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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HRM Guide Sections

HRM Guide Australia

HRM Guide Canada

HRM Guide NZ

HRM Guide UK

HRM Guide USA

Introduction Overview of HRM Guide

HRM Guide Updates Latest updates on the HRM Guide websites

Jobs and Careers Advice, job postings and leads

HRM Topics Hundreds of pages of information, updates and links to articles

HR Directory Links to HR service providers

HR News Releases Announcements, news, reports

  Origins

HRM-type themes, including 'human capital theory' and 'human asset accounting', can be found in the literature from the 1970s. However, the modern view of human resource management first gained prominence in 1981 with its introduction on the prestigious MBA course at Harvard Business School. Simultaneously, other interpretations were being developed in Michigan and New York.

Sparrow and Hiltrop (1994) picked out four main approaches from this period:

• The Michigan and New York Schools: strategic matching theories
• The Harvard school: a multiple stakeholders theory
• The Warwick School: a political and change process theory
• The Schuler School: a behavioural transformation theory

 Different interpretations of HRM.

The Harvard interpretation sees employees as resources. However, they are viewed as being fundamentally different from other resources - they cannot be managed in the same way. The stress is on people as human resources.

The Harvard Map or model outlines four HR policy areas:

• Human resource flows - recruitment, selection, placement, promotion, appraisal and assessment, promtion, termination, etc.
• Reward systems - pay systems, motivation, etc.
• Employee influence - delegated levels of authority, responsibility, power
• Work systems - definition/design of work and alignment of people.

Which in turn lead to the 'four C's' or HR policies that have to be achieved:

• Commitment
• Congruence
• Competence
• Cost effectiveness

 A harder approach - people as human resources.

A different view is associated with the Michigan Business School. The Michigan model has a harder, less humanistic edge, holding that employees are resources in the same way as any other business resource. They must be:

• obtained as cheaply as possible
• used sparingly
• developed and exploited as much as possible

Sparrow and Hiltrop (1994), pointing out that this is a 'matching' model of strategic HRM originally outlined by Tichy, Fombrun and Devanna (1982), state that:

"The philosophy does not limit itself to direct employees of an organization. Therefore humans or people - as opposed to just employees - need to be managed in a way that is consistent with broad organizational requirements such as quality or efficiency. Personnel policies and organization structures have to be managed in a way that is congruent with organizational strategy and organizational effectiveness depends on there being a tight 'fit' between human resource and business strategies. HRM strategies are all about making business strategies work and so emphasis is placed on how to best match and develop 'appropriate' HRM systems."

 The Michigan theorists highlighted the following as being the most important HR issues to achieve such a match:

• Selection of the most suitable people to meet business needs
• Performance in the pursuit of business objectives
• Appraisal, monitoring performance and providing feedback to the organization and its employees
• Rewards for appropriate performance
• Development of the skills and knowledge required to meet business objectives

The New York variation on the matching model, outlined by Schuler and Jackson (1987), looked at Michael Porter's generic competitive strategies (quality enhancement, innovation and cost leadership or reduction) and developed a set of 'needed role behaviours' for each strategy which, according to Sparrow and Hiltrop (1994):

"varied across a number of dimensions and then (they) stipulated a set of hypotheses about the personnel and industrial relations practices that were needed. They identified the most important HRM practices about which strategic decisions had to be made and for each practice noted the dichotomous but logical alternatives that could be applied. HRM could be seen as a menu of strategic choices to be made by HR executives intended to promote the most effective role behaviours that are consistent with the organization strategy and are aligned with each other."

Schuler and Jackson (1987) listed these choices under a number of categories, e.g.

Planning choices: Informal ... Formal; Short-term ... Long-term; Explicit ... Implicit job analysis; Job simplification ... Job enrichment; Low employee involvement ... High employee involvement

Other choices were given for staffing, appraising, compensating, and training/development.

References

Beer, M., Lawrence, P.R., Mills, D.Q., and Walton, R.E. (1984) Managing human assets, Free Press.
Schuler, R.S. and Jackson, S.E. (1987) "Linking competitive strategies with human resource management practices", Academy of Management Executive, 1(3), 207-19.
Sparrow, P. and Hiltrop J.-M. (1994) European Human Resource Management in Transition, Prentice Hall.
Tichy, N.M., Fombrun, C.J. and Devanna, M.A. (1982) "Strategic human resource management", Sloan Management Review, 23(2), 47-61.

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