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2IntroductionAttraction to an organization, selection by it, and attrition from it yield particular kindsof persons in an organization. These people determine organizational behaviour Positive job attitudes for workers in an organization can be expected when the naturalinclinations of the persons there are allowed to be reflected in their behaviours by thekinds of processes and structures that have evolved there.HRM has to serve the interests of the business but it must also be concerned with the interestsof the people in the business. A stakeholder approach is adopted throughout the book. Inaccordance with the views of Freeman (1984), management, and this includes HR specialists,must satisfy a variety of constituents comprising employees, customers and the community atlarge as well as shareholders or, in the public or voluntary sectors, those who have the ultimateresponsibility for what the organization does.There is an important ethical dimension to HRM. As Boxall et al (2007) point out: ‘WhileHRM does need to support commercial outcomes (often called “the business case”), it alsoexists to serve organizational needs for social legitimacy.’ This means exercising social responsibility, or in other words being concerned for the interests (well-being) of employees andacting ethically with regard to the needs of people in the organization and the community.Plan of the bookThe book is dived into four Parts and an Appendix.Part IHuman Resource ManagementPart I deals with the fundamentals of HRM. It starts with a general review of the practice ofHRM. It continues with a description of the processes that provide guidelines on the direction,scope and application of HRM, namely strategic HRM and HR policies and procedures. Theneed to base HRM decisions on data and information relating to the use and development of theorganization’s human capital is dealt with in Chapter 4, and the associated topic of knowledgemanagement – increasing organizational capability by sharing the wisdom, understanding andexpertise accumulated in a business about its processes, techniques and operations – is coveredin Chapter 5. The requirement for organizations to conduct their business in an ethical way,taking account of the social, environmental and economic impact of how they operate, andgoing beyond compliance, is emphasized in Chapter 6. The final chapter of Part 1 recognizesthat organizations operate in a global context, and explores the particular factors that affectinternational HRM.

IntroductionPart II3Organizations and peoplePart II recognizes that HRM takes place within the context of organizations, in which the waypeople behave and how the organizations of which they are members function will governHRM policy and practice. It also deals with the concept of employee engagement, which isbecoming increasingly prominent in people management, but which is often presented asa mantra without being properly understood. Chapter 9 examines the concept in detail byreference to recent research.Part IIIHRM practiceThis is the heart of the book. It deals with:zz the basic HRM activities of competency-based HRM, job / role analysis and design;zz people resourcing;zz learning and development;zz managing performance;zz reward management;zz employee relations;zz providing for the well-being of employees.Part IV People management skillsThe activities described in Part IV all require people management skills from line managers aswell as HR specialists. The following skills are covered in this part:zz managing change;zz leadership;zz selection interviewing;zz performance management;zz learning and development;zz managing conflict;zz handling people problems.AppendixHRM research methodsThis appendix describes the approaches and techniques used in conducting HRM researchprojects.

4IntroductionReferencesBoxall, P F, Purcell, J and Wright, P (2007) The goals of HRM, in Oxford Handbook of Human ResourceManagement, ed P Boxall, J Purcell and P Wright, Oxford University Press, OxfordFreeman, R E (1984) Strategic Management: A stakeholder perspective, Prentice Hall, Englewood Cliffs,New JerseySchneider, B (1987) The people make the place, Personnel Psychology, 40 (2), pp 437– 53

5Part IHuman ResourceManagement

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71The Practice ofHuman Resource ManagementKey concepts and termszz Business partnerzz HR strategieszz Centre of expertisezz HR systemzz Commitmentzz Human resource managementzz Contingency theoryzz Humanismzz Hard HRMzz Mutualityzz HR philosophyzz Organizational capabilityzz HR policieszz Shared service centrezz HR practiceszz Soft HRMzz HR processeszz Strategic business partnerzz HR programmeszz Strategic integrationLearning outcomesOn completing this chapter you should be able to define these key concepts. You shouldalso understand:zz The meaning and aims of humanresource management (HRM)zz That HRM in practice is highlydiversezz How HRM functions as a systemzz The ethical dimension of HRMzz The impact of HRM on performancezz The HRM role of line managerszz The role of the HR function

