better results in output or services so that competitive advantage might accrue to those organisations that adopt them. Thus HRM continues to provide agendas and prescriptions for debate amongst both practitioners and analysts that are contentious and compelling, and have no settled orthodoxy.
Why should this be so? Part of the answer lies in the perspective brought to bear upon HRM: there is a diversity in the HRM debate, derived from the manner in which particular participants view the essential elements of HRM and what they believe it is representing, that colours the discussion. For the purposes of this analysis four broad perspectives are set out here:
that HRM is no more than a renaming of basic personnel functions, which does little that is different from the traditional practice of personnel management;
that HRM represents a fusion of personnel management and industrial relations that is managerially focused and derives from a managerial agenda;
that HRM represents a resource-based conception of the employment relationship, incorporating a developmental role for the individual employee and some elements of cost minimisation;
that HRM can be viewed as part of the strategic managerial function in the development of business policy, in which it plays both a determining and a contributory role and is particularly so for multinational firms.
HRM as a restatement of existing personnel practice
It is possible to view this first standpoint as a basic but natural reaction to a new and somewhat threatening reformulation of traditional functions. There is, perhaps, an understandable scepticism that HRM can, or ever could, live up to the wider claims of its ability to transform the employment relationship so totally that some of the inherent problems of managing a volatile set of employee issues can be resolved more satisfactorily than by approaches that have grown out of the historical development of personnel management. Throughout the past 15 years this view has remained as a strong reaction to what is seen as the renaming pretensions of HRM. In large part such a reaction can be explained in terms of the gulf that appears to exist between personnel management ‘on the ground’ and the rather more theoretical and ‘strategic’ nature of a great deal of the discussion surrounding human resource management.
For many practitioners the notion that their roles and functions can be seen in anything other than a highly pragmatic light is no more than wishful thinking: there is an important, if straightforward, task of recruiting, selecting, rewarding, managing and developing employees that must be carried out as ‘efficiently’ as possible. In this sense, HRM might be viewed as no more than another trend in the long line of management prescriptions that have each enjoyed a vogue and then lost favour, while the pragmatic nature of established personnel management has ensured that the operational tasks have been accomplished.
HRM as a new managerial discipline
The second perspective contains more diversity and complexity, and incorporates such issues as the philosophies of personnel and industrial relations, the professional desire to present the management of employees as a holistic discipline (akin to the inclusive approaches of accounting and marketing, for example), and the belief that an integrated management approach can be provided by HRM. This would not only unite the differing perspectives of PM and IR but also create a new and broader discipline as a result of the fusion of these traditional elements.
An important outcome of this approach is to view some of these traditional components as now irrelevant or outdated and as dealing with problems that typify past, as opposed to current, practice: this is perhaps most noticeable in the renaming of functional activities so that industrial relations becomes ‘employee relations’, and training becomes ‘employee development’. This retitling is not designed solely to update an image, although that is important in itself, but is more specifically aimed at expressing the nature of the employment relationship in what are seen as changed circumstances.
Thus industrial relations is seen as expressing a relationship based upon a manual, manufacturing (and, often by implication, male) unionized workforce – rather than the supposedly wider concept of ‘employee relations’, which involves a total workforce that includes white-collar and technical staff, of whom many will be female and some or all non-union. A further significant shift in thinking connected with this second approach is that of the desire by management to extend control over aspects of the collective relationship that were once customarily regarded as jointly agreed between employees (usually via their unions) and management.
Treating employees as a primary responsibility of management, as opposed to the jointly negotiated responsibility of both unions and management, suggests an approach that is concerned to stress the primacy of the managerial agenda in the employment relationship, and marks a shift away from one of the fundamental assumptions of the approach (after the Second World War) to managing collective workforces. This shift was underlined in the 1993 employment legislation, which removed from ACAS the duty, originally given to it on its inception in 1974, to promote collective bargaining. In reality, this duty was a reflection of a deeply rooted presumption stretching back throughout most of the twentieth century and, in the UK at least, largely shared by employers, unions and the state, that collective bargaining represented a ‘politically’ acceptable compromise between management and labour; for more discussion of this see Clark (2000).
Over recent years, the UK professional body for practitioners, the Chartered Institute of Personnel and Development, has sought to establish an agenda that is concerned to show this integration into a business-led managerial discipline and the added value that can accrue from effective people management. The annual autumn conference is now the largest management conference held in Europe, and it attracts the most well-known ‘guru’ speakers; its annual HRD spring conference is as influential, and presents as extensive a range of speakers within the learning and development domain, while setting the programme in a business context. With membership now well over 1,10,000 the Institute was successfully granted a Royal Charter in 2000, in recognition of its role as a major professional management association.
Within this framework HRM is one factor in transforming personnel management into a powerful managerial role in its own right. To that extent it is part of a ‘transformation’ within the profession, which sees a move away from technical specificity towards a more rounded and sophisticated contribution to wider organisational objectives. The extent to which such transformations can be achieved is also connected to the third HRM perspective, which is discussed next.
HRM as a resource-based model
A further perspective has been brought to bear on HRM from those approaches that stress the role of the individual in organisations, rather than the collective employment models outlined so far. Personnel management, to a large degree at least, has always been concerned with the interface between the organisation and the individual, and with the necessity of achieving a trade-off between the requirements of the organisation and the needs of individual employees. Traditional personnel management policies that have been developed to cope with this trade-off have often taken a piecemeal approach to certain aspects of this issue: historically, the early twentieth-century personnel function stressed the ‘welfare’ role that could be afforded employees so that basic working conditions (both physically and contractually) could be established.
