Human Resource Management in a Business Context
3rd edition

by Alan Price

Human Resource Management in a Business Context provides an international focus on the theory and practice of people management. A thorough and comprehensive overview of all the key aspects of HRM, including case studies, articles from HRM Guide and other sources, key concepts, review questions and problems for discussion and analysis.
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Arguably, HRM has become the dominant approach to people management in English-speaking countries. However, it is important to stress that human resource management has not 'come out of nowhere'. HRM has absorbed ideas and techniques from a number of areas. In effect, it is a synthesis of themes and concepts drawn from over a century of management theory and social science research.

There is a long history of attempts to achieve an understanding of human behaviour in the workplace. Throughout the twentieth century, practitioners and academics have searched for theories and tools to explain and influence human behaviour at work. Managers in different industries encounter similar experiences: businesses expand or fail; they innovate or stagnate; they may be exciting or unhappy organizations in which to work; finance has to be obtained and workers have to be recruited; new equipment is purchased, eliminating old procedures and introducing new methods; staff must be re-organized, retrained or dismissed. Over and over again, managers must deal with events which are clearly similar but also different enough to require fresh thinking.

We can imagine that, one day, there will be a science of management in which these problems and their solutions are catalogued, classified, standardized and made predictable. Sociologists, psychologists and management theorists have attempted to build such a science, producing a constant stream of new and reworked ideas. They offer theoretical insights and practical assistance in areas of people management such as recruitment and selection, performance measurement, team composition and organizational design. Many of their concepts have been integrated into broader approaches which have contributed to management thinking in various periods and ultimately the development of HRM (see figure 1.1). The most significant include:

Scientific management

A hard-nosed and authoritarian approach to management developed by F.W. Taylor at the beginning of the 20th century. Taylor believed in a combination of detailed task specifications and selection of the 'best man' for the job. It was the function of managers to think - workers were expected to do exactly as they were told. This, he felt, would result in the most efficient method of performing physical work. Additionally, he advocated premium payments as a means of rewarding the most effective (compliant) workers. Taylor's ideas led on to:

• Fordism a philosophy of production based on the continuous assembly line
  techniques devised by Henry Ford. This methodology dominated worldwide manufacturing until the 1980s.
• Time and motion - stopwatch methods of measuring work, used to increase
  efficiency and minimize wasted time and effort.
• Continuous improvement - fundamental to Japanese production methods:
  using employee knowledge and ingenuity to continually refine product manufacture and development.

These practices require management control over the precise detail of work in order to maximise efficiency and gain competitive advantage. Inevitably, this is achieved at the expense of employees who sacrifice the freedom to control their own work. 'Scientific management', under any name, creates an inevitable tension between the rights and expectations of workers and management's need to gain ever greater quality and cost-effectiveness. HRM is identified with attempts to deal constructively with this tension through assertive, but non-autocratic, people management. It is also linked to the use of performance-related pay and other ways of rewarding appropriate behaviour.

Human factors

In Australia, New Zealand and - particularly - the UK, government-sponsored research by work psychologists during and after the first world war produced significant information on the relationship between boredom, fatigue and working conditions. They established that fatigue arose from psychological as well as physical causes. They demonstrated also that working longer hours did not necessarily increase productivity. Human factors psychologists established a tradition of performance measurement, job analysis and clarification of skill requirements. These underlie key HRM techniques such as competence assessment and selection methods.

Human relations

In the 1920s and 30s researchers in the USA demonstrated that work performance and motivation did not depend simply on pay and discipline. People worked for many other reasons. They wanted to be involved in determining their own work conditions. They responded to encouragement and the interest shown by management. Workers formed informal groups which established their own norms of behaviour, including acceptable levels of performance. Working groups exercised social pressure on their members to conform to these unconsciously determined rules. The human relations movement had considerable influence within US business schools such as Harvard which later developed a 'soft', humanistic  interpretation of HRM.

Behavioural science

The human relations and human factors approaches were absorbed into a broad behavioural science movement in the 1950's and 1960's. This period produced some influential theories on the motivation of human performance. For example, Maslow's hierarchy of needs gave an individual focus to the reasons why people work, satisfying an ascending series of needs from survival, through security to eventual 'self-actualisation'. In the same period, concepts of job design such as job enrichment and job enlargement were investigated. It was felt that people would give more to an organization if they gained satisfaction from their jobs. Jobs should be designed to be interesting and challenging to gain the commitment of workers - a central theme of HRM.

Management by objectives

Based on work by Drucker in the 1950s, and further developed by McGregor, management by objectives (MBO) linked achievement to competence and job performance. MBO primarily focused on the individual, tying rewards and promotion opportunities to specific agreed objectives, measured by feedback from performance assessment. Individual managers were given the opportunity to clarify the purposes of their jobs and set their own targets. MBO developed into modern performance management schemes and performance-related pay.

>Contingency

Many researchers found difficulty in applying academic theories to real organizations. The socio-technical school developed models of behaviour and performance which took into account the contingent variables, or 'it depends' circumstances, attached to particular work situations (Burns and Stalker, 1961; Woodward, 1980). They argued that employees were part of a system which also included the equipment and other resources utilized by an organization. The system could not function optimally unless all its components - human and non-human - had been considered. The HRM concepts of coherence and integration derive, in part, from this line of thought.

Organizational development

Also drawn from the long tradition of organizational theory, organizational development (OD) took a pragmatic approach to change. Theory and practice were mixed in a tentative process called 'action research'. OD familiarized managers with the idea that changes in processes, attitudes and behaviour were possible and that organizations should be thought of as whole entities.

>Strategic management

Directing people to achieve strategic objectives so that individual goals are tied to the business needs of the whole organization. Strategic management has become a dominant framework for organizational thinking since the second world war. It is based on concepts first used for largescale military and space programmes in the USA. Frequently, it employs project and team-based methods for planning and implementation. Lately, internal (including human) resources and key competencies have been identified as crucial elements of long-term competitive success.  Strategic management has become the major unifying theme of undergraduate and - especially - postgraduate business courses. The concern with strategy distinguishes human resource management from personnel management.

>Leadership.

Many writers have concluded that a  visionary leader is essential, particularly in developing and inspiring teams. McGregor's The Human Side of Enterprise (1960) linked leadership and management style to motivation. McGregor expressed the contrast between authoritarian people management ('Theory X') and a modern form based on human relations ideas ('Theory Y'). His ideas parallel 'hard' and 'soft' HRM. Effective managers do not not need to give orders and discipline staff, they draw the best from their people through encouragement, support and personal charisma. Later authors (such as Peters and Waterman, 1982) feature the leader's vision and mission as a quasi-religious means of galvanising worker commitment and enthusiasm.

>Corporate culture

Deal and Kennedy (1982) popularized the belief that organizational effectiveness depends on a strong, positive corporate culture. They combined ideas from leadership theory and strategic management thinkers with prevailing beliefs about Japanese business success. Managers were exhorted to examine their existing organizational climates critically and work to change them into dynamic and creative cultures. The excellence movement inspired by Peters and Waterman (In Search of Excellence, 1982, and others) has been particularly influential with practising managers, despite criticisms of the research on which it was based.

Excerpt from chapter 1 of the 1st edition of Human Resource Management in a Business Context, International Thomson Business Press. Copyright A. J. Price - this excerpt may be copied for personal use only and must be credited to the author if quoted in any text. The discussion in the 3rd edition (published by CENGAGE/Thomson Learning) has been substantially increased and revised.

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