8Human Resource ManagementIntroductionThe practice of Human Resource Management (HRM) is concerned with all aspects of howpeople are employed and managed in organizations. It covers activities such as:zz strategic HRM;zz human capital management;zz knowledge management;zz organization development;zz resourcing (human resource planning, recruitment and selection, and talentmanagement);zz performance management;zz learning and development;zz reward managementzz employee relations;zz employee well-being.HRM can be described as a strategic, integrated and coherent approach to the employment,development and well-being of the people working in organizations. It has a strong conceptualbasis drawn from the behavioural sciences and from strategic management, human capital andindustrial relations theories. This foundation has been built with the help of a multitude ofresearch projects.The aims of this chapter are to provide a general introduction to the practice and underpinningconcepts of HRM and to outline the HRM roles of line managers and the Human Resources(HR) function.The philosophy of HRMAs originally conceived by the pioneers in the 1980s, the concept of HRM was based on aphilosophy which was fundamentally different from the personnel management practices ofthe time. Beer et al (1984) believed that ‘Today, many pressures are demanding a broader,more comprehensive and more strategic perspective with regard to the organization’s humanresources These pressures have created a need for a longer-term perspective in managingpeople and consideration of people as potential assets rather than merely a variable cost.’Beer and his colleagues (the Harvard school) were the first to underline the HRM tenet thatit belongs to line managers. They suggested that HRM has two characteristic features, first,

The Practice of Human Resource Management9that line managers accept more responsibility for ensuring the alignment of competitivestrategy and HR policies, and second, that HR has the mission of setting policies that governhow HR activities are developed and implemented in ways that make them more mutuallyreinforcing.Fombrum et al (1984) held that HR systems and the organization structure should be managedin a way that is congruent with organizational strategy.A full explanation of HRM philosophy by Legge (1989) stated that HRM consists of the following propositions:That human resource policies should be integrated with strategic business planning andused to reinforce an appropriate (or change an inappropriate) organizational culture,that human resources are valuable and a source of competitive advantage, that theymay be tapped most effectively by mutually consistent policies that promote commitment and which, as a consequence, foster a willingness in employees to act flexibly inthe interests of the ‘adaptive organization’s’ pursuit of excellence.The philosophy underpinning this notion of HRM provided a new vision which was stronglycriticized by many commentators during the 1990s (see the critical evaluation of HRM at theend of this chapter). It was supposed to be substantially different from old-fashioned personnelmanagement, a term which has virtually disappeared since then, although in some quarters theterm ‘people management’ has been adopted, possibly by those who dislike the connotations of‘human resources’ with its apparent emphasis on exploitation and treating people as factors ofproduction. However, whether it is called human resource management or people management, the essential nature of the ways in which organizations manage and relate to theiremployees has not always changed significantly from that of personnel management, althoughnew techniques may have been introduced. In 2000 I asked the question ‘The name has changedbut has the game remained the same?’ and answered it with a broad affirmative.A more recent and less philosophical reference to HRM was made by Boxall et al (2007), whodefined it as ‘The management of work and people towards desired ends.’The purpose of HRMThe overall purpose of HRM (or people management) is to ensure that the organization is ableto achieve success through people. HRM aims to increase organizational effectiveness andcapability – the capacity of an organization to achieve its goals by making the best use of theresources available to it. Ulrich and Lake (1990) remarked that ‘HRM systems can be the sourceof organizational capabilities that allow firms to learn and capitalize on new opportunities.’ Thefollowing policy goals for HRM were suggested by David Guest.