Subsequently, other styles of personnel management sought to introduce, administer or rectify particular aspects of jobs and roles that individuals carried out. This tradition fostered a belief in equitable selection and reward systems, efficient procedures for discipline, dismissal and redundancy, and clear and operable rules for administering large numbers of employees to avoid arbitrary judgements over individual cases. The prevailing rationale behind all these activities could be seen as a desire to manage the difficulties of the organisation/individual relationship in as technically neutral a manner as possible. This emphasis has fostered a culture within personnel management that is characterised as cost minimisation, often identified with some forms of hard HRM, with the individual as the cost that has to be controlled and contained.
In these circumstances employees become one of the aggregate commodities within the organisation that have to be managed within the organisation’s resources, in the same way that, for example, the finance available to the organisation has to be managed within a framework and according to accounting conventions. The logical extent of this model is reached in human resources planning, with precise numerical assessments of internal and external demand for and supply of labour .
Any alternative to this formalised approach, which treats the individual as a resource rather than an expense and views expenditure on training as an investment rather than a cost, associated with some aspects of soft HRM, can be seen to pose a profound threat to the conventional wisdom of personnel management. The conception of personnel as having an enabling capacity for employees has a long tradition, not least in the United States, where organisational analysis has often provided prescriptions concerning the role of supervisors, work groups and work organisation. The advent of Japanese management systems has, however, highlighted the impact of this approach on the employment relationship.
Whether sustainable or not in the West, the Japanese large-firm emphasis on developing individual employees along particular job paths while undertaking to provide continuous employment throughout the normal working life of the individual has at least provided a model in which the employer seeks to maximise employment opportunities. This approach goes further, however: it regards all employees as potentially able to benefit from further training and development, from which the organisation itself then benefits. So, far from viewing the employee as a cost, which has to be borne by the employer, this philosophy sees the employee as an actual and potential return on investment, which ultimately strengthens the company.
The responsibility of the employer for investment and employment has, at least in the post-war period to date, encouraged large corporate Japanese employers to develop products and markets that have used the invested skills of their workforces. There has been strong interest in what is termed ‘resource-based’ HRM, in which human resources are viewed as the basis of competitive advantage. This means that advantage is not only derived from the formal reorganisation and reshaping of work, but is also powerfully derived from within the workforce in terms of the training and expertise available to the organisation, the adaptability of employees which permits the organisation strategic flexibility, and the commitment of employees to the organisation’s business plans and goals.
HRM as a strategic and international function
The advent of human resource management has also brought forward the issue of the linkages between the employment relationship and wider organisational strategies and corporate policies. Historically, the management of industrial relations and personnel has been concerned either to cope with the ‘downstream’ consequences of earlier strategic decisions or to ‘firefight’ short-term problems that threaten the long-run success of a particular strategy. In these instances the role has been at best reactive and supportive to other managerial functions, at worst a hindrance until particular operational problems were overcome.
In the private sector the well-known case of British Leyland in the 1970s demonstrated a situation where considerable amounts of managerial effort (up to 60 per cent of operational managers’ time by some estimates) were devoted to ‘fixing’ shopfloor problems. In order to re-establish managerial control the company effectively turned the reshaping of industrial relations into its strategy so that it could refashion its product range and market position. In the public sector throughout the 1980s a series of major disputes affected the operations of schools, hospitals and local authorities (among many such examples); in each of these cases changes to the nature of the employment relationship were the root causes of the dislocation.
The Leyland case and the public sector experiences are extreme examples, but each demonstrates the impact that the employment relationship can have on total operations. Human resource management lays claim to a fundamentally different relationship between the organisation’s employment function and its strategic role. The assumption behind HRM is that it is essentially a strategically driven activity, which is not only a major contributor to that process but also a determining part of it. From this standpoint the contribution that the management of the employment relationship makes to the overall managerial process is as vital and formative as that of finance or marketing, for example.
Indeed, the notion that HRM is central to such managerial decision-making indicates the extent to which its proponents feel that it has come out of the shadows to claim a rightful place alongside other core management roles. In this respect one of the traditional stances of the personnel practitioner – that of the ‘liberal’ conception of personnel management as standing between employer and employee, moderating and smoothing the interchange between them – is viewed as untenable: HRM is about shaping and delivering corporate strategies with commitment and results.
One further component in this construction of HRM points towards its international potentialities. While the employment relationship is materially affected and defined by national and related institutional contexts, these variations in labour markets and national business systems give rise to a wide variety of employment policies and strategies for the management of labour within broadly defined capitalist economies. To the extent that an employer operates within the confines of a national business system, characteristics therein do not impinge upon neighbouring business systems. For example, the Americanness of US firms does not impinge on Canadian firms and their employment systems; similarly, the Britishness of UK firms does not impinge on the Irish business system.
In contrast to this, in circumstances where employers operate across national borders, these different institutional characteristics may become factors that an employer wishes to change or override. Thus multinational corporations (MNCs) may seek to deploy centralised – more homogenous – employment strategies, regardless of the institutional character of national business systems where they locate subsidiary operations. Multinational corporations are significant international actors in the world economy and play a key role in the trend towards ‘globalisation’, contributing to industrial development and restructuring within and across the borders of national business systems. But MNCs are not itinerant or transnational as is often suggested.
Management style, strategies and policies are shaped by home business systems – the financial, institutional, legal and political frameworks in which they developed as domestic firms. Thus there is a persistent ‘country of origin’ effect in the behaviour of MNCs whereby the country from where an MNC originates exerts a distinctive effect on management style, particularly the management of human resources. Hirst and Thompson (1999: 84) demonstrate that the majority of MNCs are disproportionately concentrated in their country of origin, sell the majority of their goods and services there and hold the majority of their assets there. In addition to this home country or country of origin effect, government regulation in countries where subsidiary operations of MNCs are located may also have an effect on shaping company practices for the management of human resources.
In some respects the impact of a ‘host country’ business system may constrain the preferred practices that reflect embedded patterns of regulation in an MNC’s country of origin. This interplay between home and host country influences raises important questions (for HR academics and practitioners employed in national and multinational firms) about the nature of international competitiveness and associated questions about how MNCs draw on and seek to diffuse competitive advantage from the business system in which they originate. International human resource management for global workforces is central to this question; policies to attract, retain, remunerate, develop and motivate staff are increasingly vital for the development of international competitive advantage.
Thus the significance of these issues is not confined to theoretical debates on the nature and scope of globalisation; they are of considerable significance in respect of what becomes ‘best practice’ in and between different business systems. For example, in the UK, US MNCs are widely diffused and account for approximately 50 per cent of foreign direct investment (Ferner, 2003), and there is considerable evidence to suggest that subsidiaries of US MNCs diffuse international HRM, that is, within individual MNCs. But in addition to this there is evidence that US MNCs act as innovators in business systems where they operate.
In the British context, productivity bargaining, performance-related pay, job evaluation, employee share option schemes, appraisal, single-status employment and direct employee involvement are now widely diffused in indigenous firms but were pioneered in subsidiaries of US MNCs; see Edwards and Ferner (2002) for a review of empirical material on US MNCs. In summary, MNCs may seek to deploy centralised employment policies to subsidiary operations, a tendency that is more pronounced in US and Japanese subsidiaries but less so in the case of German MNCs. Some MNCs, notably US ones, have powerful corporate HR functions which ‘roll out’ programmatic approaches to HRM that monitor subsidiaries against an array of detailed performance targets.
So within MNCs international HRM may create broad-based HR systems that minimise or override differencesbetween national business systems and, by contrast, emphasise the importance of organizational cultures that are drawn from the strategic goals of the firm. Management style and practices for HRM in MNCs are shaped by the interplay between home and host country and, as Chapter 15 demonstrates, this interplay focuses ongoing debates about the institutional embeddedness of national business systems and the cultural impact of MNCs in overseas economies.
Some assumptions about human resource management
Figure sets out the four perspectives on HRM discussed above, and locates key aspects of the HRM focus within its framework. Such a schematic presentation not only demonstrates the breadth of these operational assumptions, but also underlines their ambiguity. Within many organisations the circumstances in which human resource management is pursued will be critically determined by the state of the labour market at any particular time: it is thus perfectly understandable for an organisation to be moving towards a strategic dimension of HRM in its own terms, but to find it necessary to revert or regroup to a modified version of its original policy.
A case in point here might be that of British Airways, which deployed both the developmental and strategic/ international models of HRM throughout the 1980s in order to support its ‘Customer Care’ business plan, but found itself increasingly relying on the restatement and fusion models as it sought to reorganise its Gatwick operations (including Dan-Air) in the 1990s. This gave rise to industrial relations difficulties, with strong residual problems over wage levels for cabin staff leading to strike threats in 1996, which were realised in 1997. At a cost of some £125 million BA sustained strike action by cabin crews, worldwide, over pay and conditions.
One outcome of the dispute was that BA hired new staff for a startup company Go on contracts that were 20 per cent cheaper than those for BA staff, thus further emphasising the cost-minimisation model of hard HRM and linking this with the fusion model. By 2002 BA’s corporate and HR strategies were in disarray. In the wake of 11 September and the collapse of transatlantic travel BA announced its ‘future shape and size’ strategy which involved two aspects: firstly, a concentration on first and business class travellers, an aspiration that renewed its customer care plan pioneered in the 1980s, and secondly, rationalisation of services at, or withdrawal from, some regional airports, an announcement that in effect conceded BA’s inability to compete with lowcost carriers on some routes.
This admission appears all the more painful owing to BA’s recent sell-off of Go to a management buy-out. In effect, BA’s lack of competitiveness in a period of global downturn in international travel, combined with the emergence of low-cost airlines which have outperformed the market (increased market share), forced the company to revert to harder HRM, further emphasising the cost reduction model.
Four perspectives on human resource management
If further evidence were needed of the shifts in HRM that can occur when businesses come under pressure, then BMW’s handling of the Rover group sale and Barclays’branch closure programme, both in the spring of 2000, provide ample evidence that approaches to HRM are prone to severe buffeting, whatever the original intent of the business. In BMW’s case it sought to fuse a European style of communication and involvement with the Japanese style already existing within Rover as a result of the latter’s Honda collaboration over the previous decade; in Barclays’ case it saw the need to maintain its role as a ‘big bank in a big world’ by cutting 10 per cent of its branch network in one operation.