Human Resource Management10Policy goals of HRM1.Strategic integration: the ability of the organization to integrate HRM issues into itsstrategic plans, ensure that the various aspects of HRM cohere, and provide for linemanagers to incorporate an HRM perspective into their decision making.2.High commitment: behavioural commitment to pursue agreed goals, andattitudinal commitment reflected in a strong identification with the enterprise.3.High quality: this refers to all aspects of managerial behaviour which bear directlyon the quality of goods and services provided, including the management ofemployees and investment in high-quality employees.4.Flexibility: functional flexibility and the existence of an adaptable organizationstructure with the capacity to manage innovation.Source: Guest (1991).The policy goals for HRM identified by Caldwell (2001) included managing people as assetswhich are fundamental to the competitive advantage of the organization, aligning HRM policies with business policies and corporate strategy, and developing a close fit of HR policies,procedures and systems with one another.HRM also has an ethical dimension, which means that it expresses its concern for the rightsand needs of people in organizations through the exercise of social responsibility.The diversity of HRMThere are no universal characteristics of HRM. Many models exist, and practices withindifferent organizations are diverse, often only corresponding to the conceptual version of HRMin a few respects. Boxall et al (2007) remarked that ‘Human resource management covers avast array of activities and shows a huge range of variations across occupations, organizationallevels, business units, firms, industries and societies.’A distinction was made by Storey (1989) between the ‘hard’ and ‘soft’ versions of HRM.The hard version of HRM emphasizes that people are important resources through whichorganizations achieve competitive advantage. These resources have therefore to be acquired,developed and deployed in ways that will benefit the organization. The focus is on the quantitative, calculative and business-strategic aspects of managing human resources in as ‘rational’ away as for any other economic factor.

The Practice of Human Resource Management11The soft version of HRM has its roots in humanism – an approach devoted to human interestswhich views people as responsible and progressive beings. It also trace its origins to the humanrelations school, as founded by Elton Mayo (1933), which believed that productivity wasdirectly related to job satisfaction and that the output of people will be high if they like theirco-workers and are given pleasant supervision. But this is a fairly remote connection. SoftHRM as described by Storey (1989) involves ‘treating employees as valued assets, a source ofcompetitive advantage through their commitment, adaptability and high quality (of skills, performance and so on)’. The emphasis is on the need to gain the commitment – the ‘hearts andminds’ – of employees through involvement, communications, leadership and other methodsof developing a high-commitment, high-trust organization. It was advocated by, among others,Walton (1985), who focused attention on his principle of ‘mutuality’ (a state that exists whenmanagement and employees are interdependent and both benefit from this interdependency)and the move from control to commitment. Attention is also drawn to the key role of organ izational culture.It has, however, been observed by Truss (1999) that ‘even if the rhetoric of HRM is soft, thereality is often hard, with the interests of the organization prevailing over those of the individual’. And research carried out by Gratton et al (1999) found that in the eight organizationsthey studied, a mixture of hard and soft HRM approaches was identified. This suggested to theresearchers that the distinction between hard and soft HRM was not as precise as some commentators have implied.But as Dyer and Holder (1998) emphasized, ‘HRM goals vary according to competitive choices,technologies or service tangibles, characteristics of their employees (eg could be different formanagers), the state of the labour market and the societal regulations and national culture’, andBoxall et al (2007) noted that ‘The general motives of HRM are multiple.’HRM as a systemIn its traditional form, HRM, as pointed out by Boselie et al (2005), can be viewed as ‘a collection of multiple discrete practices with no explicit or discernible link between them’. In contrast‘the more strategically minded systems approach views HRM as an integrated and coherentbundle of mutually reinforcing practices’. Kepes and Delery (2007) comment that a definingcharacteristic of HRM is that HRM systems and not individual HRM practices are the sourceof competitive advantage: ‘Coherent and internally aligned systems form powerful connectionsthat create positive synergistic effects on organizational outcomes.’As illustrated in Figure 1.1, an HRM system brings together HR philosophies which describethe overarching values and guiding principles adopted in managing people, HR strategieswhich define the direction in which HRM intends to go, HR policies which provide guidelinesdefining how these values, principles and strategies should be applied and implemented in