Competitive product and service market pressures can quickly overwhelm the best of HRM intentions. More recently, closure announcements by Corus (formerly British Steel), motor manufacturers Ford and General Motors and relocation decisions made by the Prudential, British Telecom and Massey Ferguson demonstrate the UK’s exposure to MNCs. Here an emergent pattern of strategic decision-making, sometimes made on a pan-European basis, illustrates some embedded characteristics of the British business system, such as comparatively loose redundancy laws, to demonstrate that host country characteristics need not constrain MNCs.
In each case the competitive pressures associated with the value of sterling, comparative labour costs, skill levels and unit labour costs, or delayed investment decisions overrode softer developmental aspects of HRM. This pattern illustrates how European consolidation in MNCs and the more general pursuit of ‘shareholder value’ further consolidate the cost-minimisation model of hard HRM. Although these four interpretations of HRM each contain strong distinguishing characteristics, they are by no means mutually exclusive: indeed, it would be surprising if that were so.
In this sense they constitute not a model of HRM but a set of perspectives on HRM that organisations bring to bear on the employment relationship. A more useful approach to interpreting these perspectives might be to recognise that many organisations may display at least one of these principal perspectives but will also rely on several characteristics drawn from at least one and probably more of the other three constructs. In this sense HRM, as a set of issues as well as a set of practices, contains ambivalence and contradiction quite as much as clarity and affirmation.
In many organizations the tension that arises from this outcome is part of the internal process of the management of uncertainty. With the privatisation of British Rail and the multiplicity of operating companies, there has been a distinct move away from the business-led strategies of the former BR operating divisions to a more traditional pattern of collective agreements involving negotiations between the unions and the individual owners of the new companies. A further discussion of some of these aspects of HRM can be found in Guest (1989a).
The search for the defining characteristics of HRM
An important part of the debate, both in the USA and in the UK, has been the search for the defining characteristics that will describe, analyse and explain the HRM phenomenon. To a considerable extent this quest has proved largely unresolved because of the wide range of prescriptions and expectations placed upon the term, and the relative lack The search for the defining characteristics of HRM 15 of available evidence to determine systematically whether or not HRM has taken root as a sustainable model of employee management. This difficulty is further compounded if one considers a series of critical questions about human resource management:
Is HRM a practitioner-driven process that has attracted a wider audience and prompted subsequent analytical attention?
Is HRM an academically derived description of the employment relationship, to which practitioners have subsequently become drawn?
Is HRM essentially a prescriptive model of how such a relationship ‘ought’ to be?
Is it a ‘leading edge’ approach as to how such a relationship actually ‘is’ within certain types of organisation?
Each of these questions leads the search for the innate qualities of HRM along different routes and towards different conclusions. If the first approach is adopted, then evidence is required that would identify the location, incidence and adoption of defined HRM practices and suggest factors that caused organisations to develop those approaches. The second approach would have to locate the HRM debate in the academic discussion of the employment relationship and demonstrate why this particular variant of analysis emerged.
The third approach would have to explain why, among so many other prescriptions concerning management, the HRM prescription emerged and quite what the distinctive elements were that permitted its prescriptive influence to gain acceptance. The final approach would have to provide satisfactory evidence that, where HRM had developed within certain organisational contexts, the evidence of the particular setting could be applied to the generality of the employment relationship.
However, when these questions have all been taken into account there still remains the residual problem that none of them can conclusively define the nature of HRM in its own terms to the exclusion of each of the others. What are seen as practitioner-derived examples of HRM can be matched by similar policies in non-HRM-espousing organisations; what are seen as academically derived models of HRM are each open to large areas of contention and disagreement between analysts; what are seen as prescriptive models of ‘what ought to be’ might well be just that and no more; and what could be held up as ‘leading edge’ examples could be wholly determined by the particular circumstances of organisations that are either incapable of translation into other contexts, or may indeed be unsustainable within the original organisations as circumstances change. Storey (1992: 30) outlines this competing set of considerations within the debate very clearly.
These considerations have not prevented the active debate about the nature of HRM proceeding with increasing velocity and breadth. A significant division can be noted between those analyses that seek to stress the innovative element of HRM, which is claimed to address the fundamental question of managing employees in new ways and with new perspectives, and those that stress its derivative elements, which are claimed to be no more than a reworking of the traditional themes of personnel management. Thus Walton (1985: 77–84), in attempting definitions of HRM, stresses mutuality between employers and employees:
Beer and Spector (1985) emphasised a different set of assumptions in shaping their meaning of HRM:
proactive system-wide interventions, with emphasis on ‘fit’, linking HRM with strategic planning and cultural change;
people as social capital capable of development;
the potential for developing coincidence of interest between stakeholders;
Mutual goals, mutual influence, mutual respect, mutual rewards, mutual responsibility. The theory is that policies of mutuality will elicit commitment which in turn will yield both better economic performance and greater human development.
the search for power equalisation for trust and collaboration;
open channels of communication to build trust and commitment;
participation and informed choice.
Conversely, some writers, most notably Legge (1989) and Fowler (1987), have commented that personnel management was beginning to emerge as a more strategic function in the late 1970s and early 1980s before the concept was subsumed under the title of HRM, and that in this sense there is little new in HRM practice. However, allowing for problems of definitions and demarcation lines between various conceptions of human resource management, there is little doubt that HRM became a fashionable concept and a controversial subject in the 1980s, with its boundaries very much overlapping the traditional areas of personnel management, industrial relations, organisational behaviour and strategic and operational management. Its emergence created a controversy, which extends through most of the issues that touch on the employment relationship.
Many proponents of HRM argue that it addresses the centrality of employees in the organisation, and that their motivation and commitment to the organisational goals need to be nurtured. While this is by no means a new concept, the HRM perspective would claim at least to present a different perspective on this issue, namely that a range of organisational objectives have been arranged in a strategic way to enhance the performance of employees in achieving these goals. Before examining these arguments in more detail, a brief account of the origins and recent historical development of HRM would be appropriate in order to understand why it emerged when and as it did.
The origins of human resource management
HRM can be seen as part of the wider and longer debate about the nature of management in general and the management of employees in particular. This means that tracing the antecedents of HRM is as elusive an exercise as arriving at its defining characteristics. Certainly there are antecedents in organizational theory, and particularly that of the human relations school, but the nature of HRM has involved important elements of strategic management and business policy, coupled with operations management, which make a simple ‘family tree’ explanation of HRM’s derivation highly improbable.
What can be said is that the origins of HRM lie within employment practices associated with welfare capitalist employers in the United States during the 1930s. Both Jacoby (1997) and Foulkes (1980) argue that this type of employer exhibited an ideologicalopposition to unionisation and collective relations. As an alternative, welfare capitalists believed the firm, rather than third-party institutions such as the state or trade unions, should provide for the security and welfare of workers. To deter any propensity to unionise, especially once President Roosevelt’s New Deal programme commenced after 1933, welfare capitalists often paid efficiency wages, introduced health care coverage, pension plans and provided lay-off pay.
Equally, they conducted regular surveys of employee opinion and sought to secure employee commitment via the promotion of strong centralised corporate cultures and long-term cum permanent employment. Welfare capitalists pioneered individual performance-related pay, profit-sharing schemes and what is now termed teamworking. This model of employment regulation had a pioneering role in the development in what is now termed HRM but rested on structural features such as stable product markets and the absence of marked business cycles. While the presence of HRM was well established in the American business system before the 1980s, it was only after that period that HRM gained external recognition by academics and practitioners.
There are a number of reasons for its emergence since then, among the most important of which are the major pressures experienced in product markets during the recession of 1980–82, combined with a growing recognition in the USA that trade union influence in collective employment was reaching fewer employees. By the 1980s the US economy was being challenged by overseas competitors, most particularly Japan. Discussion tended to focus on two issues: ‘the productivity of the American worker’, particularly compared with the Japanese worker, ‘and the declining rate of innovation in American industries’ (Devanna et al., 1984: 33).
From this sprang a desire to create a work situation free from conflict, in which both employers and employees worked in unity towards the same goal – the success of the organisation (Fombrun, 1984: 17). Beyond these prescriptive arguments and as a wide-ranging critique of institutional approaches to industrial relations analysis, Kaufman (1993) suggests that a preoccupation with pluralist industrial relations within and beyond the period of the New Deal excluded the non-union sector of the US economy for many years.
In summary, welfare capitalist employers (soft HRM) and antiunion employers (hard HRM) are embedded features within the US business system, whereas the New Deal Model was a contingent response to economic crisis in the 1930s. n the UK in the 1980s the business climate also became conducive to changes in the employment relationship. As in the USA, this was partly driven by economic pressure in the form of increased product market competition, the recession in the early part of the decade and the introduction of new technology.
However, a very significant factor in the UK, generally absent from the USA, was the desire of the government to reform and reshape the conventional model of industrial relations, which provided a rationale for the development of more employer-oriented employment policies on the part of management (Beardwell, 1992, 1996). The restructuring of the economy saw a rapid decline in the old industries and a relative rise in the service sector and in new industries based on ‘high-tech’ products and services, many of which were comparatively free from the established patterns of what was sometimes termed the ‘old’ industrial relations.
These changes were overseen by a muscular entrepreneurialism promoted by the Thatcher Conservative government in the form of privatisation and anti-union legislation ‘which encouraged firms to introduce new labour practices and to re-order their collective bargaining arrangements’ (Hendry and Pettigrew, 1990: 19).
The influence of the US ‘excellence’ literature (e.g. Peters and Waterman, 1982; Kanter, 1984) also associated the success of ‘leading edge’ companies with the motivation of employees by involved management styles that also responded to market changes. As a consequence, the concepts of employee commitment and ‘empowerment’ became another strand in the ongoing debate about management practice and HRM. A review of these issues suggests that any discussion of HRM has to come to terms with at least three fundamental problems:
that HRM is derived from a range of antecedents, the ultimate mix of which is wholly dependent upon the stance of the analyst, and which may be drawn from an eclectic range of sources;
that HRM is itself a contributory factor in the analysis of the employment relationship, and sets part of the context in which that debate takes place;
that it is difficult to distinguish where the significance of HRM lies – whether it is in its supposed transformation of styles of employee management in a specific sense, or whether in a broader sense it is in its capacity to sponsor a wholly redefined relationship between management and employees that overcomes the traditional issues of control and consent at work.