12Human Resource ManagementHUMAN RESOURCEMANAGEMENTHR philosophiesHuman capitalmanagementHR strategies, policies, processes,practices and programmesCorporate socialresponsibilityOrganizationResourcingLearning ignHuman resourceplanningOrganizationallearningJob evaluation/market surveysIndustrialrelationsDevelopmentRecruitment &selectionIndividuallearningGrade and gementManagementdevelopmentContingentpayHealth oyeewell-beingKnowledgemanagementCommunicationsHR servicesFigure 1.1The HRM systemspecific areas of HRM, HR processes which comprise the formal procedures and methods usedto put HR strategic plans and policies into effect, linked HR practices which consist of theapproaches used in managing people, and HR programmes which enable HR strategies,policies and practices to be implemented according to plan.The context of HRMHRM processes take place within the context of the internal and external environments ofthe organization. In line with contingency theory, these exert considerable influence on thedecision over which HR practices are adopted.

The Practice of Human Resource Management13The external environmentThe external environment consists of social, political, legal and economic developments andcompetitive pressures. Global competition in mature production and service sectors is increasing. This is assisted by easily transferable technology and reductions in international tradebarriers. Customers are demanding more as new standards are reached through internationalcompetition. Organizations are reacting to this competition by becoming ‘customer focused’,speeding up response times, emphasizing quality and continuous improvement, acceleratingthe introduction of new technology, operating more flexibly and ‘losing cost’. The pressure hasbeen for businesses to become ‘lean and mean’, downsizing and cutting out layers of management and supervision. They reduce permanent staff to a core of essential workers, increase theuse of peripheral workers (subcontractors, temporary staff ) and ‘outsource’ work to externalservice providers. These pressures can be considerable in an economic downturn such as theone beginning in 2008.The internal environmentThe following aspects of the internal environment will affect HR policy and practice:zz the type of business or organization – private, public or voluntary sector; manufacturingor service;zz the size of the organization;zz the age or maturity of the organization;zz the technology or key activities of the business will determine how work is organized,managed and carried out;zz the type of people employed, such as professional staff, knowledge workers, technicians,administrators, production workers, and sales and customer service staff;zz the financial circumstances of the organization, especially in economic downturns;zz the organization’s culture – the established pattern of values, norms, beliefs, attitudes andassumptions which shape the ways in which people behave and things get done;zz the political and social climate.Contingency theoryContingency theory tells us that definitions of HR aims, policies and strategies, lists of activities,and analyses of the HRM roles of line managers and the role of the HR function are valid onlyif they are related to the situation of the organization in its environment. Karen Legge (1978)in her influential book Power, Innovation and Problem Solving in Personnel Management was

14Human Resource Managementthe first commentator to insist that a contingent approach should be adopted: that is, ‘the designand implementation of policy that matches, or is contingent upon specified organizationalrequirements and circumstances’.As Paauwe (2004) explained, ‘Contingency theory states that the relationship between therelevant independent variables (eg HRM policies and practices) and the dependent variable(performance) will vary according to the influences such as company size, age and technology,capital intensity, degree of unionization, industry / sector ownership and location.’Contingency theory is associated with the concept of fit – the need to achieve congruencebetween an organization’s HR strategies, policies and practices, and its business strategies,within the context of its external and internal environment.The ethical dimensionAs Boxall et al (2007) point out, ‘While HRM does need to support commercial outcomes (oftencalled “the business case”), it also exists to serve organizational needs for social legitimacy.’ Thismeans exercising social responsibility, or in other words being concerned for the interests(well-being) of employees and acting ethically with regard to the

Armstrong's essential human resource management practice : a guide to people management / Michael Armstrong. p. cm. ISBN 978--7494-5989-5 — ISBN 978--7494-5990-1 (ebook) 1. Personnel management—Handbooks, manuals, etc. I. Title. II. Title: Essential human resource management practice. HF5549.17.A758 2010 658.3—dc22 2010000341