This ambivalence over the definition, components and scope of HRM can be seen when examining some of the main UK and US analyses. An early model of HRM, developed by Fombrun et al. (1984), introduced the concept of strategic human resource management by which HRM policies are inextricably linked to the ‘formulation and implementation of strategic corporate and/or business objectives’. The model is illustrated in Figure(The matching model of HRM). The matching model emphasises the necessity of ‘tight fit’ between HR strategy and business strategy.
This in turn has led to a plethora of interpretations by practitioners of how these two strategies are linked. Some offer synergies between human resource planning (manpower planning) and business strategies, with the driving force rooted in the ‘product market logic’ (Evans and Lorange, 1989). Whatever the process, the result is very much an emphasis on the unitarist view of HRM: unitarism assumes that conflict or at least differing views cannot exist within the organisation because the actors – management and employees – are working to the same goal of the organisation’s success.
What makes the model particularly attractive for many personnel practitioners is the fact that HRM assumes a more important position in the formulation of organisational policies. The personnel department has often been perceived as an administrative support function with a lowly status. Personnel was now to become very much part of the human resource management of the organisation, and HRM was conceived to be more than personnel and to have peripheries wider than the normal personnel function. In order for HRM to be strategic it had to encompass all the human resource areas of the organisation and be practised by all employees.
In addition, decentralisation and devolvement of responsibility are also seen as very much part of the HRM strategy as it facilitates communication, involvement and commitment of middle management and other employees deeper within the organisation. The effectiveness of organisations thus rested on how the strategy and the structure of the organisation interrelated, a concept rooted in the view of the organisation developed by Chandler (1962) and evolved in the matching model.
The matching model of HRM
A more flexible model, illustrated in Figure, was developed by Beer et al. (1984) at Harvard University. ‘The map of HRM territory’, as the authors titled their model, recognised that there were a variety of ‘stakeholders’ in the corporation, which included shareholders, various groups of employees, the government and the community. At once the model recognises the legitimate interests of various groups, and that the creation of HRM strategies would have to recognise these interests and fuse them as much as possible into the human resource strategy and ultimately the business strategy.
This recognition of stakeholders’ interests raises a number of important questions for policy-makers in the organisation: The acknowledgement of these various interest groups has made the model much more amenable to ‘export’, as the recognition of different legal employment structures, managerial styles and cultural differences can be more easily accommodated within it.
This neopluralist model has also been recognised as being useful in the study of comparative HRM (Poole, 1990: 3–5). It is not surprising, therefore, that the Harvard model has found greater favour among academics and commentators in the UK, which has relatively strong union structures and different labour traditions from those in the United States. Nevertheless, some academics have still criticised the model as being too unitarist, while accepting its basic premise (Hendry and Pettigrew, 1990).
The map of the HRM territory
The first two main approaches to HRM that emerged in the UK are based on the Harvard model, which is made up of both prescriptive and analytical elements. Among the most perceptive analysts of HRM, Guest has tended to concentrate on the prescriptive components, while Pettigrew and Hendry rest on the analytical aspect (Boxall, 1992). Although using the Harvard model as a basis, both Guest and Pettigrew and Hendry have some criticisms of the model, and derive from it only that which they consider useful (Guest, 1987, 1989a, 1989b, 1990; Hendry and Pettigrew, 1986, 1990).
As we have seen, there are difficulties of definition and model-building in HRM, and this has led British interpreters to take alternative elements in building their own models. Guest is conscious that if a model is to be useful to researchers it must be useful ‘in the field’ of research, and this means that elements of HRM have to be pinned down for comparative measurement. He has therefore developed a set of propositions that he believes are amenable to testing. He also asserts that the combination of these propositions, which include strategic integration, high commitment, high quality and flexibility, creates more effective organisations (Guest, 1987).
Strategic integration is defined as ‘the ability of organisations to integrate HRM issues into their strategic plans, to ensure that the various aspects of HRM cohere and for line managers to incorporate an HRM perspective into their decision making’.
High commitment is defined as being ‘concerned with both behavioural commitment to pursue agreed goals and attitudinal commitment reflected in a strong identification with the enterprise’.
High quality ‘refers to all aspects of managerial behaviour, including management of employees and investment in high-quality employees, which in turn will bear directly on the quality of the goods and services provided’.
Finally, flexibility is seen as being ‘primarily concerned with what is sometimes called functional flexibility but also with an adaptable organisational structure with the capacity to manage innovation’ (Guest, 1989b: 42).
The combination of these propositions leads to a linkage between HRM aims, policies and outcomes as shown in Table. Whether there is enough evidence to assess the relevance and efficacy of these HRM relationships will be examined later.
A human resource management framework
Hendry and Pettigrew (1990) have adapted the Harvard model by drawing on its analytical aspects. They see HRM ‘as a perspective on employment systems, characterised by their closer alignment with business strategy’. This model, illustrated in Figure, attempts a theoretically integrative framework encompassing all styles and modes of HRM and making allowances for the economic, technical and socio-political influences in society on the organisational strategy. ‘It also enables one to describe the “preconditions” governing a firm’s employment system, along with the consequences of the latter’ (Hendry and Pettigrew, 1990: 25). It thus explores ‘more fully the implications for employee relations of a variety of approaches to strategic management’ (Boxall, 1992).
Model of strategic change and human resource management
Storey studied a number of UK organisations in a series of case studies, and as a result modified still further the approaches of previous writers on HRM (Storey, 1992). Storey had previously identified two types of HRM – ‘hard’ and ‘soft’ (Storey, 1989) – the one rooted in the manpower planning approach and the other in the human relations school. He begins his approach by defining four elements that distinguish HRM:
It is ‘human capability and commitment which, in the final analysis, distinguishes successful organisations from the rest’.
Because HRM is of strategic importance, it needs to be considered by top management in the formulation of the corporate plan.
‘HRM is, therefore, seen to have long-term implications and to be integral to the core performance of the business or public sector organisation. In other words it must be the intimate concern of line managers.’
The key levers (the deployment of human resources, evaluation of performance and the rewarding of it, etc.) ‘are to be used to seek not merely compliance but commitment’.
Storey (1992) approaches an analysis of HRM by creating an ‘ideal type’, the purpose of which ‘is to simplify by highlighting the essential features in an exaggerated way’ (p. 34). This he does by making a classificatory matrix of 27 points of difference between personnel and IR practices and HRM practices. The elements are categorised in a four-part basic outline:
beliefs and assumptions;
This ‘ideal type’ of HRM model is not essentially an aim in itself but more a tool in enabling sets of approaches to be pinpointed in organisations for research and analytical purposes.
Twenty-seven points of difference
Storey’s theoretical model is thus based on conceptions of how organisations have been transformed from predominantly personnel/IR practices to HRM practices. As it is based on the ideal type, there are no organisations that conform to this picture in reality. It is in essence a tool for enabling comparative analysis. He illustrates this by proposing ‘a model of the shift to human resource management’, shown in Figure.
Human resource management: the state of the debate
The question of whether human resource management has the capacity to transform or replace deeply rooted models of personnel management and industrial relations, or could become a fully worked-through theory of management, is one that cannot be answered in a simple manner. Human resource management has many cogent critics and many sceptical supporters. Initial criticism which claimed that it was ‘old wine in new bottles’, the restatement perspective outlined earlier in this chapter, still has strong adherents (Keenoy and Anthony, 1992). Others see it as a version of ‘the emperor’s new clothes’ (Legge, 1989) or a ‘wolf in sheep’s clothing’ (Armstrong, 1987; Fowler, 1987; Keenoy, 1990a).
A model of the shift to human resource management
Tom Keenoy is one of the most eloquent and persuasive of critics, and his examination of HRM has exposed many of the a priori assumptions and non-sequiturs that abound in the reasoning of its supporters. He claims that HRM is more rhetoric than reality and has been ‘talked up’ by its advocates. It has little support in terms of evidence, and has been a convenient dustbin of rationalisation to support ideological shifts in the employment relationship brought about by market pressures. It is also full of contradictions, not only in its meanings but also in its practice.
In examining the meanings of HRM Keenoy notes that a ‘remarkable feature of the HRM phenomenon is the brilliant ambiguity of the term itself’. He later continues: ‘On the “Alice principle” that a term means whatever one chooses it to mean, each of these interpretations may be valid but, in Britain, the absence of any intellectual touchstones has resulted in the term being subject to the process of almost continuous and contested conceptual elision’ (Keenoy, 1990b: 363–384).
Legge (1989) has shown that a close examination of the normative models of HRM and personnel management reveals little difference between the two, and that HRM contains a number of internal contradictions. Legge points out that there is a problem with integration in the sense that HRM policies have to integrate with business policy. She asks: ‘Is it possible to have a corporation-wide mutually reinforcing set of HRM policies, if the organisation operates in highly diverse product markets, and, if not, does it matter, in terms of organisational effectiveness?’.
‘If the business strategy should dictate the choice of HRM policies, will some strategies dictate policies that . . . fail to emphasise commitment, flexibility and quality?’. Legge also comments on the probable incompatibility of creating an organisational culture that attempts to pursue both individualistic and teamwork policies at the same time. Other critics have indicated that many organisations are driven by stronger objectives than HRM. Armstrong (1989) has pointed to the financial orientations of most companies, which are incompatible with those prescriptions described as imperative in the practice of HRM.
Furthermore, the belief that human resource management can transcend national cultures has attracted considerable critical comment (Pieper, 1990). The 1990s saw a growing sophistication in the nature of the debate involving HRM. The nature of the debate at the conclusion of that decade was much more extensive than that which ushered it in. One signal factor was the reconstruction and expansion of the most important research ‘engine’ in the UK, the Workplace Employee Relations Survey of 1998 (Cully et al., 1999), which has specifically addressed HRM-based issues of techniques and performance.
Part of this development has been promoted by the realisation that traditional sources of competitive advantage, such as technological supremacy, patents and capital, are much less important than they were, in a world in which many countries can display equal advantage in at least some of these critical aspects (Pfeffer, 1994, 1998). Thus the extent to which an organisation can mobilise its internal human resources may hold the key to achievable advantage in the future (Prahalad and Hamel, 1990).
Wood (1995) has examined high-commitment management in terms of what he calls the ‘four pillars of HRM’ and their ability to deliver significant HRM performance; Guest and Hoque (1996) have examined the concept of ‘fit’ in the specific circumstances of HRM techniques in greenfield sites and the ‘bundles’ of practice that might affect performance; Purcell (1996, 1999) has critically examined the notion of ‘bundles’ but has provided a thoughtful analysis of resource-based HRM in the context of corporate strategy (1995); while Boxall has sought to relate resource-based analysis to the strategic HRM debate (1996).
A number of commentators (e.g. Storey, 1992; Guest, 1997; Gratton et al., 1999) have noted that there appears to be fairly extensive use of individual HR practices in UK Human resource management: the state of the debate 25 organisations. However, the extent to which these are linked together into a meaningful strategic whole is more contentious (Storey, 2001). WERS (Cully et al., 1999) found evidence of each of the 15 practices identified by the survey as indicative of HRM but only three of them (formal grievance and disciplinary procedures, team-briefing and regular appraisals) appear in more than half of workplaces.
The practices are more likely to occur in workplaces with an employment relations specialist and an integrated employee development plan, suggesting some level of strategic integration. However, only 14 per cent of workplaces have eight or more of the practices while 29 per cent have fewer then three. The WERS team argue that ‘there is evidence that a number of practices consistent with a human resource management approach are well entrenched in many British workplaces’ (Cully et al., 1999:82) but the practices are often adopted in a pragmatic and piecemeal way.
Sisson (2001: 80–81) identifies two main explanations to account for the low take-up of some HR practices. The first is that the time, resources and costs associated with change may tempt managers to adopt an incremental approach, i.e. ‘to try one or two elements and assess their impact before going further, even though this means forgoing the benefits of the integration associated with bundles of complementary practices’. The second (and in Sisson’s words, ‘less comfortable’) explanation is that HRM is only one means of achieving competitive advantage and other methods adopted by organisations, e.g. mergers, joint ventures, cost-cutting and new forms of Taylorism, do not involve a change in the way people are managed.
A further element in the contemporary discussion is the question of whether HRM affords line management more control of the HR function than HR specialists themselves have. If one of the attributes of HRM is its devolution to the line, then perhaps a logical consequence is the relative loss of influence and control by the erstwhile keepers of the corporate personnel conscience. Does this matter? In the words of Fernie et al. (1994), is HRM all ‘Big Hat, No Cattle’? The extent to which HRM activity has shifted to the line, and the associated question of whether personnel managers are any more strategic in their role than in the past, is difficult to determine conclusively.
The Second Company Level Industrial Relations Survey (Marginson et al., 1993) found no evidence to support general strategic involvement, and some evidence that, without a personnel director on the board, involvement in the formulation of human resource policy was weakened – findings largely supported by Purcell and Ahlstrand’s (1994) study of multidivisional organisations. Perhaps the clearest evidence to suggest that personnel management was losing out to the line is provided by Storey’s (1992) study of ‘mainstream’ companies and the introduction of HRM, although a study of 28 organisations by Kelly and Gennard (1994) presented a different picture based on interviews with personnel directors.
In an important sense, therefore, one answer to Storey’s (1995) rhetorical question ‘HRM: still marching on or marching out?’ is that ‘the domain is still lively, vibrant and contested’ (Storey, 2001: 16). And a reaction to Bach and Sisson’s (2000) view that the flood-tide of HRM is waning is to note that the tide appears still to be flooding strongly, with new aspects appearing on the agenda or existing issues further strengthening their position. What are the agenda items that are currently concerning academics and practitioners? Perhaps three particular aspects can serve from the strategy, style and outcome debate explored at the outset.
From a strategic perspective, one can explore the tendency of organisations to adopt similar approaches. Purcell (2001: 75) outlines three factors that might account for this: firstly, the tendency to copy ‘best practice’ because it appears to work but without understanding why this might be the case. Secondly, organisations might be pressured by the short-termism in the capital market or by major customers to do – or not do – certain things, e.g. training. Thirdly, the rise of HR consultancies has led to a spread of ideas that encourage conformity.
An approach to the style perspective might be seen in the role of the psychological contract and employee motivation. Guest and Conway (1997) point to evidence that suggests that employees report positive responses to issues such as fairness, trust and delivery on promises. The Fourth WERS survey of 1998 noted that 68 per cent of workplaces with over 500 employees report participation in problem-solving groups.
There is a large agenda item that is concerned with examining and assessing the scope and significance of managerial styles in terms of involvement, commitment and delivery on the part of the employer, and the resultant response from employees to give assent and commitment to management systems that stress these aspects of the employment relationship. What is unclear is how these factors hold over time, and whether component elements within this agenda will remain significant or important and thus weaken or strengthen the concept.
The third area for further work lies in the area of outcomes. At the present time there is much work exploring the nature of HRM ‘bundles’, and one might expect more as the data from WERS 98 are analysed further. Perhaps one strand of this debate is worth emphasis – high-commitment management and the emphasis on work management systems that achieve specific outcomes (Wood and De Menezes, 1998). This approach seems to have found good evidence that a particular managerial style, allied to a particular combination of practices, will lead to beneficial business outcomes.
Again, whether this is sustainable over time remains a key question and, as we have already discussed, a number of doubts have been raised over the validity of the claims. Nevertheless, it represents a significant addition to the literature and practice of HRM. If these three approaches to research, analysis and practice in HRM are indicative of its breadth and strength at the beginning of the twenty-first century, is there a way in which one can summarise these initiatives? Given that emphasis has been placed in the past on strategy, fit and integration, perhaps one final element ought to be noted as a key ingredient – that of mix.
Whatever the strategic intent, managerial style, outcomes sought or tight–loose ‘fit’ adopted by organisations, it will be in the mix of these components that we will find not only some answers to questions but also the further development of HRM as a significant approach to managing employees.